- Phoenix Group bought SunLife in 2016 from AXA as part of a £375m deal
- SunLife was the first UK firm to offer life assurance 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 the French insurance giant’s non-platform investment and pensions arm, AXA Wealth, as part of a £375million deal.
Founded in 1810, SunLife is a prominent provider of financial services, such as equity release, funeral plans, and life insurance for Britons aged over 50.
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 assurance without a medical examination and made a £16million pre-tax profit last year.
Following a strategic review, Phoenix has determined the segment is ‘no longer core to the delivery of its vision of becoming the UK’s leading retirement savings and income business’.
The group noted that it had received ‘a number of initial expressions of interest’ from third parties but warned there was ‘no certainty’ a sale would happen.
Phoenix specialises 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 UK bulk annuities market, where insurers acquire pension obligations from corporations looking to derisk.
In 2023 alone, the company wrote around £6billion of BPA premiums, having struck buy-in transactions with pension plans belonging to firms like pub chain Mitchells & Butlers and the London Stock Exchange Group.
Last year was a record for pension risk transfers in the UK, with £49.1billion of buy-ins and buyouts, according to financial consultancy Lane Clark & Peacock.
Britain’s bulk annuity market could expand even more this year due to higher interest rates bolstering funding ratios and cutting the cost of pension scheme liabilities.
In March, Phoenix’s chief financial officer, Rakesh Thakrar, told Reuters the firm could invest another £200million in bulk annuities.
Two months later, Phoenix announced Thakrar would be standing down later this year. It did not provide any reasons for his upcoming departure.
Thakrar has been replaced on an interim basis by Stephanie Bruce, the ex-finance boss of asset manager Abrdn, which has struggled in recent years with a significant outflow of funds amidst a challenging economic backdrop.
Phoenix Group shares were 0.95 per cent down at 521.5p on Wednesday morning and have slumped by around 30 per cent since the start of 2020.