Standard Life Aberdeen completes £1.6bn buy-in for own pension scheme

Standard Life Aberdeen today completed a £1.6bn bulk annuity buy-in for its own pension scheme, backed by the £166bn life and pensions balance sheet of Standard Life Assurance.

Standard Life Assurance comprises Standard Life Aberdeen's UK and European life and pension businesses, with assets of £166bn supporting the insurer’s ability to write large-scale de-risking transactions.

Phoenix Group agreed total consideration of £2,930m for Standard Life Assurance, structured as £1,971m in cash and a shareholding for Standard Life Aberdeen in the enlarged Phoenix Group valued at £959m based on the previous day’s share price.

Standard Life Aberdeen took a stake of just under 20% in the enlarged Phoenix Group as part of the transaction, aligning the asset manager with the long-term performance of the life and pensions portfolio now writing the buy-in.

A pre-completion dividend of £312m to Standard Life Aberdeen was deducted from the acquisition consideration, reducing the net cash and equity value transferred while preserving capital within the life and pensions business.

Phoenix Group assumed Solvency II Own Funds of £3.5bn with the acquisition of Standard Life Assurance, implying a 0.84x price-to-own-funds multiple on the £2,930m consideration.

Phoenix Group told investors it expected future synergies of £720m in value from integrating Standard Life Assurance, reflecting cost and capital efficiencies across the enlarged life and pensions platform.

Total expected cashflow generation of £5.5bn was projected from the Standard Life Assurance acquisition, providing capacity to support annuity and bulk purchase transactions over time.

Phoenix Group reported a market capitalisation of £2,888m as at 22 February 2018, after deducting an assumed final dividend for 2017 of 25.1p per share, ahead of the completion of the Standard Life Assurance deal.