THE new owner of Standard Life, Phoenix Group, has said it made good progress last year as it reaped the benefits of the acquisition of the venerable brand and associated pensions and long term savings businesses.
After making its name as a consolidator of closed pensions books, Phoenix noted that Edinburgh-based Standard Life forms the core of a new division that is open to new customers, and which it reckons has strong growth potential.
Phoenix said yesterday that the open business is set to generate more than £1 billion cash in respect of last year’s performance. This will be more than enough to offset the natural decline in the cash generated from closed book operations.
Chief executive Andy Briggs declared: “We have now delivered on our ambition for our new business cash generation to more than offset the run-off of our Heritage business.
“This reflects the investment we are making into our growing Open business and the Standard Life brand, which supports us in delivering Phoenix’s purpose of helping people secure a life of possibilities.”
Mr Briggs’ comments reflect Phoenix directors belief that the Standard Life acquisition put the group in a good position to capitalise on developments in the pensions and long term savings market.
READ MORE: Standard Life owner underlines value of Edinburgh business
Phoenix acquired the brand in May last year from the former Standard Life Aberdeen, which decided to focus on investment management. Standard Life Aberdeen adopted the abrdn name in July.
The group sold its life and pensions business to Phoenix for £3.2 billion in 2018, some 193 years after the operation was founded as a mutual.
The UK has an ageing population and people are being required to take more responsibility for saving for retirement as well as enjoying greater freedom to decide how they do so.
The head of Phoenix’s open division, Andy Curran, has noted the potential to draw on the expertise offered by Standard Life staff to develop new products and to harness the capabilities offered by digital technology. Standard Life employs around 2,800 people in Edinburgh.
Mr Curran said in October that Standard Life was investing in propositions and digital channels that would allow it to deliver broader retirement options and make the firm relevant to “even more customers and advisers now and in the years to come”.
The company also sees potential in the workplace pensions market. Since the Government introduced automatic enrolment in 2012 millions of people have become members of company schemes, which firms such as Standard Life operate.
Many company schemes work on a defined contribution basis, meaning employees concerned bear the investment risk. Defined benefit schemes used to be the norm. These often offered pensions based on the final salaries of members.
READ MORE: Glasgow-based mutual wins vote of confidence from big hitter
Standard Life sees attractive opportunities in the market for bulk purchase annuity (BPA) deals, which remove risk from companies responsible for defined benefit scheme liabilities. These involve pensions specialists taking on the liabilities concerned in the expectation they can cover them for less than the price of the BPA.
Phoenix said yesterday that it completed four BPA transactions during the second half of 2021 covering £4.0 billion of premiums.
It said: “Phoenix is building a market-leading BPA team and asset sourcing capability, which supports a comprehensive BPA solutions offering that is now distributed to the market under the Standard Life brand.”
Last month abrdn clinched a £1.5bn deal to buy Interactive Investor, in a deal the company said would help it build a leading position in the personal wealth market.
Interactive Investor provides services such as share dealing and portfolio management technology for 400,000 customers.
abrdn’s core asset management business has suffered funds outflows in recent years.
READ MORE: abdrn boss defends group's performance after it clinches blockbuster deal
When the Interactive Investor deal was announced abrdn chief executive Stephen Bird said the group was making good progress in the asset management market. He said the outflows reported for the first half of 2021 had a de minimis impact on revenue
Regarding the abrdn brand he told reporters then: “We are delighted with how the name has gone,” adding: “The reaction from our clients has been phenomenal.”
Mr Bird became chief executive of the group in September 2020. The group was created through the merger of Standard Life with Aberdeen Asset Management in 2017.
The Interactive Investor deal is expected to complete in the second quarter of this year, subject to shareholder and regulatory approval.
London-based Phoenix Group also has an operations centre in Birmingham.
Folloiwing the 2018 deal with Phoenix, Standard Life Aberdeen retained a 14% stake in Phoenix, which it described as strategic.
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