Firms also create partnership involving £158 billion portfolio
Standard Life Aberdeen is set to sell its insurance business to Phoenix Group, moving toward a fee-based, capital-light business with the aim of accelerating its growth strategy.
The firm, the result of a merger between Standard Life and Aberdeen Asset Management last year, announced the £3.2 billion ($4.5 billion) deal to sell Standard Life Assurance Ltd. alongside its first full-year financial statement. Standard Life Assurance is a life insurance and retirement savings business, based in the U.K. and with operations in Ireland and Germany.
The deal value is made up of a 19.99% shareholding in Phoenix Group and £2.3 billion in cash.
As well as selling the insurance business, Standard Life Aberdeen announced an enhanced long-term strategic partnership with Phoenix Group. The partnership includes the investment management of more than £158 billion of assets under management for Phoenix; a commitment to further review investment management allocations not now managed by Aberdeen Standard Investments, the firm’s money management business; the opportunity for wider collaboration as the money manager of choice for Phoenix Group; and the shareholding and representation on the Phoenix Group board. Aberdeen Standard now manages £48 billion for Phoenix Group.
Standard Life Aberdeen said the deal accelerates its strategy of building a “world-class investment company,” with the move to a fee-based, capital-light business. It simplified the group structure and “strengthens our financial position enabling Standard Life Aberdeen to accelerate its growth strategy through targeted investments,” added the announcement.
The firm retains its three adviser businesses — Wrap, Elevate and Parmenion — and its financial advice business, 1825, which has £58 billion in assets under administration.
The deal is expected to close in the third quarter, subject to regulatory approvals.
Last week, Lloyds Banking Group and affiliate Scottish Widows said it would be moving £109 billion in assets under management run in legacy allocations to Aberdeen Asset Management from the merged group over competition concerns.
Standard Life Aberdeen’s 2017 update said pro-forma fee-based revenue was up 2.6% over the year ended Dec. 31, to £2.76 billion, and profit was down 1.4% to £1.04 billion.
Assets under management and administration grew 1.1% to £654.9 billion, with assets under management for Aberdeen Standard Investments falling 0.8% to £575.7 billion for the year.
Net outflows for money management were £37.3 billion in 2017, vs. £39.7 billion in 2016. Net outflows were recorded across all strategies, with the majority from equities, at £8.2 billion. That compared with equities net outflows in 2016 of £13.9 billion.