5th Mar 2019 09:43
LONDON (Alliance News) - Life and pensions consolidator Phoenix Group Holdings on Tuesday reported a sharp rise in profit and gross written premiums in a "very successful" year for the company.
In 2018, Phoenix swung to a pretax profit of GBP259 million from a GBP7 million loss in 2017.
The company's net premiums written more than doubled to GBP2.16 billion from GBP941 million, with gross written premiums doubling to GBP2.65 billion from GBP1.30 billion.
Phoenix total revenue more than doubled to GBP2.55 billion from GBP1.11 billion.
Net income swung to a GBP6.87 billion loss in 2018 from a GBP6.11 billion profit in 2017, due a swing to a net investment income loss of GBP9.60 billion from GBP4.99 billion gain the year before.
However, operating expenses in 2018 were actually booked as a GBP7.27 billion gain for Phoenix, compared to a GBP5.98 billion in cost in 2017. A change in investment contract liabilities led to the unusual positive expense line.
Phoenix proposed a final dividend of 23.4 pence, 3.5% higher than 2017's final dividend, giving the company a total dividend of 46.0p, 1.8% up on the total distributed in 2017.
The company's asset under administration at the end of 2018 stood at GBP226 billion compared to GBP240 billion the year before. The decrease was attributed to "particularly negative" market movements in the fourth quarter. Phoenix said strong net inflows from its UK Open and European segments partially offset the net outflows from its largest segment, UK Heritage.
"2018 was a very successful year for Phoenix in which we exceeded our cash generation targets, further improved our capital resilience and transformed the business through the acquisition of the Standard Life Assurance businesses," said Chief Executive Clive Bannister.
Phoenix completed the reverse takeover of Standard Life Assurance Ltd from Standard Life Aberdeen PLC in August 2018.
Phoenix said it has already recorded GBP500 million of capital synergies on the acquisition, against a total GBP440 million capital synergy target announced for the transaction. As a result, the company is now increasing the target to GBP720 million.
Phoenix has generated a total GBP1.3 billion in cash in the two years since the start of 2017, ahead of its GBP1.0 billion to GBP 1.2 billion target for the period.
Phoenix generated GBP664 million in cash during 2018 and is targeting between GBP600 million to GBP700 million in 2019. The company is guiding its cash generation from 2019 to 2023 to be GBP3.8 billion.
Bannister added: "Phoenix's substantial new business flows across both our Heritage and Open businesses through our strategic partnership with Standard Life Aberdeen bring increased sustainability to our long term cash generation. We are confident about our opportunities to grow in the future both organically and through bulk purchase annuities and acquisitions."
Chair Nicholas Lyons said: "Despite our expectation that market conditions will remain turbulent leading up to and beyond Brexit, we look ahead with optimism as Phoenix's hedging programme brings resilience to the group' solvency position and cash generation. Additionally, the group's capital-light new business capability brings added sustainability to Phoenix's cash generation."
Phoenix ended 2018 with a solvency II surplus of GBP3.2 billion.
Phoenix has completed its preparations for Brexit by creating an Irish domiciled subsidiary.
Shares in Phoenix Group were up 2.2% Tuesday at 722.20 pence each.
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Phoenix Group Holdings