Phoenix expects more firms to offload DB pensions

Phoenix Group's offices in Lothian Road, Edinburgh

Closed life and pension fund consolidator Phoenix Group Holdings plc, owner of the “old” Edinburgh-based Standard Life Assurance, told Reuters on Thursday it expects more companies to offload defined benefit pension obligations.

Phoenix has benefited from an increase in such bulk annuity deals.

Standard Life Aberdeen has a 17.9% stake in Phoenix Group.

“I am yet to meet the finance director of any type of business that is pleased to have a large pension scheme attached to the side,” Phoenix chief executive Andy Briggs told Reuters.

“As we go through this awful pandemic, the desire of finance directors to offload these pension schemes and focus on their core business is greater than ever.”

Phoenix Group made a vow on Thursday to become net zero carbon by 2025 and for its investment portfolio to do so by 2050.

The vow came as Phoenix published a trading update “with 2020 cash generation ahead of target.”

The group reported £1.713 billion of cash generation in 2020 (2019: £707 million) “exceeding the upper end of the 2020 cash generation target range of £1.5 billion – £1.6 billion.”

Phoenix reported £472 million incremental long-term cash generation from new business in the nine months ended 30 September 2020 (FY 2019: £483 million).

Briggs said: “Phoenix has continued to perform strongly with full year cash generation of £1.7 billion now complete, exceeding the top end of our target range.

“Our balance sheet remains resilient, underpinned by our high-quality portfolio of assets and unique approach to risk management, and our shareholder capital coverage ratio of 159% remains robust.  

“As we execute successfully against our strategy, I am confident that we will continue to deliver cash, resilience and growth, and therefore sustainable cash generation for investors.

“We also recognise that Phoenix has an important role to play in society and today we are announcing our commitment for our operations to become net-zero carbon by 2025 and for our investment portfolio to do so by 2050.

“Sustainability is at the core of our purpose and reducing our environmental impact will be integral to delivering long-term value for all of our stakeholders.”

Standard Life Aberdeen sold Standard Life Assurance Limited to Phoenix Group Holdings for £3.28 billion in August 2018.

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