Phoenix Group Holdings Expects to be in upper end of target

FTSE News FTSE 100

Phoenix Group Holdings (LON: PHNX), Europe’s largest life and pensions consolidator1, announced today strong results for the six months ended 30 June 2019.

Financial highlights

· Strong cash generation2 of £287 million in H1 2019 (H1 2018: £349 million). The Group expects to be towards the upper end of its cash generation target range of £600 million – £700 million3 for full year 2019.

· Solvency II surplus of £3.0 billion4 as at 30 June 2019 (£3.2 billion5 as at 31 December 2018).

· Shareholder Capital Coverage Ratio of 160%4,6 as at 30 June 2019 (167%5,6 as at 31 December 2018).

· Group operating profit of £325 million in H1 2019 (H1 2018: £216 million).

· Interim dividend of 23.4p per share, a 3.5%7 increase on the 2018 interim dividend.

· New business contribution8 of £116 million from UK Open and Europe (H1 2018 pro forma9: £100 million).

· £250 million of incremental long-term cash generation from H1 2019 new business (H1 2018 pro forma9:
£303 million), enhancing the sustainability of our dividend.

· Assets under administration of £245 billion as at 30 June 2019 (£226 billion as at 31 December 2018).

· Leverage ratio10 of 23% as at 30 June 2019 (22% as at 31 December 2018) remains under target range
of 25% – 30% and new £1.25 billion revolving credit facility in place.

Transition programme

· Remains on track to deliver the £1.2 billion total synergy target for the Standard Life Assurance businesses transition.

· £115 million of capital synergies delivered in H1 2019 taking cumulative capital synergies to £615 million against a target of £720 million (85% of total).

· £21 million per annum cost savings delivered to date against a target of £75 million per annum (28% of total).

· £17 million one-off cost synergies delivered to date against a target of £30 million (57% of total).

Delivering on strategic priorities

· Brexit preparations complete with £250 million of capital injected into an Irish subsidiary prior to a Part VII transfer of our European branch businesses completed in March 2019.

· £3.5 billion gross new business inflows for UK Open and Europe businesses in H1 2019 (H1 2018 pro forma9: £4.6 billion).

· £0.5 billion of bulk purchase annuity liabilities contracted in the period (H1 2018: £0.5 billion) and a further
£0.2 billion contracted in August.

· £1.1 billion buy-in from the PGL Pension Scheme successfully completed.

· £0.5 billion of illiquid assets sourced, taking allocation of illiquid assets backing annuity liabilities to 22%.

· Regulatory approval for two master trust schemes, looking after over 240,000 customers and £5 billion assets under administration, enabling Phoenix to access this rapidly growing market.

Commenting on the results, Phoenix Group Holdings CEO, Clive Bannister said:

“I am delighted to announce our H1 2019 results today which demonstrate Phoenix’s commitment to meeting the targets it has set. Having delivered £287 million of cash generation year to date, Phoenix expects to be towards the upper end of the £600 – £700 million 2019 target range. We also continue to make good progress across all phases of our transition programme and remain on track to meet the £1.2 billion total synergy target announced in March.

Whilst net inflows into our Open businesses are down overall year on year reflecting market uncertainty from Brexit and a tail off in DB to DC transfers, contributions to our auto-enrolment workplace schemes have increased, and new annuity business in our Heritage segment has been strong. The £250 million of incremental long-term cash generation from this new business in H1 2019 brings sustainability to Phoenix and its dividend.

The life insurance sector continues to consolidate and the M&A pipeline remains strong. We are ready to do deals that meet our acquisition criteria and I am confident that Phoenix will continue to be the market leader in this consolidation process.”

Presentation

There will be a presentation for analysts and investors today at 8.30am (BST) at J.P. Morgan, 1 John Carpenter Street, London, EC4Y 0JP

A link to a live webcast of the presentation, with the facility to raise questions, and a copy of the presentation will be available at www.thephoenixgroup.com

To register for the conference call please go to:

https://www.webcastphoenixgroup.com/2019-half-year-results/vip_connect

To register for the live webcast please go to:

https://www.webcastphoenixgroup.com/2019-half-year-results

A replay of the presentation will also be available through the website.

Dividend

The interim dividend of 23.4p per share is expected to be paid on 30 September 2019.

The ordinary shares will be quoted ex-dividend on the London Stock Exchange as of 15 August 2019. The record date for eligibility for payment will be 16 August 2019.