With £2.5bn of debt, three quarters of it due within the next five years, it was thought to be an unlikely contender for a takeover.
The level of interest in Phoenix could be as much a reflection of current tough markets, which have thrown into sharp relief its ability to generate steady cash despite the turbulence, as its own merits.
Its performance lags that of its peers in the closed-end life sector – a specialist branch of life insurance where a company buys up bundles of life insurance policies and consolidates them to create cost synergies. It underperformed its would-be buyer Resolution by 15 per cent since February this year, according to Jefferies analysts.
They also pointed out that Phoenix has debt leverage of 48 per cent and restrictions on paying dividends that its lenders have imposed. It needs external capital and debt restructuring in favour of far longer-term repayment to match the long-term nature of its cash generation.
But Phoenix is also cheap, and its sluggish performance makes it ripe for opportunistic suitors with the ability to tear up its management and debt structures and start again. CVC, Resolution, or Swiss Re’s life vehicle Admin Re could all do this, in different ways.
Phoenix represents a steady and predictable cash flow – it had generated £603m by 8 November this year. It has been tidied up and its assets consolidated by its current management – now may be its time to fly.