Phoenix eyes Guardian
‘ZOMBIE’ insurance specialist Phoenix is in talks to devour smaller rival Guardian Financial Services in a deal valued in the region of £1bn.
Phoenix, which is Britain’s largest company running ‘zombie’ funds – pensions and investments closed to new business – confirmed it ‘has been evaluating’ Guardian Financial Services, but added it was not in exclusive talks.
It is thought Admin Re and buyout firm CVC Capital Partners are among the other bidders also eyeing Guardian but shares in Phoenix rose 4p to 865p on the news.
Last month chief executive Clive Bannister said the company had won an investment grade ranking from Fitch Ratings which will enable it to borrow funds to buy other closed life businesses. It plans to take advantage of new Solvency II financial regulations which could force open life insurance companies to offload their zombie funds.
The takeover talks are the latest in a run of deals. Across the general insurance market, foreign buyers have launched bids for British insurers.
RSA (514.5p), is in the process of selling itself to Swiss giant Zurich in a £5.6bn deal. Earlier this month Lloyd’s of London insurer Amlin agreed to a £3.5bn takeover bid from a Japanese predator Mitsui Sumitomo.
Aviva is taking over Friends Life in a £5.2bn deal while Just Retirement and Partnership Assurance are planning a £1.6bn merger.
Just Retirement (up 4.6p to 187.9p) fell to a £29.6m loss for the year, compared to £92.8m profit the previous year after pension reforms caused a collapse in the UK annuities market.
Just Retirement, which is backed by private equity house Permira and Cinven, was one of the hardest hit by the changes.
However it said there had been a recent small improvement in the sale of annuities.
Chief executive Rodney Cook, said: ‘This is our first full year set of results since the Budget 2014 pension reforms and I hope our resilient performance will not be forgotten amid the excitement of the proposed merger with Partnership. We have adapted rapidly to the changing market.’ The company also said the merger with Partnership (149.5p) will produce more than £40m in savings in 2018.