Phoenix Group Holdings Plc and Standard Life Aberdeen Plc (SLA) – whose relationship was deepened following Phoenix’s swoop for Standard Life Assurance Ltd (SLAL) in 2018 – have entered into a new binding agreement aimed at simplification.
“While the insurance sale allowed Standard Life Aberdeen to streamline its own operations, it also created a complex network of commercial and operational services between the groups, including in respect of certain pensions and savings products and the shared use of the ‘Standard Life’ brand,” explained SLA in a release.
To simplify things, Phoenix, in its own announcement, said they have agreed the following:
|
Transaction detail |
What it means |
|
Sale of Wrap Self-Invested Personal Pension (Wrap SIPP), Wrap Onshore Bond, and UK Trustee Investment Plan (TIP) |
Phoenix will sell the businesses, with the economic risk and reward transferred to SLA effective January 01, 2021, while the legal transfer via a Part VII transfer scheme is slated for completion in late 2022. |
|
Client service and proposition agreement (CSPA) |
The camps’ CSPA will be dissolved. “As a result, SLA’s rights of first refusal to provide advice or non-insured savings products where they are to be offered as part of any future long-term savings proposition will be removed, and responsibility for distribution and marketing will transfer to Phoenix.” |
|
Standard Life brand and marketing |
The Standard Life brand, which Phoenix currently uses under licence, will be owned by the latter. |
|
Transitional services agreement (TSA) |
“The TSA between the two groups will come to a close, and both parties have agreed a timeline for separation by 2022 to ensure a smooth transition.” |
|
Strategic asset management partnership |
Core components of Phoenix’s partnership with Aberdeen Standard Investments will be extended for a further two and a half years to February 2031. |
Additionally, Phoenix noted: “Phoenix expects transfer of the brand for most parts of the business and the standardlife.co.uk website by mid-2021. As a result, the end-to-end experience of our SLAL customers will be managed solely by Phoenix, resulting in a more streamlined, multi-channel customer experience.
“This will also involve circa 60 new colleagues joining Phoenix at its operational headquarters in Edinburgh as marketing, distribution, and data team members supporting the Workplace and CS&I (Customer Savings and Investments) propositions move from SLA to Phoenix.”
SLA, while it is the party selling the Standard Life brand, said it will pay £32 million in return for Phoenix bearing the cost of transferring colleagues going forward. As for its purchase of the Wrap SIPP, onshore bond, and TIP businesses, SLA cited an upfront payment of £62.5 million.
Meanwhile Phoenix said it will receive a total of £115 million in cash through the transaction. All outstanding differences in relation to legacy matters are also settled.
SLA’s beneficial shareholding in Phoenix remains approximately 14%.
“The most successful partnerships in business tend to be formed on clear and simple terms,” commented SLA chief executive Stephen Bird.
“What we are announcing is an agreement that simplifies the relationships between Standard Life Aberdeen and our strategic partner Phoenix Group in a way that will allow us to work together constructively as partners for at least the next 10 years. Both businesses will be able to play to their respective strengths in the partnership.”
For Phoenix CEO Andy Briggs, the new agreement with SLA is a “natural progression” of their strong strategic partnership.
Briggs added: “I am delighted that Phoenix now owns all of the life and pensions business of Standard Life, including the brand and all distribution and marketing, and we are committed to investing in this business. This will enable Phoenix to accelerate the delivery of a broader set of product and service propositions to meet the financial needs of our customers as they journey to and through retirement.
“This is therefore a key enabler of our open business growth strategy and will support the delivery of incremental new business long-term cash generation. I look forward to continuing to work with Stephen and his team to execute against our respective growth ambitions and deliver Phoenix’s purpose of helping people secure a life of possibilities.”
