UK-based Standard Life Aberdeen has agreed to sell its insurance business to Phoenix Group in a deal worth £3.24bn.

The deal includes Standard Life Assurance Limited (SLA), the UK Mature Retail and Spread/risk books and the Europe, UK Retail and UK Mature Retail and Spread/ risk boots and the Europe, UK Retail and Workplace business.

SLA has about 4.8 million policyholders across multiple business segments and has about £166bn of assets.

Standard Life Aberdeen will receive a consideration of £3.24bn, which comprises of £2.3bn in cash and about 19.99% of stake in Phoenix Group.

SLA will become Phoenix’s preferred, long-term asset management partner for Standard Life Assurance and the existing arrangements between the parties under which SLA manages assets for Phoenix will be extended.

Standard Life Aberdeen chairman Sir Gerry Grimstone said: “This transaction completes our transformation to a capital light investment business, a process started in 2010 with the sale of Standard Life Bank, continuing with the sale of our Canadian business and the merger last year between Standard Life and Aberdeen Asset Management.

“This transaction represents excellent value for our shareholders, including a comprehensive and mutually beneficial strategic relationship entered into with Phoenix Group, a longstanding partner of the firm. In addition, I am particularly pleased to note Phoenix Group’s commitment to maintain operational headquarters in Edinburgh.”

Post acquisition, more than 57% of Phoenix's enlarged headcount will be based in Edinburgh and it will be its operational headquarters.

Phoenix Group CEO Clive Bannister said: “This is a compelling transaction for Phoenix, consistent with the Group’s stated strategy and acquisition criteria. The proposed acquisition establishes Phoenix as the pre-eminent closed life fund consolidator in Europe with more than 10 million policyholders and supports a significant increase in Phoenix’s cash generation.

“The reinforced Strategic Partnership with Standard Life Aberdeen allows both companies to focus on their key strategic strengths whilst generating future value through the new Client Service and Proposition Agreement.”

Image: The head office of Standard Life in Edinburgh. Photo: Courtesy of Stefan Schäfer, Lich/