London insurer Phoenix Group today said it is on track to generate £1.3bn- £1.4bn worth of cash this year due in part to it avoiding the UK’s LDI crisis.
The insurer said its “comprehensive” hedging strategy had insulated it from the current downturn as Phoenix noted it does not participate in the Liability Driven Investment (LDI) market or utilize the strategy in its pension funds.
The LDI crisis that followed the launch of Liz Truss’ and Kwasi Kwarteng’s “mini-budget” saw pensions schemes forced to sell off billions worth of assets as a result of sharp drops in bonds and financial markets.
Phoenix said it also expects to have delivered £1.2bn worth of new business in 2022, on the back of a series of pensions buyout deals.
The deals saw Phoenix Group’s Standard Life business strike seven bulk purchase annuity (BPA) deals worth £3.2bn in 2022.
The update comes amid forecasts the UK could see £200bn worth of BPA deals over the next three years, as higher gilt yields and volatile markets boost the buyout deals attractiveness.
Phoenix Group chief executive Andy Briggs said “it is shaping up to be another outstanding year” as he claimed the insurer’s balance sheet remains “resilient as ever” despite the “economic conditions” in the second half of 2022.
Looking forwards, the insurer said it is on track to achieve its newly set target of £1.5bn worth of new business by 2025, which Phoenix chief Briggs said will “support future dividend growth”.
Shares in Phoenix Group are up 2.56 per cent.