Closed life fund consolidator Phoenix Group now claims to be “on track” to achieve its cash generation targets of £200m to £250m this year, following previous concerns that the looming Solvency II capital requirements were likely to hit cash generation this year.
The group’s results for the first half of this year revealed that it achieved £110m in cash generation during the first six months of this year.
In its annual results, published in March, Phoenix expressed uncertainty as to whether it would be able to meet the cash generation range target of £200m to £250m “due to the retention of capital in the life companies in the short term”.
However, the latest results said: “2015 is a transitional year to the new Solvency II capital regime and our cash generation targets incorporate assumptions about how the final Solvency II regulations are likely to be implemented.
“Against a full year cash generation target of £200m to £250m, £110m was delivered in the first half of the year, taking the group half way towards meeting the full year target.
The statement added: “We have now achieved £1.1bn of our longer term cash generation target of £2.8bn from 2014 to 2019 and we remain on track to achieve both our 2015 and longer term cash generation targets.”
In addition, the group anticipates a further £3.6bn of cash generation from 2020 onwards, which was deemed to be “a clear demonstration of the long term cash flow potential of the group”.
Meanwhile, Phoenix achieved operating profits of £135m in the first half of the year, including £23m from management actions, compared to £266m in the first half of 2014, which included £114m of management actions and a £17m contribution from Ignis Asset Management, before its divestment on 1 July 2014.
Phoenix Group’s two principal operating life companies also were assigned an investment grade credit rating of ‘A’ by Fitch Ratings.
Clive Bannister, group chief executive, said that the group is in a sound financial position as it transitions to Solvency II, with further detail on the progress of its internal model application due during the remainder of this year.
“With the investment grade credit rating and continued financial delivery against our targets we are well placed to build on our existing position as the UK’s largest specialist consolidator of closed life funds.”
donia.o’loughlin@ft.com
