Phoenix Group is discontinuing its sale of SunLife due to “uncertainty” in the protection market.
In its half year 2024 results announcement, released this morning, the group describes SunLife, which provides financial protection products direct to the over 50s market in the UK, as “a valuable asset which contributes to the group’s new business growth”.
It added that “given the current uncertainty in the protection market”, its board has decided to discontinue the sale process and “will focus on enhancing the value it generates within the group”.
In June of this year, Phoenix Group’s board announced its intention to explore a potential sale of the business following a strategic review which concluded that the business was “no longer core to the delivery of its vision of becoming the UK’s leading retirement savings and income business”.
At the time, the board said it had decided to begin a sale process, having received a number of initial expressions of interest from third parties, but added there could be no certainty at that stage a sale would occur.
Phoenix Group did not elaborate further on the uncertainties affecting the protection market.
But last month, the Financial Conduct Authority (FCA) announced it will be conducting a review into the operation of the pure protection market including commission structures including loaded commission and the shrinking insurer market.
The regulator noted that some pure protection products may not provide fair value to customers, and highlighted guaranteed acceptance over-50s insurance.
It found that some guaranteed acceptance over-50s life insurance products appear to have low average payouts in comparison to overall premiums paid and to other products.
“We have seen examples where the total premium paid over an average lifetime far exceeds the payout, typically at least 50% greater,” it said.
“And, while the total premium could be higher if the customer lives longer than average, the payout amount is fixed, widening the gap between premiums paid and payout amount.
“We are particularly concerned that this may not be consistent with providing fair value and in particular, this may be impacting customers in vulnerable circumstances.”
