BY Fraser Tennant
In a significant expansion of their existing long-term strategic partnership, Standard Life Aberdeen plc has sold its capital-intensive insurance business to Phoenix Group Holdings in a transaction valued at £3.2bn.
The sale involves the disposal of Standard Life Assurance Limited (SLAL), with Standard Life Aberdeen retaining its UK retail platforms and financial advice business. The businesses transferring to Phoenix as part of the sale include the UK mature retail and spread/risk books and the Europe, UK retail and workplace businesses.
Founded in 1825, SLAL is one of the UK’s oldest life and pensions businesses. Primarily based in the UK and with operations in Ireland and Germany, SLAL is a leading provider of long-term savings and investment propositions, serving around 4.5 million customers and clients.
“This transaction completes our transformation to a capital light investment business, a process started in 2010 with the sale of Standard Life Bank, continuing with the sale of our Canadian business and the merger last year between Standard Life and Aberdeen Asset Management,” said Sir Gerry Grimstone, chairman of Standard Life Aberdeen. “This transaction represents excellent value for our shareholders, including a comprehensive and mutually beneficial strategic relationship entered into with Phoenix, a longstanding partner of the firm.”
In addition, subject to normal commercial and governance constraints, Phoenix has committed to review further investment management mandates not currently managed by Aberdeen Standard Investments, which will be its preferred asset management partner for insurance investment solutions, as well as future consolidation opportunities.
“This is a compelling transaction for Phoenix, consistent with its stated strategy and acquisition criteria,” said Clive Bannister, Phoenix’s chief executive. “The acquisition establishes Phoenix as the pre-eminent closed life fund consolidator in Europe with more than 10 million policyholders and supports a significant increase in Phoenix’s cash generation. The reinforced strategic partnership with Standard Life Aberdeen allows both companies to focus on their key strategic strengths while generating future value.”
Conditional upon the approval of Standard Life Aberdeen’s shareholders and upon relevant regulatory approvals, including from the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA), the sale is expected to complete in the third quarter of 2018.
Martin Gilbert and Keith Skeoch, co-chief executives of Standard Life Aberdeen, concluded: “With the foundations of a world-class investment company in place we look forward to capitalising on the opportunities that we see ahead of us whilst continuing to deliver for our shareholders.”