Deutsche Bank has agreed to sell its Abbey Life business to closed book consolidator Phoenix Group for £935m.
Phoenix Group confirmed it was considering such a deal earlier this month.
John Cryan, chief executive of Deutsche Bank, said: “We are pleased to have reached this agreement with Phoenix Group, a specialist life fund provider which is well qualified to serve Abbey Life policyholders.
“Deutsche Asset Management will continue to focus on its core businesses of active, passive and alternatives, while this transaction will also strengthen Deutsche Bank’s capital position.
“We continue to build a simpler and better Deutsche Bank.”
Deutsche Bank has said that as a result of the transaction it will post a pre-tax loss of €800m (£687m) because of “impairment of goodwill and intangible assets”.
Abbey Life has been closed to new business since 2000 and was sold to Deutsche Bank by Lloyds Banking Group in 2007.
In August Phoenix chief executive Clive Bannister said he was expecting more consolidation in the UK life industry and said his company would be taking the opportunities of that “as they arise”.
A spokesman for Phoenix Group said: “We believe this is a good deal for Abbey Life policyholders.
“Phoenix is the UK’s largest consolidator of closed life and pension funds and this means we are able to maximise economies of scale and capital efficiencies through streamlining internal funds and other operational improvements.
“With Phoenix, Abbey Life customers will benefit from high standards of customer service, innovative schemes to improve policy outcomes, investment in systems and our website, and a promise that the guarantees on their policies will be met.
“We will invest heavily to ensure these customers are integrated into our business and minimise any impact to their customer service.”
Earlier this week shares in Deutsche Bank fell to their lowest level since the mid-1980s – though this morning they have rallied, climbing as much as 3.5 per cent.
The Frankfurt-based bank has faced questions this week over whether it can afford $14bn (£10.7bn) fine for mis-selling mortgage bonds.
In its statement this morning Deutsche Bank said the Abbey Life deal would have a net positive capital impact and would have improved its Common Equity Tier 1 capital ratio as of 30 June by around 10 basis points.
The Abbey Life transaction is subject to regulatory approval by the Prudential Regulation Authority.
