TIDMPHNX
RNS Number : 6736I
Phoenix Group Holdings PLC
06 December 2022
LEI: 2138001P49OLAEU33T68
Phoenix Group delivers another year of strong organic growth in
2022 and sets a new 2025 organic growth target at its Capital
Markets Event
* Phoenix Group expects to deliver c.GBP1.2 billion of
incremental new business long-term cash generation in
2022 through organic growth
* Phoenix Group also remains on track to deliver 2022
cash generation at the top end of its target range of
GBP1.3 to GBP1.4 billion
* Today's Capital Markets Event will outline the strong
progress Phoenix Group has made in building its
organic growth capabilities and will provide a
deep-dive into its strategy to deliver future organic
growth
* Phoenix Group is setting its first incremental new
business long-term cash generation target of c.GBP1.5
billion by 2025, which is a c.25% increase on the
strong performance in 2022
Commenting on the trading update and Capital Markets Event,
Phoenix Group CEO, Andy Briggs said:
"It is shaping up to be another outstanding year for Phoenix
Group, as we expect to deliver around GBP1.2 billion of new
business in 2022. This once again demonstrates that we are a
growing, sustainable business.
I am also pleased that, despite the change in economic
conditions seen in the second half of this year, our balance sheet
remains as resilient as ever, thanks to our comprehensive hedging
approach, and we are on track to deliver 2022 cash generation at
the top end of our GBP1.3 to GBP1.4 billion target range.
Alongside optimising our in force business, and M&A, our
organic strategy is to deliver sustainable growth. We will do this
through both meeting more of the evolving needs of our existing
customers on their journey to and through retirement, and by
acquiring new customers, primarily through our trusted Standard
Life brand. We are confident that this will allow us to achieve our
new target of GBP1.5 billion of new business by 2025, which in turn
will support future dividend growth."
2022 was another year of strong organic growth
Phoenix Group Holdings plc ("Phoenix Group" or "the Group")
today announces that it expects to deliver c.GBP1.2 billion of
incremental new business long-term cash generation in 2022,
primarily through its Standard Life branded businesses. This
comprises c.GBP0.9 billion from its Retirement Solutions business
and c.GBP0.3 billion from its capital-light fee-based businesses
(Pensions & Savings, Europe and SunLife). For the second
consecutive year, the Group will therefore more than offset the
run-off of its in-force business (currently c.GBP0.8 billion of
annual cash generation), as it delivers sustainable organic
growth.
Retirement Solutions primarily comprises the Defined Benefit
Solutions business, which completed an additional 7 Bulk Purchase
Annuity (BPA) transactions during the second half of 2022 covering
GBP3.2 billion of premiums. This comprised GBP2.6 billion of
external deals and the final tranche of the Group's Pearl Pension
Scheme. The Group does not expect to complete any further
transactions in 2022.
The Group has therefore contracted GBP4.8 billion of BPA
premiums for the year (FY21: GBP5.6 billion). The capital invested
for 2022 will be slightly less than GBP300 million, with an
improved capital strain of c.6% (FY21: 6.5%) and an improved cash
multiple of c.3x (FY21: 2.6x), which reflects Phoenix Group's
disciplined approach to capital deployment.
Within Pensions & Savings, the Workplace business is
expected to deliver a strong performance in 2022, with positive net
fund flows of c.GBP2.0 billion (FY21: GBP0.2 billion) and a c.40%
increase in incremental new business long-term cash generation to
c.GBP200 million (FY21: GBP139 million). This is underpinned by the
strong momentum that is building in this business, having won 68
new workplace schemes in 2022, with aggregate assets of c.GBP2
billion on behalf of c.47,000 members, which will transfer in
future years. The Group is now winning in all parts of the market
across small, medium and large schemes. These wins, together with a
strong pipeline of future opportunities, firmly re-establishes
Standard Life as a major player in the Workplace market.
In line with the Group's usual approach, the Board will make its
annual assessment of the dividend alongside the Full Year 2022
results in March 2023. As previously stated, any organic increase
would be in addition to the proposed 2.5% inorganic dividend
increase that was already announced with the acquisition of Sun
Life of Canada UK.
Phoenix remains resilient and is on track to deliver at the top
end of its 2022 cash generation target range
Phoenix Group operates a comprehensive hedging approach whereby
it hedges the majority of the market risks it is exposed to. As a
result, the change in economic conditions seen during the second
half of 2022 is expected to have only a limited impact on the
Group's Solvency II capital position, broadly in line with the
Group's published sensitivities. In addition, the Group continues
to benefit from surplus liquidity in line with its conservative
liquidity framework, which enabled it to meet all collateral calls
on its hedging instruments during the unprecedented market
volatility in September/October, and was not at any point a forced
seller of assets. Phoenix Group does not participate in the
Liability Driven Investment (LDI) market in any way and does not
utilise the strategy for any of its own pension funds.
Phoenix Group's ongoing resilience ensures it remains on track
to deliver 2022 cash generation at the top end of its target range
of GBP1.3 to GBP1.4 billion.
Capital Markets Event - delivering sustainable organic growth,
with a new target for c.GBP1.5 billion of incremental new business
long-term cash generation by 2025
Phoenix Group is today hosting a Capital Markets Event for
investors and analysts to provide a deep-dive into the Group's
organic growth opportunities, which complement its market leading
capabilities of optimising in-force business and M&A.
Phoenix Group is helping people secure a life of possibilities
through its clear and differentiated strategy, as it supports its
customers' on their journey to and through retirement. The scale of
the Group's in-force business brings three key competitive
advantages of capital efficiency, customer access and cost
efficiency. The Group will leverage these to grow its in-force cash
generation over time, both organically and through M&A.
Phoenix Group will therefore today outline the significant
organic growth opportunities across the Standard Life branded
Retirement Solutions and Pensions and Savings businesses, through
both meeting more of the evolving needs of its existing customers
and by acquiring new customers. Reflecting the investment made into
building its capabilities, the Group is now confident of growing
its incremental new business long-term cash generation, and has set
a new target of GBP1.5 billion per annum by 2025, which is a 25%
increase on the Group's strong 2022 performance.
This new target i s expected to comprise c.GBP1.0 billion from
Retirement Solutions and c.GBP0.5bn from Pensions & Savings
(inclusive of Europe and SunLife). To deliver this, in Retirement
Solutions the Group will continue investing c.GBP300 million of
capital per annum into BPA and will look to achieve mid-teens IRRs.
While in Pensions and Savings, the Group will grow its net fund
flows, with an ambition for c.GBP5 billion of annual net fund flows
in Workplace and c.GBP2 billion in its Retail businesses, by
2025.
Delivering this new growth target will enable the Group to
generate significant net growth in its long-term free cash from
2025, which can support future dividend growth.
The event will be live-streamed on the Group's website from
10:00 (GMT) with the joining details below.
Enquiries
Investors/analysts:
Claire Hawkins , Director of Corporate Affairs, Phoenix
Group
+44 (0)20 4559 3161
Andrew Downey , Investor Relations Director, Phoenix Group
+44 (0)20 4559 3145
Media:
Douglas Campbell , Teneo
+44 (0)7753 136 628
Shellie Wells , Corporate Communications Director, Phoenix
Group
+44 (0) 20 4559 3031
Presentation details
There will be a live virtual presentation for analysts and
investors today starting at 10:00 (GMT).
A link to the live webcast of the presentation, with the
facility to raise questions, as well as a copy of the presentation
will be available at:
https://www.thephoenixgroup.com/investor-relations/results-reports-and-presentations
You can also register for the live webcast at:
https://phoenixcapitalmarkets2022.virtualhub.events/
A replay of the presentation and transcript will also be
available on our website following the event.
Legal Disclaimers
This announcement in relation to Phoenix Group Holdings plc and
its subsidiaries (the 'Group') contains, and the Group may make
other statements (verbal or otherwise) containing, forward-looking
statements and other financial and/or statistical data about the
Group's current plans, goals, ambitions, targets and expectations
relating to future financial condition, performance, results,
strategy and/or objectives.
Statements containing the words: 'believes', 'intends', 'will',
'may', 'should', 'expects', 'plans', 'aims', 'seeks', 'targets',
'estimates', 'continues' and 'anticipates' or other words of
similar meaning are forward looking. Such forward-looking
statements and other financial and/or statistical data involve risk
and uncertainty because they relate to future events and
circumstances that are beyond the Group's control. For example,
certain insurance risk disclosures are dependent on the Group's
choices about assumptions and models, which by their nature are
estimates. As such, actual future gains and losses could differ
materially from those that the Group has estimated.
Other factors which could cause actual results to differ
materially from those estimated by forward-looking statements
include, but are not limited to: domestic and global economic,
social, environmental and business conditions; asset prices; market
related risks such as fluctuations in interest rates and exchange
rates, the potential for a sustained low-interest rate environment,
and the performance of financial markets generally; the policies
and actions of governmental and/or regulatory authorities,
including, for example, initiatives related to the financial
crisis, the COVID-19 pandemic, climate change and the effect of the
UK's version of the "Solvency II" requirements on the Group's
capital maintenance requirements; the impact of inflation and
deflation; the political, legal, social and economic effects of the
COVID-19 pandemic and the UK's exit from the European Union;
information technology or data security breaches (including the
Group being subject to cyberattacks); the development of standards
and interpretations including evolving practices in ESG and climate
reporting with regard to the interpretation and application of
accounting; the limitation of climate scenario analysis and the
models that analyse them; lack of transparency and comparability of
climate-related forward-looking methodologies; climate change and a
transition to a low-carbon economy (including the risk that the
Group may not achieve its targets); market competition; changes in
assumptions in pricing and reserving for insurance business
(particularly with regard to mortality and morbidity trends, gender
pricing and lapse rates); the timing, impact and other
uncertainties of proposed or future acquisitions, disposals or
combinations within relevant industries; risks associated with
arrangements with third parties; inability of reinsurers to meet
obligations or unavailability of reinsurance coverage; the impact
of changes in capital, solvency or accounting standards, and tax
and other legislation and regulations in the jurisdictions in which
members of the Group operate.
As a result, the Group's actual future financial condition,
performance and results may differ materially from the plans,
goals, ambitions and expectations set out in the forward-looking
statements and other financial and/or statistical data within this
announcement. The Group undertakes no obligation to update any of
the forward-looking statements or data contained within this
announcement or any other forward-looking statements or data it may
make or publish. Nothing in this announcement constitutes, nor
should it be construed as, a profit forecast or estimate.
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END
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