Phoenix Group has upgraded its cash generation target after finalising a merger of two insurance brands.
Britain’s largest long-term retirement savings firm has just consolidated the Standard Life and Phoenix Life Assurance divisions into a single business called Phoenix Life.
The tie-up involves combining four separate legal entities, which between them have 8 million policies and around £200billion of assets.
Thumbs up: Andy Biggs, chief executive of Phoenix Group (pictured), said the merger upholds the firm’s ‘position as the UK’s leader at delivering cost and capital synergies’
Following the deal, it now expects to generate approximately £1.8billion in cash this year, compared to a previous goal of between £1.3billion and £1.4billion.
Meanwhile, over the 2023 to 2025 period, it has upped the cash generation target from £4.1billion to £4.5billion.
The London-based company also anticipates having ‘significant’ surplus cash levels within its holding business by the end of the year.
Andy Biggs, chief executive of Phoenix Group, said the merger upholds the firm’s ‘position as the UK’s leader at delivering cost and capital synergies and generating value for customers and shareholders.’
Phoenix Group shares were 5.9 per cent higher at 491.4p on Monday afternoon, making them the top riser on the FTSE 100 Index, although they have declined by about a fifth since the year started.
Standard Life Assurance was one of the UK’s oldest insurers when it was acquired for £3.3billion by Phoenix five years ago.
Phoenix’s takeover formed part of its move towards buying up ‘closed books’ – insurance policies that are no longer sold but still have customers paying premiums.
At the same time, Standard Life Aberdeen (SLA) – subsequently renamed Abrdn – wanted to transition away from insurance in order to concentrate on the asset management sector.
In 2021, Phoenix bought the Standard Life brand name for an undisclosed sum in a deal that also saw it sell some savings products back to SLA.
The company has also been expanding its acquisitions of bulk purchase annuities as interest rate hikes have reduced the funding gaps of many defined-benefit pension schemes.
For the first half of 2023, Phoenix reported £3.2billion of BPA premiums, double the amount in the equivalent period last year.
Over that same period, it saw new business long-term cash generation more than double from £430million to £885million and operating profits grow by 5 per cent to £266million.
