Phoenix Hopes To Spin Off Phoenix Investment Partners

Phoenix Chairman Dona Young says Phoenix is turning the asset management unit into a stand-alone company partly because 5 years of efforts to rebuild the business have given Phoenix more options.

“Separation will increase clarity on valuation for the respective businesses and serve the best long-term interests of both companies,” Young says in a statement about the spin-off proposal.

After the spin-off, Phoenix would be a “pure play” life and annuity company focused on serving affluent and high-net-worth clients, Young says.

Young notes in the statement that Phoenix does have access to closed-block capital that “can be redeployed into higher return opportunities.”

Oliver Press put out a statement welcoming the announcement of the proposed asset management unit spin-off.

“We are gratified that the views of leading shareholders have finally convinced the Phoenix board to pursue the first step in our value recovery plan,” Oliver Press says in a letter to Phoenix shareholders. “We are convinced that with the unsuccessful diversion into asset management now out of the way, the opportunity is at hand to correct the core issues that have resulted in the declining ratings and low [return on equity] of this company — inefficient capital allocation in the closed book, and excessive cost and overhead structure.”

The proposed spin-off would make the Phoenix insurance and asset management operations “cleaner acquisition targets,” Andrew Kligerman, a securities analyst at UBS Investment Research, New York, writes in a comment on the spin-off announcement.