Phoenix Group Holdings announced today (27 June) that it has reached an agreement to transfer approximately £5bn of annuity in-payment liabilities to Guardian Financial Services, effective from 1 July 2012.
Phoenix said this will accelerate the release of capital and increases cash generation by approximately £200m in 2012. Phoenix said this is “incremental” to the group’s existing cash generation target of £500m-£600m for 2012.
The transfer of annuity in-payment liabilities will be made from Phoenix Life Limited (£3.4bn), National Provident Life Limited (£600m) and Pearl Assurance Limited (£1bn)
The group will make an associated transfer of £4.9bn of assets to Guardian as the related re-insurance premium for the transferred annuity liabilities
In addition, Phoenix Group and Guardian have agreed terms for Ignis Asset Management, Phoenix’s asset management arm, to continue to provide investment management services to Guardian in respect of assets backing the transferred annuity in-payment liabilities
Clive Bannister, group chief executive of Phoenix Group, said: “We are very pleased to have concluded this agreement with Guardian for the transfer of a significant block of annuity liabilities.
“This transaction will generate a number of important benefits for the group. Principally, it will accelerate the cash flows from our operating business and release regulatory capital, thereby strengthening our balance sheet.”
