Standard Life Aberdeen (SLA) is simplifying and extending its strategic partnership with Phoenix Group Holdings, as part of which it will sell its “Standard Life” brand to the latter.
In 2018, SLA signed an agreement to sell its insurance business to Phoenix in a cash-stock transaction worth around £3.24bn.
“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,” SLA stated.
The strategic asset management partnership between the two parties will now be extended until at least 2031. At present, SLA oversees £147.4bn in Phoenix assets.
Besides, SLA will buy Phoenix’s Wrap self-invested personal pension (SIPP) and Wrap Onshore Bond operations to support growth plans.
To consolidate its investments offering for UK pension scheme customers, SLA will also purchase Phoenix’s trustee investment plan (TIP) business from.
SLA will make an upfront payment of £62.5m for the acquisition of the Wrap SIPP, onshore bond and TIP operations.
Meanwhile, it will also sell the Standard Life brand to Phoenix during the course of this year.
Certain employees supporting this brand and related marketing will move to Phoenix Group as a result of the sale.
Phoenix Group will bear the expenses of these employees. In exchange of this, Standard Life Aberdeen will pay £32m to Phoenix Group.
SLA said that the sale of the brand and the employee transfer will not affect its results materially.
It has already started a branding review and will unveil the result of the review later in 2021.
All outstanding differences between the two companies associated with legacy matters have been settled as part of the new agreements and will offer SLA a net cash inflow of £34m this month.
This represents an inflow of £54m linked to specific indemnities and a £20m outflow relating to settlement of other legacy matters.
SLA’s beneficial stake in Phoenix stands at 14% and it retains the right to appoint a director to the Phoenix board.
SLA CEO Stephen Bird welcomed the move, saying that it will enable the two companies to work together constructively as partners for at least the next ten years while utilising their respective strengths.
Bird noted: “The “Standard Life” brand has an important heritage. In the UK, it has strong recognition as a life insurance and workplace pensions brand. This is closely aligned with Phoenix’s strategy and customer base.
“This is much less the case with the business we are building at Standard Life Aberdeen which is focused on global asset management, our market-leading platforms offerings to UK financial advisers and their customers, and our UK savings and wealth businesses.”