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 part of the deal, SLA will pay Phoenix £62.5m for the purchase of the Wrap Sipp onshore bond and TIP businesses which represent £36bn of assets under management. SLA will also pay the the life insurer £32m in return for several colleagues who will be transferred to Phoenix, including SLA’s marketing service.
See also: Future of Standard Life Aberdeen brand called into question by expected Phoenix Group deal
In return, Phoenix will pay SLA a net figure of £34m “to settle legacy matters”.
The deal will see the Standard Life brand handed over to Phoenix. SLA has begun a branding review, the results of which will be announced later this year, it said.
The value of the Standard Life brand has not been disclosed. SLA said it has been “offset against related elements of the deal and therefore is not expected to have a material impact on its financial result”.
‘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 chief executive Andy Briggs said the announcement “recognises the global expertise and excellent service that Aberdeen Standard Investments delivers to Phoenix Group and our customers as our preferred asset management partner.”
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.
Aberdeen brand is strong in UK and Asia
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.”
