The agreement on Wednesday follows confirmation from Phoenix Group on 16 September that it was already in advanced talks about the deal.
Phoenix Life Holdings, a subsidiary of Phoenix Group, will acquire 100% of the Abbey Life business which comprises the Abbey Life Assurance Company, Abbey Life Trustee Services and Abbey Life Trust Securities which all sit within Deutsche Asset Management.
The deal is subject to regulatory approvals including that of the Prudential Regulatory Authority.
John Cryan, chief executive of Deutsche Bank, said Phoenix Group was well qualified to serve Abbey Life policyholders and added that “Deutsche Asset Management will continue to focus on its core businesses of Active, Passive and Alternatives, while this transaction will also strengthen Deutsche Bank’s capital position. We continue to build a simpler and better Deutsche Bank”.
Phoenix Group chief executive Clive Bannister said: “This is a pivotal deal for Phoenix, giving us the platform and scale to continue as a leader in the consolidation of the UK life industry.“
"This attractively-priced deal meets precisely Phoenix’s areas of strategic focus and stated acquisition criteria, whilst significantly increasing our cash generation and supporting a further increase in our proposed dividend."
Phoenix announced the acquisition of Axa Wealth's pensions and protection business earlier this year and said in a statement today that it is expected to complete in November 2016.
"The business models of AXA and Abbey Life are complementary and will allow the Group to gain from economies of scale. Furthermore, Abbey Life policyholders will benefit from stable ownership, improved service levels and a robust governance framework", Bannister said.
The acquisition of Abbey Life brings an additional £10bn of assets under management and approximately 735,000 policyholders to the Phoenix Group.
While Deutche Bank's shares bounced back in markets on Wednesday morning, the improvement to Deutsche Bank’s common level Tier 1 capital position, by 10 basis points as at 30 June 2016, comes after shares in the bank slumped by over 6% on Monday morning as worries about its capital position intensified.