Pension consolidator Phoenix Group has seen its operating increase by 50 per cent year-on-year, according to its latest half-year results.
Phoenix’s results, published this morning (August 7), showed an operating profit of £325m for the first half of 2019, compared with £216m a year earlier, a growth of 50 per cent.
The group's operating profit is stated before tax and is based on expected long-term investment returns.
The group stated it expects to be towards the upper end of its 2019 cash generation target range of £600m to £700m for 2019 after it generated £287m in the first half of the year.
It is ready to take on further acquisitions in a bid to become the "market leader in this consolidation process".
The company also said it is on track to realise £1.2bn from its Standard Life Assurance acquisition.
Phoenix Group bought Standard Life Aberdeen’s insurance arm in August 2018 for £3.28bn and in March Phoenix increased the target for savings made by £500m to £1.2bn.
Standard Life Assurance was put up for sale following the merger between Standard Life and asset manager Aberdeen in 2017.
As part of the deal Standard Life Aberdeen acquired a shareholding of just under 20 per cent of the wider group.
The group has already delivered £21m in cost savings per annum to date against a target of £75m per annum (28 per cent of total).
It has also delivered £17m in one-off cost savings against a target of £30m (57 per cent of total).
Net inflows into the consolidator’s open business were down year-on year however, with the group reporting £800m for the first half year of 2019, compared with £2.1bn in the same period the year before.
This was due to market uncertainty caused by Brexit as well as a continued decline in defined benefit transfers, it stated.
However, inflows in its workplace pension product increased by 17 per cent from £1.9bn in 2018 to £2.3bn this year after auto-enrolment contributions were increased by the government.
Assets under administration were £245bn as at 30 June 2019, down from £226bn in December 2018.
Clive Bannister, chief executive of Phoenix Group, said: “Whilst net inflows into our open businesses are down overall year on year reflecting market uncertainty from Brexit and a tail off in DB to DC transfers, contributions to our auto-enrolment workplace schemes have increased, and new annuity business in our heritage segment has been strong."
He added: “The life insurance sector continues to consolidate and the M&A pipeline remains strong.
“We are ready to do deals that meet our acquisition criteria and I am confident that Phoenix will continue to be the market leader in this consolidation process.”
According to the half year results, Phoenix has a Solvency II surplus of £3bn, down by £200,000 from December 2018.
An interim dividend of 23.4p per share has been proposed, a 3.5 per cent increase on the 2018 interim dividend.
amy.austin@ft.com
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