Reuters – British Life Insurer to Get Windfall from Guardian Deal

Debt-laden British life insurer Phoenix will get a 200 million pound ($312 million) windfall from a deal to transfer 300,000 retirement policies to private equity-owned rival Guardian Financial Services, according to Reuters. Guardian, taken over by buyout firm Cinven last year as a vehicle for closed life fund consolidation in Europe, said the deal would boost its assets under management to 13 billion pounds and double its customer base, writes Reuters.

(Reuters) – Debt-laden British life insurer Phoenix will get a 200 million pound ($312 million) windfall from a deal to transfer 300,000 retirement policies to private equity-owned rival Guardian Financial Services.

Phoenix, also handing Guardian 5 billion pounds of assets to fund payments to its former customers, said on Wednesday the transfer would reduce the risk of an unforeseen financial hit in the event customers live longer than expected.

The agreement boosts Phoenix’s cash by freeing up regulatory capital set aside to cover potential investment or longevity-related losses on the annuity portfolio.

Phoenix, valued at about 800 million pounds but weighed down by 2.1 billion pounds debt, is striving to bolster its finances as it pursues talks to reschedule repayments to its banks.

The company, set up to buy life insurers that are closed to new business and merge them into a more profitable whole, hopes banks will also agree to a relax a cap on dividend payments that is seen as a drag on its shares.

Guardian, taken over by buyout firm Cinven last year as a vehicle for closed life fund consolidation in Europe, said the deal would boost its assets under management to 13 billion pounds and double its customer base.

The agreement “is an important next step for Guardian as we pursue our closed life fund consolidation strategy in the European life insurance sector,” said chief executive Jonathan Yates, formerly Phoenix’s finance director.

Phoenix shares were 1.8 percent higher by 0905 GMT, outperforming a flat FTSE 250 . share index.

The stock has fallen 11 percent this year, against a 2 percent rise for the broader life insurance sector.