Canada’s Sun Life Financial has signed an agreement to sell its UK business, SLF of Canada UK, to Phoenix Group Holdings for £248m in cash.

This transaction is expected to close during the first half of 2023, subject to regulatory approvals.

Under the agreement, Sun Life will retain its economic interest in UK’s payout annuities business.

Sun Life UK manages life and pension policies and annuity blocks for UK Clients. Since 2001, the firm has been operating as a run-off business in the life and pension policies segment.

This transaction is expected to provide Sun Life’s asset management businesses with further growth opportunities.

As part of the sale, Sun Life will enter into a long-term partnership with Phoenix Group as a strategic asset management partner.

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Sun Life’s asset management companies, MFS and SLC Management, will continue to manage approximately C$9bn of Sun Life UK’s general account upon the close of the sale.

Sun Life president and CEO Kevin Strain said: “A great deal of consideration was taken to find the right buyer and partner for our UK business.

“Phoenix Group is a purpose-led company with similar values to Sun Life and a strong focus on delivering outcomes for their customers. We’re also pleased about our asset management partnership, which will bring the strength of MFS and SLC Management to Phoenix Group customers.”

London-headquartered Phoenix Group is a long-term savings and retirement business with more than 13 million customers and £310bn of assets under administration.

The deal comes as Phoenix Group plans to invest approximately $25bn in North American public and private fixed income and alternative investments over the next five years.

MFS and SLC Management will become material partners to Phoenix Group in achieving this goal.

Phoenix Group CEO Andy Briggs said: “This acquisition is highly attractive for Phoenix Group.  As the UK’s largest long-term savings and retirement business with a strong track record of UK closed book integrations, we look forward to offering a safe home for Sun Life UK Clients over the long term and enabling them to benefit from our broad range of Standard Life products in our Open division.”

Last year, Sun Life’s US arm struck a deal to acquire DentaQuest for $2.47bn.