RCS - Utmost Group - Completion of the Acquisition of Quilter Intl

Axa SAAnnouncement

30/11/2021 12:00

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RNS Number : 0284U  Utmost Group  30 November 2021

30 November 2021

 

 

 Utmost Group plc: Completion of the Acquisition of Quilter International

 

Utmost Group plc (and together with its subsidiaries "Utmost Group" or "the
Group") is pleased to announce the completion of the acquisition of Quilter
International from Quilter plc (the "Acquisition"). This follows the initial
announcement in April 2021 and the announcement of the achievement of the
necessary regulatory approvals on 12 November 2021

 

Highlights

 

-   Quilter International will become a part of Utmost International, the
international life assurance business of the Group. The Acquisition confirms
Utmost International's position as the leading global provider of
international life assurance

 

-     The Acquisition adds approx. £24bn of assets under administration
("AUA") and 90,000 policies to the Group. On a pro-forma basis, the Group
would have had approx. £62bn of AUA and approx. 570,000 policies as at 30
September 2021, and Utmost International would have written £3.7bn of new
business on a pro-forma basis in the nine months to 30 September 2021

 

-    The total consideration payable to Quilter plc is £481m reflecting
interest at 5% p.a. on the base consideration of £460m from 31 December 2020
to the date of completion

 

-     The Acquisition is in line with the Group's strategy to grow its
business both organically and through acquisition and to enhance its
proposition for its partners and clients

 

Commenting on the Completion, Paul Thompson, CEO of Utmost Group plc said:

 

"I am delighted to confirm completion of the acquisition of Quilter
International and would like to extend a warm welcome to our new colleagues,
distribution partners and clients joining Utmost Group. The Acquisition marks
a significant milestone in the Group's strategic development and brings
additional scale, skillsets and cashflows to the Group.

 

"The Acquisition cements Utmost Group's position as a leading consolidator in
the insurance and savings market and gives the Group an enhanced platform to
pursue further acquisitions."

 

Commenting on the Completion, Ian Maidens, CFO of Utmost Group plc said:

 

"The Acquisition demonstrates the Group's ability to complete value-add
acquisitions which enhance customer outcomes and provide attractive returns
to shareholders.

 

"The Group has been able to execute a sizeable, strategic transaction whilst
retaining its strong balance sheet, robust capital position and conservative
leverage ratios, giving us headroom for further acquisitions. The completion
of the Acquisition, following the inaugural Tier 2 issuance in September,
completes a seminal year for the Group."

 

Strategic Rationale

 

-     Complementary business footprint and distribution network - Quilter
International's diversified business footprint and distribution network across
the UK, Europe, the Middle East, Asia and Latin America, with branches in
Singapore and Hong Kong and a regulated distribution office in the Dubai
International Financial Centre (DIFC), complement and strengthen Utmost
International's existing position in these attractive markets, where Utmost
International sees strong, continuing demand for wealth solutions for affluent
and high net worth clients

 

-    Operational Integration - The operational integration of the
businesses will now commence and is expected to take 12-18 months. Quilter
International will be merged with Utmost International's operations in the
Isle of Man, Ireland, Singapore, Hong Kong and the DIFC. A single suite of
products, combining the strengths of both the Utmost International and Quilter
International product ranges, will be available to clients going forward under
the Utmost brand

 

-   Isle of Man Leadership Team - Mike Foy has been appointed the CEO of
the expanded Utmost International Isle of Man operations, subject to
regulatory approval. Mike has been CEO of the Utmost International Isle of Man
operations since the acquisition of the AXA Isle of Man business in 2016 and
previously held various senior roles within AXA. Peter Kenny, CEO at Quilter
International, has decided that he would like to pursue different
opportunities at this time. The Group thanks Peter for his stewardship of
Quilter International until this time and wishes him well for the future

 

Financial Impact

 

-     Solvency Coverage - On a pro-forma basis(1), as if the Quilter
International acquisition had completed on that date, total Group Own Funds
were £1,836m on 30 September 2021 and Group Solvency Capital Requirement
("SCR") was £1,032m leading to a pro-forma SCR Coverage Ratio of 178% on 30
September 2021.  The Group's actual SCR Coverage Ratio on 30 June 2021 was
also 178%

 

-   Economic Value - On a pro-forma basis(1), again as if the Quilter
International acquisition had completed on 30 September 2021, the Group's
gross Solvency II Economic Value ("SII EV") was £2,377m.  Deducting the
£400m of Tier 2 loan notes issued by the Company on 15 September 2021 gives a
net Group SII EV of £1,977m and a leverage ratio of 17% of gross SII EV on 30
September 2021.  Utmost Holdings (Guernsey) Limited, the Group's immediate
parent company, has £125m of remaining bank debt in place.  Allowing for
this bank debt, the pro-forma leverage ratio increases to 22% of gross SII EV
at 30 September 2021

 

-     Net Flows - Net flows in both the Utmost International and Quilter
International businesses remained strong in the third quarter of the year with
total net flows for the nine months of £1.1 billion on a pro-forma basis as
shown in the table below.

 

 £bn                    Opening AUA  Inflow  Outflow  Net Flows  Market Movements  Closing AUA

                        1 Jan 21                                                   30 Sept 21
 Utmost International   29.3         2.0     (1.5)    0.5        1.5               31.3
 Quilter International  21.8         1.7     (1.1)    0.6        1.2               23.6
 Utmost Pro-forma       51.1         3.7     (2.6)    1.1        2.7               54.9

 

Note 1: The pro-forma figures given above add the results for the Quilter
International companies to the Utmost Group plc results for 30 September 2021
and adjust for the transaction financing.  They do not reflect the delivery
of any synergies between the two businesses.  It is expected that the
delivery of synergies will result in a material increase in both Own Funds and
SII EV over time.  As noted above, it will take 12-18 months to deliver all
the planned synergies and the value of synergies will be able to be
progressively included in the calculation as their delivery becomes more
certain, with a modest proportion likely to be included at year end 2021.

 

 

For further information, please contact:

 

Utmost Group plc

Anne Marie Shepherd, Head of Strategy and Corporate Affairs

Tel: +44 (0)203 861 4347 / Email: annemarie.shepherd@utmostgroup.co.uk
(mailto:annemarie.shepherd@utmostgroup.co.uk)

 

Temple Bar Advisory

Alex Child-Villiers / William Barker

Tel: +44 (0)20 7183 1190 / Email: utmost@templebaradvisory.com

 

About Utmost Group plc

Utmost Group plc is a leading provider of insurance and savings solutions. Its
principal businesses are Utmost International and Utmost Life and Pensions,
which together are responsible for approx. £62bn of primarily unit-linked
policyholder assets for around 570,000 customers. Utmost Group plc is subject
to Group Supervision by the PRA.

 

About Utmost International

Utmost International is a leading provider of insurance based wealth
solutions. Utmost International operates across the UK, Europe, Latin America,
Asia and the Middle East. Its solutions are based on unit-linked insurance
policies. Utmost International manages £55bn assets under administration on
behalf of 210,000 policyholders and wrote £3.7bn new business in the nine
months to 30 September 2021.

 

About Utmost Life and Pensions

Utmost Life and Pensions is a closed UK life and pensions business focused on
the acquisition of life and pension businesses in the UK. Utmost Life and
Pensions manages £7bn assets under administration on behalf of 360,000
policyholders. Utmost Life and Pensions is authorised by the PRA and regulated
by the FCA and the PRA.

 

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