US-based Nassau Reinsurance Group, which was launched in April 2015, has agreed to acquire Connecticut-based life and annuity group The Phoenix Companies for $217.2m.
The purchase price represents a 188% premium over Phoenix’s closing stock price of $13.03 on 28 Sept.2015.
After completion of the transaction, which is expected to occur by early 2016, Nassau will contribute $100m in new equity capital into Phoenix to further stabilise and improve Phoenix’s balance sheet as well as providing growth capital.
As of 30 June 2015, Phoenix had GAAP equity including AOCI of $199.2 m, GAAP equity excluding AOCI of $464.4 million, and total statutory surplus (including AVR) of $817.3m.
After completion of the transaction, Phoenix will be a privately held, wholly owned subsidiary of Nassau.
Phoenix’s corporate headquarters will remain in Hartford, Connecticut, and its service center will continue to be located in East Greenbush, New York.
Life Insurance International reported in May this year that Nassau Reinsurance Group had raised over $750m of initial capital to build an insurance and reinsurance platform focused on the life, annuity and long-term care sectors.
According to the company website, Nassau Reinsurance Group’s mission is to acquire and operate onshore and offshore platforms with long tail liabilities focused on the life, annuity and long term care sectors.
The business is led by insurance industry executives Phillip J. Gass and Kostas Cheliotis. Gass will serve as chairman and CEO, and Cheliotis will serve as executive vice president and chief operating officer.
Commenting on the Phoenix deal, Gass said: "This transaction marks Nassau’s first life insurance acquisition, which will become our U.S. life and annuity platform for future growth.
"Taking Phoenix private, in conjunction with the additional $100 million in new equity capital, will accelerate the company’s turnaround, bolster its financial strength and ratings, and benefit policyholders and distribution partners. We are also very excited to support the continued growth of Saybrus, which Phoenix has done a great job building into a uniquely competitive life and annuity distribution business."
The transaction is subject to approval by Phoenix shareholders, approvals by regulatory authorities including Connecticut and New York insurance regulators, FINRA and Hart-Scott-Rodino, as well as other closing conditions.
Phoenix and Nassau engaged in discussions with state insurance regulators regarding the proposed transaction in advance of executing the agreement.
Sandler O’Neill + Partners, L.P. and Goldman, Sachs & Co. are acting as financial advisors to Phoenix, and Simpson Thacher & Bartlett LLP is acting as legal adviser. Macquarie Capital (USA) . is acting as financial adviser to Nassau, and Debevoise & Plimpton LLP is acting as legal adviser.
Founded as a life insurance company in 1851, Phoenix offers products and services designed to meet financial needs in the middle income and mass affluent markets. It has approximately 600 employees.