The life and pensions giant which owns Standard Life has highlighted “current uncertainty in the protection market” as it scrapped plans to sell its Sun Life UK business, sending shares tumbling by nearly 5%.
Phoenix Group had told the stock market in June that it was exploring the potential sale of SunLife, which provides financial protection products to the over-50s, declaring that it was “no longer core to the delivery of its vision of becoming the UK’s leading retirement savings and income business”.
However Phoenix, which acquired the SunLife business from French company AXA in 2016, has now rowed back on those plans.
READ MORE: Scotch whisky industry suffers huge fall in exports
“SunLife is a leading provider of financial protection products direct to the over 50s market in the UK and a valuable asset which contributes to the group’s new business growth,” Phoenix said in a statement.
“Given the current uncertainty in the protection market, the board has decided to discontinue the sale process and will focus on enhancing the value it generates within the group.”
Phoenix, which came to prominence in Scotland with a £3.2 billion deal to acquire the life and pensions business of Standard Life in 2018, did not elaborate further.
Last month, the Financial Conduct Authority (FCA) announced its intention to launch a market study into how pure protection insurance products are sold following concerns that competition was not working well in the market. The regulator voiced concern that the design of commission arrangements may not allow firms to deliver good outcomes to policyholders and that some products may be providing poor value, for example if the total premiums over a lifetime far exceed the maximum conceivable pay-out.
READ MORE: Huge Oasis shows will put hotel industry under pressure
The decision to scrap the sale of SunLife came as Phoenix reported a 15% rise in adjusted operating profit to £360 million in the first half, driven by “profitable growth” in both its pensions and savings, and retirement solutions businesses.
It also underlined progress at Standard Life, which employs around 2,600 people in Edinburgh.
The Standard Life workplace business delivered 83% growth in net fund flows to £3.3 billion by retaining customers and winning new schemes, while assets at the Standard Life Master Trust exceeded £10bn for the first time.
Andy Curran, chief executive of Standard Life at Phoenix, said: “The UK pensions market continues to transition from defined benefit to defined contribution schemes and Standard Life has positioned itself to capitalise on both sides of this major shift.
“Flows into our modern workplace business are up 83% year-on-year as auto-enrolment continues to encourage people to save for the future and our Master Trust passed a major milestone with assets exceeding £10bn for the first time in 2024.
READ MORE: Nationwide moves to step closer of Virgin deal
“Employers behind defined benefit schemes and their trustees are looking to take advantage of the strong funding positions most schemes are in as a result of higher interest rates. Bulk purchase annuities are the gold standard when it comes to de-risking these schemes and we have a strong pipeline of deals ahead.
“Today people are increasingly responsible for making decisions about their retirement income too and we know that customers want a combination of flexibility and security. We were the first new provider to enter the annuity market since pension freedoms and have experienced strong demand from customers since doing so.”
The board of Phoenix declared an interim dividend of 26.65p per share, equal to the 2023 final dividend and a 2.5% increase on last year's interim dividend.
Andy Briggs, chief executive of Phoenix, said: "Phoenix's vision is to be the UK's leading retirement savings and income business, and I am pleased with the initial progress we have made in executing on our three-year strategy, as our 2024 interim financial results demonstrate.
“We have delivered 19% growth in operating cash generation and remitted total cash generation of £950m in the first half.
“I am confident that as we continue to execute on our strategy we are building a growing business that is on track to deliver our financial targets and create shareholder value."
Shares in Phoenix Group closed down 4.94%, or 28.5p, or 548p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here