In a £3 billion ($4 billion) deal that continues the trend of life insurance atomizing into asset managers and risk managers, Standard Life Aberdeen is selling its remaining insurance business to United Kingdom -listed Phoenix Group.
By exiting insurance - a move which it said "significantly simplifies the group" - it has cleared one of the hurdles to regaining control of a £109bn investment mandate from Lloyds Banking Group.
The firm was also hit by a move by Lloyds Banking Group earlier this month which announced it is to withdraw £109bn of assets now managed by Standard Life Aberdeen for Scottish Widows, almost 17% of Standard Life Aberdeen's AUM.
The sale came as Standard Life Aberdeen updated investors on its full-year performance, posting a rise in assets under administration from £647.6 billion to £654.9 billion in 2016, and revealing net outflows of £31 billion, marking an improvement on the prior year's £36.8 billion outflows.
However, inflows from equity investments were up 8% at £16.2bn, from £15.0bn in 2016.
As part of this strategy change, SLA said on Friday it had agreed to sell the bulk of its insurance business to Phoenix Group for 3.24 billion pounds ($4.5 billion).
Shares of Standard Life Aberdeen (LON SLA) opened at GBX 394.70 ($5.45) on Friday.
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Citi served as exclusive financial advisor to Rite Aid , while Skadden, Arps, Slate, Meagher and Flom LLP acted as legal advisor. Reports over the past several months linked Albertsons to a few major deals that ended up falling through.
The sale is expected to be completed in the third quarter of 2018, subject to regulatory approval.
"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 results follow last year's merger between Standard Life and Aberdeen Asset Management, and the company noted today that integration was progressing well, with the group now targeting £250 million of annualised cost synergies.
Co-chief executives Martin Gilbert and Keith Skeoch said that the deal was the "logical next step" in transitioning the firm into a "world class investment company".
It added that owning advice business and platforms allowed the investment manager to have "greater proximity" to retail customers.
SLA said in a separate statement that Grimstone would stand down as chairman at the end of 2019.