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Phoenix £6bn offshore bond grab opens market to last players

The acquisition of Standard Life Aberdeen’s UK and European insurance arm will net closed book insurer Phoenix Group around £6bn ($8.35bn, €6.8bn) in offshore bonds, Phoenix Group’s head of corporate communications, Shellie Wells, confirmed to International Adviser.

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The offshore bonds, which were distributed in the UK via independent financial advisers, equate to around 18,000 policies with an average size of £300,000.

The deal creates an enlarged group with £240bn of legacy assets.

Wells told IA that the deal is a “transformational transaction for Phoenix and means that Phoenix will become the leading closed life consolidator in Europe with over 10 million policyholders”.

The departure of Standard Life Aberdeen from the offshore bond market opens it up to the remaining players, who are already looking to seize on the opportunity.

The Standard Life offshore bond, however, will continue to be available through Phoenix, a Standard Life spokesperson confirmed to IA.

Offshore stake

Pinning down the exact number and distribution of offshore bonds is challenging, with few providers offering concrete details.

However, figures from the Association of British Insurer in August 2017 show that Canada Life International’s market share increased to 28% in 1Q17, up from 25% in 4Q16.

In August, CLI reported that sales of offshore bonds rose 60% in 1H17, with new business through the Isle of Man and Dublin hitting £566m.

Without further details, it is not possible to speculate how much of the offshore bond market Phoenix Life has bought.

Offshore opportunities

The loss of Standard Life Aberdeen from the market will likely have a significant impact on the companies still offering offshore bonds.

Mike Foy, chief executive of Utmost Wealth Solutions, commented on LinkedIn: “We avoid the constraint of ‘our product, on our platform, in our funds’ like some providers and offer our advisers freedom of choice over investment platform and investment content. Try us, you might like us!”

Utmost was also acquired by a consolidator, Life Company Consolidation Group (LCCG), but has remained open book.

The summer of 2017 seemed to be a renaissance for offshore bonds, with Utmost, Old Mutual International, and Standard Life launching or expanding products.

The true impact of the withdrawal of one of the big market players, however, is a story for another day.

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