- Phoenix Group bought SunLife in 2016 from AXA as part of a £375 million deal
- SunLife was the first UK company to offer life insurance without a medical exam
Phoenix Group is considering selling its SunLife business after deciding it was “no longer core” to its operations.
The FTSE 100 company bought the division from AXA in 2016, along with French insurance giant AXA Wealth’s off-platform pensions and investments arm, as part of a £375m deal.
Founded in 1810, SunLife is a leading provider of financial services including equity release, funeral plans and life insurance for Britons aged 50 and over.
Possible deal: Phoenix Group is considering selling its SunLife business after deciding it was “no longer core” to its operations.
It was the first UK company to offer life insurance without a medical exam and made a pre-tax profit of £16 million last year.
Following a strategic review, Phoenix has determined that the segment is “no longer critical to realizing its vision of becoming the UK’s leading retirement income and savings company”.
The group said it had received “several initial expressions of interest” from third parties, but warned there was “no certainty” a sale would go through.
Phoenix specializes in buying and managing ‘closed books’ – insurance policies that are closed to new business but still have customers paying premiums.
It has benefited from a growing bulk annuity market in the UK, where insurers buy pension obligations from corporations seeking to reduce risk.
In 2023 alone, the company has issued around £6bn of BPA premiums, having made buyout transactions with pension schemes belonging to companies including pub chain Mitchells & Butlers and the London Stock Exchange Group.
Last year saw a record for pension risk transfers in the UK, with £49.1bn in takeovers and takeovers, according to financial consultancy Lane Clark & Peacock.
Britain’s bulk annuity market could expand further this year as higher interest rates will bolster funding ratios and reduce the cost of pension plan liabilities.
In March, Phoenix Chief Financial Officer Rakesh Thakrar told Reuters the company could invest another £200 million in bulk annuities.
Two months later, Phoenix announced that Thakrar would step down at the end of this year. He did not provide any reason for his upcoming departure.
Thakrar has been replaced on an interim basis by Stephanie Bruce, the former chief financial officer of asset manager Abrdn, which has struggled in recent years with a significant outflow of funds amid a challenging economic backdrop.
Phoenix Group Shares They were down 0.95 per cent at 521.5 pence on Wednesday morning and have fallen around 30 per cent since the start of 2020.