Insurer Phoenix Group sets new long-term cash target
Phoenix Group, the UK’s largest
owner of life assurance funds, has set itself a long-term cash generation
target of £2bn ($2.8bn) over the next four years.
The FTSE 250-listed firm, which
buys pension books closed to new investors, delivered an operating profit of
£324m in 2015, down from the previous year’s £483m figure.
Cash generation over the course
of last year reached £225m, less than half of 2014’s sum but in line with its
earlier target range of £200m-£250m.
Led by chief executive Clive
Bannister, Phoenix has been simplifying its structure and dealing with the
introduction of the EU’s Solvency II legislation.
New pension freedom rules
introduced in April have also added to the group’s workload.
The business has around 4.5
million policyholders and £47bn in assets held by its life companies.
In its statement on Wednesday, Phoenix
predicted further consolidation in the UK life sector, as existing providers
struggle with regulation, increased capital requirements and shortages of
skilled personnel to manage complex legacy products.
Chairman Harry Staunton said Phoenix has the operating model
in place to take advantage of the changing environment.
He added that the firm will only make acquisitions that are
value accretive, would sustain the current dividend per share and support its
investment grade credit rating, which Phoenix received from Fitch last year.
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