Sirius creates credit facility
Sirius International Insurance Group (SIIG) has decided to exercise its call option to acquire all of Delek Group’s remaining 47.35 percent stakes in Phoenix Holdings, a leading insurance group in Israel that writes life and non-life business, for a cash sum of NIS 2.3 billion ($656 million).
The transaction will provide SIIG with a controlling stake (52.25 percent) of Phoenix, complementing the acquisition made in September this year of an initial 4.9 percent of shares for NIS 208 million in cash.
The acquisition is expected to close in the first half of 2018 and remains subject to regulatory approvals.
Meanwhile, ratings agency AM Best has placed the Bermuda-based insurer's outlook "under review with negative implications" citing concerns that this acquisition carries execution risk stemming from the size of the group being acquired, and changes SIIG’s strategic direction.
It added that the under review status with negative implications also reflects the potential pressure the transaction could put on SIIG’s balance sheet strength, should it fail to finance the acquisition as planned, with the use of own funds complemented by equity capital raised from new investors (with a back-stop from SIIG’s parent, CM Bermuda). While SIIG’s risk-adjusted capitalisation is not expected to deteriorate significantly provided the additional equity is raised, financial leverage is likely to increase as a result of the transaction.
Allan Waters, CEO of Sirius International Insurance Group, said: "Sirius has completed its due diligence investigation of The Phoenix and is delighted that it was found to be a good fit with Sirius Group's business. The Phoenix is one of Israel's leading insurance and services companies. Through it, Sirius will be able to offer new products to the Israeli market, receive access to Israel’s world-class technology center and the opportunity to develop insurance technology solutions, enhance its financial results, and protect the interests of the Israeli public insured by the company."
"Sirius is under strict regulatory oversight in all of the global markets in which it operates, including Bermuda, New York, the UK, Sweden, Singapore and others," Waters added. "We are confident in the sophistication of the Israeli regulatory system and we look forward to receiving approval for the acquisition of control. We intend to cooperate fully and transparently with the Israeli regulators, as we do with regulators around the world."
Sirius International Insurance Group, M&A, Delek Group, Phoenix, AM Best, Rating, Israel, EMEA, Bermuda