Phoenix Group (“Phoenix”), the UK’s largest long-term savings and retirement business, is today hosting a Capital Markets Day for investors and analysts, which will include presentations by Phoenix’s management team.
The purpose of the event is to provide greater insight into Phoenix’s strategy and financial framework. The presentations will also include a series of deep dives into how its businesses are being managed to deliver sustainable cash, resilience and growth for investors.
Alongside this, Phoenix today announces a strong trading update with 2020 cash generation ahead of target.
Commenting on the results, Group CEO, Andy 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.
Financial Highlights – Phoenix continues to deliver cash, resilience and growth
Strong cash generation
Resilient Solvency II balance sheet with increased surplus
Growth through Open business
-£300 million from BPA (FY 2019: £235 million);
- £94 million from Workplace (FY 2019: £155 million); and
- £42 million from Customer Savings and Investments (includes Wrap and Retail business) (FY 2019: £59 million).
Further financial disclosures are provided in the appendix to this announcement and all financial results are available in the financial supplement which can be accessed through the following link: www.thephoenixgroup.com/investor-relations/capital-markets-day-2020
Phoenix has committed to becoming net-zero carbon by 2050
Phoenix recognises its responsibility in driving forward its commitment to sustainability, and in particular the importance of reducing greenhouse gas (“GHG”) emissions and accelerating the transition to a low carbon economy. As such, today we are setting net-zero carbon targets in two phases:
We will take into account the best available scientific knowledge in this process. Therefore, in relation to our operations, we will set and pursue a 1.5°C aligned science-based emissions reduction target, with any remaining hard-to-decarbonise emissions compensated using certified GHG removal projects.
In relation to our investment portfolios, where we have the ability to influence the investment strategy or investment solution, we will aim to reduce the emission intensity to net-zero GHG emissions by 2050. This is also consistent with the objective of limiting the temperature rise to no more than 1.5°C above pre-industrial temperatures and is in line with the Paris Agreement and the commitment of the UK Government.
We will do this by:
Presentation
We will be hosting our live virtual Capital Markets Day for analysts and investors today at 2.00 pm (GMT).
A link to the live webcast of the presentation, with the facility to raise questions, and a copy of the presentation will be available at www.thephoenixgroup.com
You can register for the live webcast at the link below: https://phoenixgroup.virtualhub.events
A video replay of the presentation will be available through the Phoenix Group website post-event.
Enquiries
Investors/analysts:
Claire Hawkins, Corporate Affairs and Investor Relations Director, Phoenix Group
+44 (0)20 3735 0575
Media: Douglas Campbell, Teneo
+44 (0)775 313 6628
Haya Herbert Burns, Teneo
+44 (0)734 203 1051
Shellie Wells, Head of Corporate Communications, Phoenix Group
+44 (0)203 735 0922
Appendices
Appendix 1: Estimated PGH Shareholder Solvency II surplus
£bn | 30-Sep-202 | 30-Jun-20 Pro-forma3 | 31-Dec-19 Pro-forma6 |
---|---|---|---|
Own Funds | 13.6 | 13.2 | 13.0 |
SCR | 8.6 | 8.8 | 8.6 |
Surplus | 5.0 | 4.4 | 4.4 |
Shareholder Capital Coverage Ratio4 | 159% | 150% | 152% |
Appendix 2: Estimated PGH Regulatory Solvency II surplus
£bn | 30-Sep-202 | 30-Jun-20 Pro-forma3 | 31-Dec-19 Pro-forma6 |
---|---|---|---|
Own Funds | 17.0 | 16.3 | 15.5 |
SCR | 12.0 | 11.9 | 11.1 |
Surplus | 5.0 | 4.4 | 4.4 |
Shareholder Capital Coverage Ratio4 | 142% | 137% | 140% |
Appendix 3: Change in estimated PGH Solvency II surplus
£bn | SCCR4 | |
---|---|---|
PGH Solvency II surplus as at 31 December 2019 Proforma6 | 4.4 | 152% |
Surplus emerging and release of capital requirements |
0.5 |
9% |
Debt raise | 0.2 | 3% |
Management actions | 0.6 | 8% |
New business strain7 | (0.1) | (3)% |
Dividend, financing, corporate costs & pension contributions | (0.5) | (7)% |
Assumption changes | 0.1 | 1% |
Economic variances and other | (0.2) | (4)% |
PGH Solvency II surplus as at 30 September 20202 | 5.0 | 159% |
Appendix 4: Solvency II sensitivities
Solvency II surplus (£bn) |
SCCR (%) |
|
---|---|---|
Solvency II base at 30 September 20202 | 5.0 | 159 |
Equities: 20% fall in markets | 5.0 | 160 |
Property: 12% fall in values8 | 4.8 | 156 |
Rates: 73bps rise in interest rates9 | 5.1 | 165 |
Rates: 88bps fall in interest rates9 | 4.8 | 152 |
Credit spreads: 120bps widening with no allowance for downgrades10 | 4.8 | 160 |
Credit downgrade: immediate full letter downgrade on 20% of portfolio11 | 4.4 | 151 |
Lapse: 10% increase/decrease in rates12 | 4.8 | 157 |
Longevity: 6 month increase13 | 4.1 | 149 |
Appendix 5: Asset mix of total shareholder and non-profit
£m | 30-Sep-20 | 30-Jun-20 Pro-forma14 |
---|---|---|
Cash deposits | 5,205 | 5,132 |
Debt securities | ||
Debt securities - gilts | 7,450 | 7,902 |
Debt securities - Other Gvnt and Supranational | 2,560 | 2,672 |
Debt securities – other liquid bonds | 20,364 | 21,451 |
Debt securities - illiquids | 5,023 | 3,895 |
Total debt securities | 35,397 | 35,920 |
Equity securities | 103 | 110 |
Property investments | 85 | 86 |
Commercial Real Estate | 981 | 984 |
Equity Release Mortgages | 3,256 | 3,111 |
Other investments | 590 | 500 |
Total | 45,617 | 45,843 |
Appendix 6: Sector analysis of bond portfolio, 30 September 2020
£m | AAA | AA | A | BBB | BB & below and unrated | Total | % |
---|---|---|---|---|---|---|---|
Industrials | 66 | 361 | 1,014 | 43 | 1,484 | 4 | |
Consumer, Cyclical | 472 | 356 | 370 | 63 | 1,261 | 4 | |
Tech and Telecoms | 100 | 257 | 658 | 968 | - | 1,983 | 6 |
Consumer, Non-cyclical | 221 | 324 | 1,114 | 493 | - | 2,152 | 6 |
Banks | 794 | 830 | 3,037 | 740 | 36 | 5,437 | 15 |
Financial Services | 98 | 354 | 406 | 256 | 29 | 1,143 | 3 |
Utilities | 28 | 58 | 2,264 | 1,954 | - | 4,304 | 12 |
UtilitiesGilts/Sovereign/Supra/ sub-sov | 1,488 | 8,719 | 386 | 2 | 44 | 10,639 | 30 |
Real Estate | 34 | 134 | 2,636 | 449 | 73 | 3,326 | 9 |
Insurance | - | 552 | 426 | 119 | 22 | 1,119 | 3 |
Oil and Gas | - | 186 | 302 | 87 | 2 | 577 | 2 |
Infrastructure | - | 62 | 285 | 1,062 | 20 | 1,429 | 4 |
Other15 | 32 | 160 | 300 | 51 | - | 543 | 2 |
Total | 2,795 | 12,174 | 12,531 | 7,565 | 332 | 35,397 | 100% |
Total % | 8% | 34% | 35% | 21% | 2% | 100% |
Appendix 7: New business
Long term cash generation £m | Gross inflows (on new business) £bn | Capital strain7 £m | |
---|---|---|---|
Workplace | 94 | 0.9 | 8 |
Customer Savings & Investment | 42 | 2.8 | 2 |
Retirement Solutions | 300 | 1.4 | 116 |
SunLife | 20 | 0.2 | - |
Europe | 16 | 0.9 | 10 |
Total | 472 | 6.2 | 136 |
Notes