Standard Life drives Phoenix to £1.2bn new business

Phoenix Group-Standard Life office in Lothian Road, Edinburgh

By Mark McSherry — Phoenix Group Holdings plc announced on Tuesday that it expects to deliver £1.2 billion of incremental new business long-term cash generation in 2022, primarily through its Standard Life branded businesses.

The group said this comprises £900 million from its retirement solutions business and £300 million from its capital-light fee-based businesses — pensions and savings, Europe and SunLife.

Phoenix Group said Standard Life is “firmly” re-established as a major player in the workplace market.

“Reflecting the investment made into building its capabilities, the group is now confident of growing its incremental new business long-term cash generation, and has set a new target of £1.5 billion per annum by 2025, which is a 25% increase on the group’s strong 2022 performance,” said the company.

Phoenix Group said it also remains on track to deliver 2022 cash generation at the top end of its target range of £1.3 billion to £1.4 billion.

Phoenix Group CEO Andy Briggs said: “It is shaping up to be another outstanding year for Phoenix Group, as we expect to deliver around £1.2 billion of new business in 2022. This once again demonstrates that we are a growing, sustainable business.

“I am also pleased that, despite the change in economic conditions seen in the second half of this year, our balance sheet remains as resilient as ever, thanks to our comprehensive hedging approach, and we are on track to deliver 2022 cash generation at the top end of our £1.3 to £1.4 billion target range.

“Alongside optimising our in force business, and M&A, our organic strategy is to deliver sustainable growth.

“We will do this through both meeting more of the evolving needs of our existing customers on their journey to and through retirement, and by acquiring new customers, primarily through our trusted Standard Life brand.

“We are confident that this will allow us to achieve our new target of £1.5 billion of new business by 2025, which in turn will support future dividend growth.”

Phoenix Group added: “Retirement Solutions primarily comprises the Defined Benefit Solutions business, which completed an additional 7 Bulk Purchase Annuity (BPA) transactions during the second half of 2022 covering £3.2 billion of premiums.

“This comprised £2.6 billion of external deals and the final tranche of the group’s Pearl Pension Scheme. The group does not expect to complete any further transactions in 2022.

“The group has therefore contracted £4.8 billion of BPA premiums for the year (FY21: £5.6 billion).

“The capital invested for 2022 will be slightly less than £300 million, with an improved capital strain of c.6% (FY21: 6.5%) and an improved cash multiple of c.3x (FY21: 2.6x), which reflects Phoenix Group’s disciplined approach to capital deployment.

“Within Pensions & Savings, the Workplace business is expected to deliver a strong performance in 2022, with positive net fund flows of c.£2.0 billion (FY21: £0.2 billion) and a c.40% increase in incremental new business long-term cash generation to c.£200 million (FY21: £139 million).

“This is underpinned by the strong momentum that is building in this business, having won 68 new workplace schemes in 2022, with aggregate assets of c.£2 billion on behalf of c.47,000 members, which will transfer in future years.

“The group is now winning in all parts of the market across small, medium and large schemes. These wins, together with a strong pipeline of future opportunities, firmly re-establishes Standard Life as a major player in the workplace market.

“In line with the group’s usual approach, the board will make its annual assessment of the dividend alongside the Full Year 2022 results in March 2023.

“As previously stated, any organic increase would be in addition to the proposed 2.5% inorganic dividend increase that was already announced with the acquisition of Sun Life of Canada UK.”