Standard Life Aberdeen has agreed to sell its insurance arm to Phoenix Group in a £3.2bn deal.
The deal was announced in Standard Life Aberdeen's first annual results since the merger between insurer Standard Life and asset manager Aberdeen last year.
Standard Life Aberdeen will keep hold of its three adviser platforms - Wrap, Elevate and Parmenion - and 1825, its financial advice business.
Sir Gerry Grimstone, chairman of Standard Life Aberdeen, 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."
The sale comes after Standard Life Aberdeen's biggest client Scottish Widows withdrew £109bn of assets from the company earlier this month.
At the time Scottish Widows chief executive Antonio Lorenzo said the merger of Standard Life and Aberdeen has resulted in his company's assets being managed by a "material competitor".
As part of the deal for the business, which comes with £158bn of assets, Phoenix Group will pay £2.28bn in cash and Standard Life Aberdeen will take a 19.99 per cent stake in Phoenix.
The two companies will also "significantly expand" their strategic partnership, with Standard Life Aberdeen becoming Phoenix's "preferred, long-term asset management partner".
Phoenix also committed to keeping the operational headquarters in Edinburgh.
The closed-book provider said one of the benefits of the deal was that it would give it the ability to expand into Europe since it increased Phoenix's potential market from around £380bn of closed life fund assets in the UK to around £540bn across the UK, Germany and Ireland.
Clive Bannister, the chief executive of Phoenix, said: "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."
Standard Life Aberdeen also published its results for 2017, which showed a slightly reduced profit of £1.03bn, down from £1.05bn in 2016.
The company saw net outflows of £31bn because of "weaker short-term investment performance", taking its assets under management to £654.9bn.
Keith Skeoch, co-chief executive of Standard Life Aberdeen, said: "We have continued to deliver for clients, helping to grow assets and dividends and our integration is on track.
"Investment performance has been mixed, and we have seen net outflows over the year. However, with over £80bn of gross inflows, there's momentum behind us."