Phoenix Group is to acquire Sun Life UK, a closed book life insurance company, from Sun Life Financial in a £248m deal.
The acquisition is expected to deliver c.£470m of incremental long-term cash generation, with approximately 30% of this cash generation to emerge in the first three years.
Sun Life UK operates a predominantly outsourced business model with the majority of its policy administration already undertaken by our strategic outsourcing partner (TCS Diligenta), which supports a simplified operational integration programme.
Phoenix Group is targeting the delivery of c.£125m of integration synergies, net of costs, from cost efficiencies and capital management actions, representing c.50% of the consideration paid.
Phoenix Group CEO, Andy Briggs (pictured) 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 £470 million, 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.”
