(Alliance News) - Life and pensions consolidator Phoenix Group Holdings PLC on Wednesday reported a strong rise in written premiums as the firm said its cash generation is likely to be towards the upper end of its guided range.
In the six months to June 30, Phoenix swung to a pretax profit of GBP217 million from a GBP42 million loss the year before.
The insurance company's net written premiums doubled to GBP1.58 billion from GBP842 million the year before, with gross written premiums jumping 71% to GBP1.86 billion.
Total revenue more than doubled to GBP1.93 billion from GBP945 million.
Net income jumped to GBP20.41 billion from GBP889 million, due to a significant swing to a net investment income of GBP18.44 billion from a GBP56 million loss the year before.
However, operating expenses in the first half jumped to GBP20.12 billion from GBP864 million. A change in investment contract liabilities led to a GBP10.39 billion charge in the period.
"Phoenix has enjoyed a successful first half year in 2019. We delivered across all of our strategic priorities with strong performance against our financial targets; and are progressing the transition programme following the acquisition of the Standard Life Assurance businesses. We also completed our preparations for Brexit with a Part VII transfer of our European branch business to Standard Life International," said Chief Executive Clive Bannister.
Phoenix completed the reverse takeover of Standard Life Assurance Ltd from Standard Life Aberdeen PLC in August 2018.
Phoenix said it has delivered GBP287 million of cash generation in the first half and, as a result, expects to be towards the upper end of its GBP600 million to GBP700 million 2019 target range. The company is guiding its cash generation from 2019 to 2023 to be GBP3.8 billion.
"We also continue to make good progress across all phases of our transition programme and remain on track to meet the GBP1.2 billion total synergy target announced in March," the company added.
Phoenix declared an interim dividend of 23.4 pence per share, 3.5% higher than the year before.
The company's asset under administration at the end of the half stood at GBP245 billion, 8.4% higher than the GBP226 billion seen at the end of 2018. The rise was attributed to positive market movements, with Phoenix adding a "notably strong performance" in global equity markets during the first half of the year was partly offset by net outflows from the group's UK Heritage and European businesses.
Phoenix said its solvency II balance sheet "remains resilient" with a surplus of GBP3.0 billion and a shareholder capital coverage ratio of 160%.
CEO Bannister continued: "Whilst net inflows into our Open businesses are down overall year on year reflecting market uncertainty from Brexit and a tail off in defined benefit to defined contribution transfers, contributions to our auto-enrolment workplace schemes have increased, and new annuity business in our Heritage segment has been strong. The GBP250 million of incremental long-term cash generation from this new business in the first half brings sustainability to Phoenix and its dividend."
"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," added Bannister.
Shares in Phoenix Group were 2.1% higher on Wednesday morning in London at 670.10 pence each.
Phoenix Group Holdings (PHNX)