Standard Life Aberdeen (SLA) has announced the “simplification and extension” of its strategic partnership with Phoenix Group as it sells its historic brand to the life insurer and looks to focus on its asset management and platforms businesses.
The deal extends the terms reached between the two parties in 2018, which saw SLA take a 19.9% stake in Phoenix in return for the sale of its insurance arm for £3.3bn. Under the deal, Phoenix Life outsources the management contract back to SLA which manages around £147bn of Phoenix assets.
This partnership has been extended until at least 2031, three years later than the original end date of 2028.
As a component of the arrangement, SLA will pay Phoenix £62.5m for the acquisition of the Wrap Sipp inland bond and TIP organizations which address £36bn of resources under administration. SLA will likewise pay the existence guarantor £32m as a trade-off for a few associates who will be moved to Phoenix, including SLA’s advertising administration.
Consequently, Phoenix will pay SLA a net figure of £34m “to settle inheritance matters”.
The arrangement will see the Standard Life brand gave over to Phoenix. SLA has started a marking survey, the consequences of which will be reported not long from now, it said.
The estimation of the Standard Life brand has not been uncovered. SLA said it has been “balance against related components of the arrangement and subsequently isn’t required to really affect its monetary outcome”.
‘I’m excited about the work we are doing on our own brand’
Standard Life Aberdeen chief executive Stephen Bird (pictured) described the Standard Life brand as having 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,” he added. “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.”
He added: “That’s why I am excited about the work we are doing on our own brand, which we look forward to sharing later this year.”
‘Should lead to greater asset flows to ASI’
Phoenix Group CEO Andy Briggs said the declaration “perceives the worldwide skill and astounding assistance that Aberdeen Standard Investments conveys to Phoenix Group and our clients as our favored resource the board accomplice.”
He added: “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 ASI.”
SLA’s market value dropped significantly following the merger of the Standard Life and Aberdeen Asset Management brands, from £13.3bn in October 2016 to £7.12bn today, as the company saw net outflows of £58.4bn in 2019.
AJ Bell head of active portfolios Ryan Hughes said: “The sale of the Standard Life brand makes it clear that the remaining business intends to focus on asset management and its platform businesses, which makes a lot of sense when you consider how the market is evolving.
He added: “We’ll have to wait and see what branding approach ASI adopts for the remaining business but the Aberdeen brand is strong in the UK and Asia, so it would make sense to capitalise on that, rather than adopting a new name that would need significant investment to launch and build awareness.”