Phoenix to buy Swiss Re's ReAssure for $4.1 billion

LONDON/ZURICH: Phoenix Group Holdings has agreed to buy the British business of Swiss Re for 3.2 billion pounds ($4.1 billion) in cash and shares, the UK insurer's biggest deal to date, driving the two companies' shares higher.

The deal is the latest in a rapidly consolidating industry as many insurance companies, hit by tougher capital rules since the financial crisis, seek to sell legacy books of business to free up capital to invest in high-growth areas. By consolidating the legacy books of business together, Phoenix aims to run them more efficiently. Its strong growth helped to propel it into Britain's blue-chip FTSE 100 .FTSE this year.

"There are too many insurance companies in a market which is consolidating and we are the natural beneficiaries," outgoing Phoenix Chief Executive Clive Bannister told a media call on Friday.

Aviva and M&G are among insurers with substantial legacy books of insurance business that analysts have speculated could be for sale. The pipeline for large bulk annuity deals - insuring company defined benefit, or final salary pension schemes - is also strong. The deal will take Phoenix's total assets to 329 billion pounds and is expected to generate 800 million pounds of cost and capital synergies, Phoenix said. It is due to complete next year.