Standard Life Aberdeen PLC (LON:SLA) has confirmed it is to sell the Standard Life brand to Phoenix Group Holdings PLC (LON:PHNX).
The sale is part of an initiative to simplify the strategic partnership with Phoenix, in which Standard Life Aberdeen (SLA) holds a stake of around 14% after it sold its UK and European life assurance business (SLAL) to Phoenix in 2018.
While Phoenix will buy the Standard Life brand, SLA will acquire certain investment and platform-related products from Phoenix.
From Phoenix’s point of view, the changes are designed to allow it to control its own distribution, marketing and brands, and focus on using Standard Life Aberdeen’s asset management services in support of its growth strategy.
For its part, SLA, which currently manages around GBP147.4bn of Phoenix Group assets, will see that asset management partnership extended to at least 2031.
The upfront payment by Standard Life Aberdeen for the purchase of the Wrap SIPP (self-invested personal pension), onshore bond and TIP (trustee investment plan) businesses will be GBP62.5mln, which will be offset in part by expected payments from Phoenix Group to Standard Life Aberdeen relating to the profits of the business before completion of the legal transfer.
The transfer of the Standard Life brand to Phoenix will lead to a change of employer for some SLA staff; Standard Life Aberdeen has agreed to pay GBP32mln to offset the cost of the change-over.
Meanwhile, Standard Life Aberdeen said it would receive a net cash inflow of GBP34mln in February 2021 as a result of settling all outstanding differences between the two groups concerning legacy matters.
Other existing services and platform arrangements between the groups will gradually be terminated to simplify the strategic partnership, Standard Life Aberdeen said.
“The most successful partnerships in business tend to be formed on clear and simple terms. What we are announcing today is an agreement that simplifies the relationships between Standard Life Aberdeen and our strategic partner Phoenix Group in a way that will allow us to work together constructively as partners for at least the next ten years. Both businesses will be able to play to their respective strengths in the partnership,” said Stephen Bird, the chief executive of Standard Life Aberdeen.
“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,” Bird said.
Andy Briggs, Bird’s counterpart at Phoenix Group, said “the simplification of the Standard Life brand, sales and marketing” will be a key enabler of Phoenix’s growth strategy, which in turn should lead to greater asset flows to Aberdeen Standard Investments.
“I am delighted that Phoenix now owns all of the Life and Pensions business of Standard Life, including the brand and all distribution and marketing, and we are committed to investing in this business. This will enable Phoenix to accelerate the delivery of a broader set of product and service propositions to meet the financial needs of our customers as they journey to and through retirement. This is therefore a key enabler of our Open business growth strategy and will support the delivery of incremental new business long-term cash generation,” Briggs said.