Sept 16 (Askume) – British insurer Phoenix Group (PHNX.L) said on Monday it had put off the sale of its SunLife business, citing regulatory scrutiny over its so-called pure protection insurance market, sending its shares tumbling.
Phoenix’s pure protection products are designed to help policyholders manage their finances if they are unable to meet their financial obligations. It distributes these products under the SunLife brand and earns commissions.
The UK financial regulator launched a market study into the sale of pure protection insurance products in August because it had concerns that the design of some commission structures could lead to undesirable consequences for policyholders.
“The uncertainty around commissions is a concern for potential buyers,” Chief Executive Andy Briggs told Askume.
Briggs said selling the SunLife brand would separate the manufacturing and distribution of products, raising concerns about lower commissions SunLife would receive.
Shares fell 2.8% in early trade as the SunLife news hit Phoenix’s first-half profit and cash totals, which exceeded market expectations thanks to growth in its pensions and savings business.
Phoenix reported total cash generation of 950 million pounds ($1.25 billion) in the six months to June 30, higher than consensus estimates of about 739 million pounds compiled by the company.
The company, which specialises in buying and managing closed life insurance business books for new clients, said it was confident it could deliver total cash in 2024 of more than £1.5 billion, up from its previous target range of £1.4 billion.
The insurer’s half-year adjusted operating profit rose 15% to 360 million pounds, although analysts had expected revenue of around 348 million pounds.
Phoenix, which is expanding into the wholesale annuity market, said it wrote 1.7 billion pounds of annuity premiums in the first half, down by around 47% on the previous year.
Still, Briggs said he is optimistic about wholesale annuity deals and new players entering the market.
Wholesale annuities, which have slowed this year after hitting record levels last year, are a type of insurance in which a company’s pension plan transfers liabilities to an insurance company.
($1 = 0.7603 British pounds)
