Phoenix Group saw its operating profit jump to £1.2bn last year, up from £810m in 2019, which it partly put down to its acquisition of the ReAssure businesses.
Phoenix’s full year results for the period ended December 31, 2020, published this morning (March 8), showed the firm also raised its cash generation target following the Reassure acquisition, which completed in July 2020.
The group originally had a target of £3.8bn for the five-year period 2019 to 2023 but this was increased by £2.7bn to £6.5bn, of which £700m was achieved in 2019 with a further £1.7bn delivered in 2020.
The company has now set a 2021-23 cash generation target of £4.4bn, an increase of £300m, which it said was “primarily due to new business and over-delivery of management actions”.
It was first announced in December 2019 that Phoenix would buy ReAssure Group, a life insurance closed book consolidator, from Swiss Re making it Europe’s largest life and pensions consolidator.
However, since then ReAssure has been the subject of hundreds of complaints at the Financial Ombudsman Service after advisers bemoaned increasingly poor levels of service.
Advisers said it was primarily legacy Legal and General policies – initially sold to Swiss Re in 2017 and then to Phoenix in July 2020 – that it struggled to manage properly.
They claimed the consolidator was “ill-equipped” and “under-resourced” to deal with its growing administration book.
Phoenix has pledged to “ensure that customer service for the transferring customers meets our internal standards”.
In 2018, ReAssure carried out an internal thematic review and set aside £8m to cover costs related to some of its paid-up policies
A further £9m has now been set aside for voluntary redress to customers of certain legacy products.
Meanwhile, the firm saw assets under administration rise 36 per cent to £338bn.
This increase was largely driven by the ReAssure acquisition, net inflows from the UK open business, and positive market movements, Phoenix said.
Phoenix’s business is split into two segments, heritage and open.
The heritage segment comprises products that are no longer actively marketed to clients and has been built through the consolidation of more than 100 legacy insurance brands.
The open business manufactures and underwrites new products and policies, which are actively marketed to new and existing customers primarily under the Standard Life brand.
Last month, Phoenix acquired the 'Standard Life' brand from Standard Life Aberdeen for an undisclosed sum as the firms moved to extend their strategic partnership.
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