Phoenix Group has more than doubled its cash generation on the previous year after it bought two life businesses, and said it will continue to look for acquisition opportunities.
The group reported £486m of cash generation in its 2016 full year results, more than the £225m in cash generation it reported the previous year.
The long-term cash generation target to 2020 has now been revised up from £2bn to £2.8bn to reflect the impact of the group’s two most recent acquisitions.
Last year the group bought Axa Wealth’s pensions and protection business in a cash deal worth £373m, which added over 910,000 polices and £12bn of assets to the group.
The acquisition has already generated £282m, exceeding the target of £250m within six months of completion from November, and cost synergies are expected to be more efficient than previously predicted.
Phoenix Life also purchased life assurance business Abbey Life for £933m, which added around 735,000 and £10bn of assets.
Clive Bannister, chief executive of Phoenix Life Group, called the two acquisitions “highly successful” and allowed the group to increase its dividend per share by 5 per cent to 23.9p.
The group makes money by buying life insurers in Europe that are closed to new business and making them more efficient, and Mr Bannister said that Phoenix Life will continue to look for acquisition targets.
“We are grateful for the support of our investors during 2016 and we believe there will be further consolidation in the UK life industry. We continue to explore opportunities as they arise.”
He added that the group's recent tier three bond issue and the achievement of £282m of cash generation from the Axa business will provide Phoenix with greater flexibility to finance future acquisitions.
The group reported operating profits of £351m, up from £324m in 2015, and a Solvency II cash surplus of £1.9bn and shareholder capital coverage ratio of 170 per cent.