Insurer Phoenix explores sale of SunLife business

Shares in the retirement and insurance giant slipped in early trading after the announcement.

Phoenix Group has hailed record first half results (Phoenix/PA)

Phoenix Group has revealed it is exploring the sale of its SunLife financial services business.

Shares in the retirement and insurance giant slipped in early trading as analysts highlighted that the potential disposal appeared “slightly odd”.

Phoenix told shareholders on Wednesday morning that it will seek a possible buyer for the over-50s finance specialist.

The FTSE 100 group said: “Following a strategic review, the group has concluded that this business is no longer core to the delivery of its vision of becoming the UK’s leading retirement savings and income business.

“The board has therefore decided to begin a sale process, having received a number of initial expressions of interest from third parties.”

It stressed there can be “no certainty” at this stage that it will sell the business.

The SunLife division was purchased by Phoenix as part of a £375 million deal in 2016.

Phoenix said SunLife contributed a reported pre-tax profit of £16 million in 2023.

Liberum analyst Abid Hussain said: “At first glance, it is slightly odd that a life consolidator would be making a disposal, but remember, under their new strategy, it is hoping to transform into a proper life insurance company focusing on the retirement space (pensions and annuities).

“Management concluded the protection book did not fit any more.

“With a 10% dividend yield and more cash, potentially, coming in the door to support the capital generation and avoiding an upgrade of legacy protection systems, this makes some sense.”

Phoenix shares were 1.6% lower after early trading.