Phoenix breaks takeovers duck with £375 million Axa swoop

Phoenix boss Clive Bannister has set out his stall to conquer the life insurance sector after snapping up Axa’s UK life business for £375 million.

Phoenix will buy Axa’s over-fifties business Sunlife and Axa Wealth, in its first takeover since listing on the stock market in 2008.

Bannister said the takeover was a “stepping stone” to more deals as he tries to bulk out its book of old insurance policies.

“We see continued M&A in front of us. We are at the forefront to lead the consolidation of the UK life industry,” he added.

Phoenix buys books of old insurance policies sold in Britain over the past decades and makes money by managing them until they run out. But it needs to keep buying books to make money.

The group is in the running to take over Abbey Life from Deutsche Bank.

In September, it missed out on a £1.6 billion deal to buy Guardian Financial Services, beaten to the punch by Swiss Re.

The Axa deal is expected to close in September and will give Phoenix another 910,000 insurance policies, taking the figure north of five million.

It will also boost assets under management by a quarter to nearly £60 billion.

“This breaks Phoenix’s duck,” Panmure Gordon analyst Barrie Cornes said. “It’s an important deal and on the face of it looks good.”

Sunlife, which uses Sir Michael Parkinson in adverts, will remain open to new business but Phoenix plans to close Axa Wealth to new customers.

For Axa it marks its exit from the UK life insurance sector as part of a radical overhaul of the group. The French firm has installed a new management committee to shake up the sleepy giant.

The rejig leads to a big promotion for its general insurance boss Amanda Blanc, who is made overall head of the UK. Current UK boss Paul Evans has taken on a bigger global role.

Phoenix will fund the purchase by raising £190 million of fresh cash from investors and borrow a further £185 million in short-term debt.