Phoenix Group posts record cash generation following strong showings by ReAssure and Standard Life
- Phoenix Group announced an increase to its organic dividend for the first time
- The company has set a target to generate £4bn in cash between 2022 and 2024
- Standard Life was bought in 2018 by Phoenix Group from investment firm Abrdn
Phoenix Group has hailed its best financial year ever and upped its dividend payout thanks to solid performances by its recently acquired insurance brands.
The blue-chip listed insurer achieved its highest ever bulk purchase annuity (BPA) premiums of £5.6billion and generated a record £1.7billion in cash in 2021, beating its target range of £1.5billion to £1.6billion.
Around £400million of this cash generation was attributed to cost savings arising from the integration of the Standard Life and ReAssure insurance brands.
Records set: Blue-chip listed Phoenix Group achieved its highest ever bulk purchase annuity (BPA) premiums of £5.6billion and generated a record £1.7billion in cash in 2021
Another £1.2billion derived from new business, which jumped 55 per cent from the previous year, with the overwhelming majority coming from its retirement solutions division.
But its workplace arm and other asset-based businesses also contributed a significant amount due to the company winning 41 small schemes during the year.
Following the impressive results, Phoenix Group has announced an increase to its organic dividend for the first time of 3 per cent as part of a recommended full-year dividend of 24.8p per share.
It hopes to generate up to £1.4billion in cash this year, £4billion in total between 2022 and 2024, and continue to ‘prove the wedge’ by making more cash from new business rather than its ‘heritage’ assets.
Chief executive Andy Briggs said: ‘It has been an outstanding year for Phoenix, with a record set of financial results and significant strategic progress made as we fully embraced our purpose.
‘2021 marked a pivotal moment for Phoenix, with £1.2billion of new business from our Open business more than offsetting the run-off of our Heritage business for the first time.
Acquisitions: Phoenix purchased Standard Life from Edinburgh-based investment company Abrdn for £3.2billion in 2018 and ReAssure from Swiss Re in 2020
‘This demonstrates that Phoenix is a growing, sustainable business, and enabled the Board to recommend our first-ever organic dividend increase of 3 per cent.’
Phoenix purchased Standard Life from Edinburgh-based investment company Abrdn for £3.2billion in 2018 before gaining the rights to the Standard Life brand name in May last year, while it bought ReAssure from Swiss Re in 2020.
Steve Clayton, a Hargreaves Lansdown fund manager, said: ‘This is a pivotal moment for Phoenix. Ever since the Standard Life acquisition, the group has been talking about ‘proving the wedge.’
‘The revelation that new business is now more than offsetting the natural decline of the acquired legacy books upon which the group is built shows that the group is now driving its own destiny organically.
‘The dividend increase announced today leaves the stock trading on a very attractive yield of 7.8 per cent. Phoenix’s challenge is now to prove that they can indeed maintain their new business capabilities and support the growth of their dividend into the future.’
Phoenix Group shares were up 1.3 per cent to 634.2p during the mid-afternoon on Monday. However, their value has declined more than 14 per cent in the last 12 months.
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