Standard Life Aberdeen has signed an agreement to sell its insurance business to Phoenix Group in a cash and stock deal valued at approximately £3.24bn.

As part of the deal, Standard Life will also receive a 20% stake in Phoenix.

The deal involves sale of Standard Life Assurance, the UK Mature Retail and Spread/risk books and the Europe, UK Retail and Workplace businesses.

However, Standard Life Aberdeen will retain ownership of its UK retail platforms and financial advice business.

Standard Life Aberdeen co-CEOs Martin Gilbert and Keith Skeoch said: “Today’s announcement represents a logical next step in Standard Life Aberdeen’s journey to build a world-class investment company positioning us strongly for the future and enabling us to meet the evolving needs of our customers and clients.

“We have a diverse range of modern investment capabilities with global distribution and our leading UK retail platforms are growth engines generating significant net inflows for our asset management business.

“The enhancement of our strategic partnership with Phoenix Group is evidence of our market-leading insurance asset management capabilities. It is also a great opportunity for wider collaboration as the asset manager of choice for Phoenix Group who see further significant consolidation opportunities.”

Last week, Lloyds Banking Group and its subsidiary Scottish Widows decided to terminate a £109bn asset management contract with Standard Life Aberdeen.

Aberdeen’s merger with Standard Life in August 2017 created competition issues, they said.