UK savings and retirement company Phoenix Group has bought closed book life insurer Sun Life UK from Sun Life Financial for a cash consideration of £248m ($301m, €296m).
This comes days after International Adviser reported Kingdom Holding Company (KHC), the conglomerate controlled by Saudi Arabian prince Alwaleed Bin Talal, bought SAR 1.06bn (£233m, $284m, €277m) worth of shares in Phoenix Group – which has a market cap of £6.4bn.
Sun Life UK operates a life company, Sun Life Assurance Company of Canada (UK), which is a closed book with life, pensions and annuity business.
It does not write new business, other than offering increments on current policies to existing customers on a passive basis. At 31 December 2021, Sun Life UK had around 480,000 in-force policies and around £10bn of assets under administration, of which £2.5bn are annuities that will remain reinsured with Sun Life.
Phoenix Group said that this is its “first acquisition to be financed solely from existing cash resources”.
It continues to see M&A as a strategic priority going forward and a core part of the group’s growth strategy. In 2020, Phoenix Group revamped its long-term savings and retirement business into two divisions ‘open’ and ‘heritage’.
‘Highly attractive’
Andy Briggs, chief executive of Phoenix Group, said: “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 expect this acquisition to deliver incremental long-term cash generation of around £470m, inclusive of cost and capital synergies. This supports a 2.5% dividend increase, in line with our ambition to sustainably grow our dividend over time.
“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.”
