European private equity firm Cinven is to sell UK life assurance consolidation business Guardian Financial Services to Admin Re, Swiss Re's unit active in the closed life book business, for a total consideration of GBP1.6 billion.
Under Cinven's ownership, Guardian has become one of the most active life insurance consolidators in the UK and Irish markets and the UK's largest privately owned life insurance company. Today Guardian has GBP20 billion of assets under management and manages 900,000 policies.
Cinven's Financial Services team identified closed life books as an attractive consolidation opportunity in 2010 and Guardian as a highly attractive entry point for a UK life insurance consolidation platform.
Cinven acquired Guardian in November 2011 from Aegon, the international provider of life insurance, pensions and asset management. It was the sole private equity firm invited to make a final offer for the business based on a combination of its strong sector expertise and strong relationship with the seller in the Netherlands.
Guardian has grown significantly since 2011 reflecting Cinven's well-executed acquisition strategy. Key achievements include:
• A highly successful 'buy and build' consolidation strategy: Four successful acquisitions completed including Guardian and the following add-on acquisitions:
– 300,000 in-payment annuities, representing c.GBP4.9 billion of reserves, from Phoenix Group ('Phoenix'), the listed UK life assurance company (July 2012);
– Ark Life representing an incremental c.270,000 policies and GBP3.5 billion of assets from Allied Irish Bank (December 2013); and

- GBP1.7 billion of pension annuities-in-payment from Phoenix (July 2014)
• Strong financial performance: Guardian's underlying UK Group net profit has increased by 285% to GBP104 million in 2014 from GBP27 million in 2010. Guardian’s market consistent embedded value (‘MCEV’)i has increased by 540% to GBP2.7 billion from GBP0.4 billion, over the same period; 

• Creating an industry leading management team: Cinven appointed a new senior executive management team individually with a proven track record of successfully executing closed life strategies and creating shareholder value; and 

• Significant investment and operational improvements: These include de- risking of Guardian Assurance With-Profits fund and significant investment in improved operational and IT capabilities. 

Caspar Berendsen, Partner at Cinven, says: "The Cinven Financial Services team identified the consolidation opportunity for closed life books in the UK in 2010, driven by the fragmented nature of the life assurance industry, the ongoing pressure on new business volumes, regulatory change, and banks’ and international insurers' desire to sell insurance assets or recycle capital. 

"The investment in Guardian has been a highly successful one for Cinven given our ability to drive considerable growth through our 'buy and build' strategy with the completion of four acquisitions. We have had the pleasure of working with a highly capable senior management team at Guardian to achieve this great result and we would like to wish them every success in the future." 

Rory Neeson (pictured), Senior Principal at Cinven, says: "We are confident that Admin Re is a good next owner of Guardian as it has the resources and strategic desire to continue investing in the business for further growth. 

"We believe the European life assurance market will continue to create opportunities for further consolidation in the near to medium term. Cinven will continue to capitalise on this in other markets, for example through its investment in Heidelberger Leben, the German life insurance consolidator, which Cinven acquired in April 2014 and is continuing to grow through further acquisitions.” 


