The renowned financial services company, Phoenix Group, is currently evaluating the potential sale of its over-50s financial services specialist, SunLife. The acquisition of SunLife in 2016 was part of a substantial deal valued at £375 million. However, the company has now determined that SunLife is no longer a core part of its operations.
Founded in 1810, SunLife offers a diverse range of financial services tailored for individuals over the age of 50, including equity release, funeral plans, and life insurance. Notably, it was the first UK company to offer life assurance without the requirement of a medical examination and reported a significant pre-tax profit of £16 million in the previous year.
While Phoenix Group has received expressions of interest from potential buyers for SunLife, the company has indicated that there is no certainty a sale will occur. The decision to consider the sale of SunLife follows a strategic review in which Phoenix Group concluded that the division no longer aligns with its vision of becoming the UK’s leading retirement savings and income business.
Specializing in the management of ‘closed books’, which are insurance policies no longer available to new customers but still have existing policyholders, Phoenix Group has seen success in the growing UK bulk annuities market. Over the past year, the company has written approximately £6 billion of bulk annuity premiums, establishing buy-in transactions with pension plans of prominent companies such as Mitchells & Butlers and the London Stock Exchange Group. The surge in pension risk transfers in the UK, totaling £49.1 billion in buy-ins and buyouts, has contributed to a record year for the bulk annuity market.
The British bulk annuity market is anticipated to further expand in the upcoming year, driven by higher interest rates that enhance funding ratios and decrease pension scheme liabilities. In consideration of these developments, Phoenix’s chief financial officer has expressed the company’s potential investment of an additional £200 million in bulk annuities in the near future.
However, despite these positive prospects, Phoenix Group recently announced the forthcoming departure of its CFO, Rakesh Thakrar, who will be temporarily replaced by Stephanie Bruce, the former finance head of asset manager Abrdn. The company’s shares have experienced a slight decline, decreasing by approximately 30% since the beginning of 2020, reflecting the challenges faced by the financial market amidst the global economic landscape.
In conclusion, Phoenix Group’s decision to explore the sale of SunLife signifies a strategic shift in its business operations, with a strong focus on its vision of leading the retirement savings and income sector in the UK. The potential sale of SunLife could shape the company’s future trajectory, while its continued success in the bulk annuities market highlights its resilience and adaptability in the face of evolving economic conditions.