Phoenix Group said it was buying closed book UK life insurance company Sun Life for £248m.
The deal is expected to deliver around £470m of incremental long-term cash generation, with approximately 30% of this to emerge in the first three years.
Sun Life UK operates a predominantly outsourced business model, with the majority of its policy administration already undertaken by Phoenix’s strategic partner TCS Diligenta, the company said on Thursday.
Phoenix said it was targeting circa £125m of integration synergies, net of costs, from cost efficiencies and “capital management actions”.
It added that the cash flow generated by the deal supported a sustainable 2.5% inorganic increase in the group’s dividend, to take effect from and including the 2022 final dividend, subject to completion.
“In line with our strategy to diversify our credit portfolio, we have also agreed a new long-term strategic asset management partnership with Sun Life that complements our existing relationships,” Phoenix said.
“This will further enhance and diversify our liquid and illiquid credit origination capabilities in North America, building on Sun Life’s strong presence in the region.”
The acquisition is subject to regulatory approvals and is expected to complete in the first quarter of 2023.
Reporting by Frank Prenesti at Sharecast.com
