Fitch revises Phoenix’s view to positive

Fitch Ratings said it revised the outlooks on Phoenix Group Holdings plc and its main operating life companies to positive from stable. The revisions follow Phoenix’s announcement the group has agreed to acquire ReAssure Group plc from Swiss Re Ltd. with a combination of cash and shares.

At the same time, Fitch has affirmed the ratings of Phoenix, Phoenix Life Ltd., Phoenix Life Assurance Ltd. and Standard Life Assurance Ltd.

The revision of the outlook reflects Fitch’s expectation that the planned acquisition would strengthen Phoenix’s already strong business profile through increased size, scale and business position. In addition, we expect this deal to ultimately improve its longer-term debt service capabilities by strengthening the overall group capital generation. We expect cash generated over the life of the in-force business to improve to around £19 billion from £12 billion,” Fitch said in a press release.

The agency expects the acquisition to increase Phoenix’s financial leverage ratio to around 30%. However, Fitch said it views the increase as temporary, and expects FLR to strengthen to below 30% within a year and stay within the group’s stated target range of 25%-30% thereafter.

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