Closed life and pension fund consolidator Phoenix Group Holdings plc reported record cash generation of £1.717 billion for 2021, exceeding its annual target range of £1.5 billion to £1.6 billion.

Phoenix said integration synergies achieved to date from its acquisitions of Standard Life and ReAssure are now in excess of £2.5 billion.

Edinburgh investment giant Abrdn has a strategic partnership with Phoenix and retains a 10.4% shareholding in the group.

“Integration synergies of £824m were delivered in 2021, including £590m realised from the Standard Life acquisition (£1,632m total to date – 134% of target) and £234m from ReAssure (£930m total in just 18 months – 89% of target),” said Phoenix in its 2021 results.

Phoenix Group CEO Andy Briggs said: “It has been an outstanding year for Phoenix, with a record set of financial results and significant strategic progress made as we fully embraced our purpose.

“2021 marked a pivotal moment for Phoenix, with £1.2 billion of new business from our Open business more than offsetting the run-off of our Heritage business for the first time.

“This demonstrates that Phoenix is a growing, sustainable business, and enabled the board to recommend our first ever organic dividend increase of 3%.

“Phoenix has also today announced a new dividend policy which sets out our intention to pay a dividend that is sustainable and grows over time.”

The group said its increased dividend cost of roughly £500 million per annum remains “just as sustainable over the long term with c.£11.8bn of group long-term free cash available to shareholders …”

Steve Clayton, fund manager of the Hargreaves Lansdown Select UK Income Shares fund, which holds a position in Phoenix, said: “This is a pivotal moment for Phoenix. Ever since the Standard Life acquisition the group has been talking about ‘proving the wedge’.

“The revelation that new business is now more than offsetting the natural decline of the acquired legacy books upon which the group is built shows that the group is now driving its own destiny organically.

“The dividend increase announced today leaves the stock trading on a very attractive yield of 7.8%.

“Phoenix’s challenge is now to prove that they can indeed maintain their new business capabilities and support the growth of their dividend into the future.”