Phoenix pipeline strong as it profits from insurers shunning retirement books

Oliver Gill
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Cash generation at Phoenix beat its own very high expectations, the firm said (Source: Getty)

The boss of back book insurer Phoenix says the cash-rich firm is ready to take advantage of a growing trend for insurance firms to turn themselves into asset managers.

Chief executive Clive Bannister made the comments after unveiling half-year cash coffers have swelled at Phoenix. The firm is on target to generate over £1bn between 2017 and 2018.

Regulatory surpluses swelled and group operating profit doubled to £215m in the first six months of the year.

"Many insurers are attracted to fee-based incomes of the likes of a Hargreaves Lansdown or St James's Place," said Bannister.

Standard Life's recent tie-up with Aberdeen was seen by some as a further step distancing the Edinburgh insurer from some its insurance offerings.

Meanwhile, Prudential is on the hunt for bidders to offload its £10bn annuity book while it combines fund management arm M&G with its European insurance operations.

Read more: The City pensions boss running around for retirees


Such moves represent a huge opportunity to the likes of Phoenix, which is more than happy to take capital-intensive operations off the hands of insurers and other companies alike.

Last year, Phoenix paid £375m for Axa's Sun Life and Embassy; and paid almost £1bn to buy Abbey Life from Deutsche Bank.

Phoenix said both investments were already paying dividends. The Axa acquisition has generated £282m of cash, well ahead of what Bannister said was a tough target of £250m. It expects to have generated synergies of between £12m-£15m, more than the £10m originally pencilled in. Cost synergies from Abbey Life are in line with expectations.

And Bannister is convinced the deals will keep coming. He said:

We are going to put that money [cash generated] to work... We believe there will be more deals.

Shares in Phoenix rose almost one per cent in trading.

Read more: Aberdeen shares suspended as Standard Life merger finalised

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