Phoenix Group forecasts first positive net cash flows in 2024
- The company revealed that it is “on track” to achieve positive net cash flow by 2024
- The savings giant reported a 72 per cent rise in net funding to £3.1bn in the first half.
Phoenix Group is on track to generate positive net cash flows for the first time in its history in 2024, after new business surged in the first half.
The insurer reported a 72 per cent rise in net new business funding flows to £3.1bn in the six months to June, up from £1.8bn in the same period from last year.
The company’s long-term incremental cash generation from new businesses increased 106 per cent year-on-year to £885 million.
The savings giant reported a 72 per cent rise in net new business fund flows to £3.1 billion in the six months to June, up from £1.8 billion.
Chief executive Andy Briggs told Reuters news agency the outlook for the UK retirement market is positive despite difficult conditions in other sectors.
The market for workplace pension plans has grown rapidly due to an aging population and the shift from defined benefit pension plans to defined contribution pension plans, and also due to automatic enrollment.
Briggs said he expects the bulk annuity market – which insures company-defined benefits, or final salary and pension plans – to grow to a record more than £40bn this year as higher interest rates make it more affordable. The market has valued around £30 billion in recent years.
The FTSE 100 company, through its Standard Life brand, has been looking to expand into mass annuities as demand for corporate pension insurance arrangements grows against a backdrop of rising interest rates that have pushed up yields.
“There are a number of very large schemes… over £10bn that are interacting with the market to consider buying part or all of the scheme, and that is part of the factor why the market is so strong “Briggs said.
“We’re not likely to write those super-large cases…we’ll be very happy with the medium-sized cases,” he added.
The group’s losses soared by £1bn last year following a fall in the value of assets backing the company’s pension plans.
The company reported a loss of £1.76 billion for 2022, down from £709 million a year earlier, as rising yields, inflation and widening credit spreads hit the performance of its investments.
Losses were also affected by an accounting discrepancy for retirement plans that were the subject of acquisitions.
The insurer expects 2023 cash generation to be at the top end of its £1.3bn to £1.4bn forecast range after long-term cash for new business more than doubled in the first semester.
The company’s total cash generation for the six months ended June 30 amounted to £898 million, above the average analyst forecast of £733 million.
Phoenix Group Shares rose 1 percent to 543.40 pence in afternoon trading on Monday
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