9th Mar 2020 08:30
(Alliance News) - Phoenix Group Holdings PLC on Monday reported a sharp rise in 2019 profit, with its Standard Life Assurance acquisition delivering synergy targets and its ReAssure Group acquisition on track for completion.
For 2019, the life insurer and pensions consolidator recorded GBP351 million in pretax profit, 36% higher than the GBP259 million seen in 2018.
Operating profit - a key financial indicator for the group - came in ahead of consensus, rising 14% year-on-year to GBP810 million from GBP708 million. Market consensus had predicted GBP734 million.
Gross written premiums topped GBP4.04 billion, sharply higher than the GBP2.65 billion reported in 2018. Net premiums written were up 61% year-on-year to GBP3.48 billion from GBP2.16 billion.
Phoenix's Solvency II surplus ended 2019 at GBP3.1 billion, slightly ahead of consensus but slightly behind from the same point the year prior.
As a result, the firm's coverage ratio slipped to 161% from 167%.
Across the firm's three units - UK Heritage, UK Open and Europe - Phoenix recorded GBP475 million in new business, allowing the pensions consolidator to generate GBP707 million in cash in 2019, ahead of its target range of between GBP600 million and GBP700 million.
For 2020, Phoenix is guiding for cash generation of between GBP800 million and GBP900 million, and is targetting GBP3.9 billion for the five-year period between 2019 and 2023.
The firm ended 2019 with GBP248.3 billion in assets under management, up 9.7% on the GBP226.3 billion reported at the end of 2018, with the UK Open unit contributing gross inflows of GBP9.8 billion, driven by Workplace and Wrap product inflows.
Outgoing Chief Executive Clive Bannister said: "Phoenix has had a strong year - we beat our cash generation target, made significant progress in the transition of Standard Life Assurance and announced the GBP3.2 billion acquisition of ReAssure. With circa GBP500 million of incremental cash generation delivered from new business written in the year, we have demonstrated that our Open businesses and BPA bring sustainability to Phoenix, offsetting the run-off of our in-force business.
"I am extremely proud of the evolution of Phoenix during my time as CEO and I would like to thank all of the colleagues I have worked with throughout to deliver benefits to both our customers and shareholders."
Bannister will retire on Tuesday, after serving nine years as CEO.
Phoenix has already lined up replacement, Andy Briggs, who most recently served as chief executive officer of UK Insurance at London-headquartered Aviva PLC.
On Monday, Phoenix also announced its Group Finance Director and Group Director Scotland Jim McConville is stepping down on May 15. His deputy, Rakesh Thakrar, will be taking over. Thakrar has served as McConville's deputy since 2014.
McConville's Scotland responsibilities will be handed over to Susan McInnes, CEO Standard Life Assurance and Group Director, Open business.
Chair Nicholas Lyons added: "I am delighted to welcome Andy Briggs to the group as Clive's successor as CEO and to announce today that Rakesh Thakrar will succeed Jim McConville as Group Finance Director when he retires in May. Andy and Rakesh inherit a group that is delivering on its financial and operational targets and is strategically positioned to capture future opportunities in the life and pensions industry.
"The ReAssure transaction will deliver GBP7 billion of incremental cash generation and, alongside supporting the dividend, will give us an enhanced platform to pursue further growth opportunities. I would like to reiterate my thanks to both Clive and Jim for everything they have achieved at Phoenix, during which time they have transformed and grown the business to become the largest life and pensions consolidator in Europe."
In early December, Phoenix agreed to acquire Swiss Re Group's UK business ReAssure Group for GBP3.25 billion.
Phoenix confirmed the deal is on track to be completed by mid-2020.
The company also confirmed its Standard Life Assurance deal is on track to deliver its GBP1.2 billion total synergy target.
Shares in Phoenix Group were down 5.7% in London on Monday morning at 645.20 pence. The FTSE 100 was down 8.4% in early trading on fears over the spread of the coronavirus and diving oil prices.
By Paul McGowan; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Phoenix Group Holdings