Long-term savings and retirement giant Phoenix Group Holdings plc (Phoenix) has got its hands on Sun Life Financial’s UK life insurance business for £248 million.
Sun Life UK represents c.£10 billion of the estimated £480 billion UK Heritage mergers and acquisitions (M&A) market and operates a predominantly outsourced business model. Most of its policy administration was already undertaken by Phoenix’s strategic outsourcing partner, TCS Diligenta, which supports a simplified operational integration program.
Phoenix expects the latest acquisition 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. It also aims to deliver c.£125 million of integration synergies, net of costs, from cost efficiencies and capital management actions, representing c.50% of the consideration paid.
Phoenix CEO Andy Briggs commented that the acquisition demonstrates the significant value smaller cash-funded M&A transactions can deliver for the group’s 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,” Briggs said.
Phoenix also agreed to a new long-term strategic asset management partnership with Sun Life that complements its existing relationships, in line with its strategy to diversify its credit portfolio and enhance and diversify its liquid and illiquid credit organisation capabilities in North America, building on Sun Life’s solid presence in the region.
The acquisition is subject to regulatory approvals and is expected to be completed in the first quarter of 2023.
