Mergers and acquisitions has been the zeitgeist in the life insurance industry amid regulatory upheaval, low interest rates and an unsavoury past blighted by product mis-selling scandals.
In the forefront of these consolidations is the Phoenix Group, which, on 1 November, announced the completion of the £375m acquisition of Axa’s UK pensions and investment business, along with SunLife which offers protection to individuals aged 50 and over.
The deal was touted to add an extra £12.3bn of assets under management to its books and more than 910,000 policies
The amalgamation will mark the closure of the former’s unit-linked business – with the exception of its corporate trustee investment plan which will be rebranded with the Phoenix group name, according to Andy Moss, chief executive of Phoenix Life.
It will be business as usual for SunLife, which will continue to run as a stand-alone business with its brand, products and management board intact, Mr Moss added.
Phoenix reached its second significant agreement of the year to acquire Abbey Life insurance businessfrom Deutsche Bank for £935m – funded by a share sale along with a banking facility. The acquisition is set to add £10bn of AUM and approximately 735,000 policyholders.
Mr Moss said: “Abbey Life is very much like our business. It is a closed book and is largely outsourced in terms of customer administration. We will run the business like we run our Phoenix business.
“Abbey Life will also be rebranded to Phoenix over time. We will ensure that customers will be able to identify their product from its original brand name. We think this is important.”
Phoenix has made no secret of its ambitions to make acquisitions to expand its scale. Last year, the company lost out to Swiss Re in a £1bn-plus race to acquire Guardian Financial Services.
Mr Moss was coy on the prospect of further acquisitions, but teased: “We think there will be more consolidation in the market and we have a big role to play.”
Mr Moss was appointed to his current position in 19 May 2014 - mere months after the FCA announced it would begin an investigation into zombie funds as part of a wider inquiry into the treatment of longstanding insurance customers. The news saw shares in life assurers operating in the UK tumble – by as much as 11.5 per cent for the group.
The resulting thematic review into fair treatment of legacy insurance customers, published in March this year, brought the disclosure of ongoing charges applicable to legacy products into the spotlight.
Mr Moss, said: “The guidance the FCA provided in that review was enormously useful. For us, it has been an evolution rather than revolution. Greater disclosure of charges to customers in a way that they can understand is a challenge for the industry as a whole.
“We made a number of changes in our communications and there will be more to come going forward. We have a customer panel we will use to test news communication.”