Phoenix considers return to M&A activity after debt deal

PHOENIX Group is eyeing a return to M&A activity in the closed-book life insurance industry, it emerged yesterday.

Clive Bannister, chief executive of the FTSE 250 company, told City A.M. his company would consider a bid if suitable assets came up for sale because he does not want the company “to go into Edwardian decline”.

However, he insisted that he was not interested in trophy assets and would prioritise cash returns to shareholders.

Bannister added that he was looking over the medium term because consolidation in the industry is “a bit like elephants in gestation – it takes a long time to come through.”

The closed-book business involves buying up life insurance companies that no longer write new policies but have liabilities stretching into the future. They are then combined into a more profitable whole by sharing back-office functions.

Customers continue to pay premiums towards ongoing policies, providing a predictable source of income to the new owners.

Phoenix was previously known as Pearl and has suffered from a heavy debt burden following its £5bn purchase of Resolution in 2008.

In January it agreed a deal reducing its debt to £1.9bn and lifting dividend restrictions.