Phoenix-Standard Life in £4bn bulk annuity deals

Phoenix Group offices in Lothian Road, Edinburgh

Closed life and pension fund consolidator Phoenix Group Holdings plc, owner of the “old” Standard Life Assurance, announced that it completed four Bulk Purchase Annuity (BPA) transactions during the second half of 2021 covering £4 billion of premiums.

This equates to total BPA premiums of £5.5 billion contracted for the year (FY20: £2.5 billion),” said Phoenix in a stock exchange statement.

Phoenix Group announced a major investment in the iconic Standard Life brand last year after buying the brand from Edinburgh-based asset management giant Abrdn.

Abrdn retains a roughly 15% stake in Phoenix Group and the two firms have an asset management partnership that has been extended to at least 2031.

On the annuity transactions, Phoenix added: “The capital strain for all BPA transactions written in 2021 is currently expected to be c.6.5% (FY20: 9%) and the cash multiple c.2.6x (FY20: 2.3x), with the second half transaction economics reflective of the current low credit spread environment.

This strong performance highlights Phoenix’s success in driving organic growth, and reflects the investment the group is making into both its Open business and internal asset management function.

“Phoenix is building a market-leading BPA team and asset sourcing capability, which supports a comprehensive BPA solutions offering that is now distributed to the market under the Standard Life brand.

As a result, Phoenix Group now expects to deliver in excess of £1 billion of total new business long-term cash generation for 2021, which will more than offset the run-off of the in-force business (currently c.£0.8 billion of annual cash generation).”

Phoenix Group CEO Andy Briggs said: “I am delighted with the progress we are making in building a market-leading Bulk Purchase Annuity business which contracted £5.5 billion of premiums in 2021, more than double our 2020 premiums.

As a result, we have now delivered on our ambition for our new business cash generation to more than offset the run-off of our Heritage business and have ‘proven the wedge’.

This reflects the investment we are making into our growing Open business and the Standard Life brand, which supports us in delivering Phoenix’s purpose of helping people secure a life of possibilities.”