Phoenix Group to acquire Sun Life UK for £248 million

Life consolidator Phoenix Group is set to acquire Sun Life UK, a closed book UK life insurance company, for £248 million, funded from existing cash resources.

The deal is expected to deliver c.£470 million of incremental long-term cash generation, with approximately 30% of this cash generation to emerge in the first three years.

Sun Life UK operates a predominantly outsourced business model with the majority of its policy administration already undertaken by TCS Diligenta, Phoenix’s strategic outsourcing partner, which supports a simplified operational integration programme.

Consequently, the group is targeting the delivery of close to £125 million of integration synergies, net of costs, from cost efficiencies and capital management actions, representing around half of the consideration paid.

Phoenix has also agreed a new long-term strategic asset management partnership with Sun Life that complements the group’s existing relationships. This should enhance and diversify liquid and illiquid credit origination capabilities in North America, building on Sun Life’s presence in the region.

Tremor - The modern way to place reinsurance

The acquisition is subject to regulatory approvals and is expected to complete in the first quarter of 2023. It also supports a 2.5% inorganic dividend increase, payable from, and including, the 2022 final dividend.

Sun Life UK represents around £10 billion of the estimated £480 billion UK Heritage M&A market.

According to Phoenix, this is the group’s first acquisition to be financed solely from existing cash resources, reflecting the surplus cash and capital available for reinvestment into growth.

The group’s Board continues to see M&A as a strategic priority going forward and a core part of the Group’s growth strategy, Phoenix noted.

Andy Briggs, Phoenix Group CEO, commented:”The acquisition of Sun Life UK is highly attractive for Phoenix Group and demonstrates the significant value that smaller cash funded M&A transactions can deliver for our shareholders.

“We welcome the colleagues who will join us from Sun Life UK, and as the UK’s largest long-term savings and retirement business with a strong track record of closed book integrations, we look forward to offering a safe home for Sun Life UK’s customers over the long term.

“I am pleased that we will also be able to offer Sun Life UK’s customers access to our broad range of Standard Life products in our Open division.”

Print Friendly, PDF & Email

Comments are closed.