Phoenix Group is on track to deliver positive net fund flows for the first time in its history in 2024, after new business surged in the first half.
The insurer reported a 72 per cent increase in new business net fund flows to £3.1billion in the six months to June, up from £1.8blillion at the same time last year.
The firm’s incremental new business long-term cash generation rose by 106 per cent year-on-year to £885million.
The savings giant, reported a 72 per cent increase in new business net fund flows to £3.1billion in the six months to June, up from £1.8blillion
CEO Andy Briggs told news agency Reuters the outlook for the UK retirement market is positive despite challenging conditions in other sectors,
The market for workplace pension schemes has grown rapidly due to an ageing population and the move from defined benefit to defined contribution pension schemes, and also because of auto-enrolment.
Briggs said he expects the bulk annuity market – which insures company-defined benefits, or final salary and pension schemes – to grow to a record of more than £40billion this year as higher interest rates make it more affordable. The market has been worth around £30billion over the last couple of years.
The FTSE 100 company, through its Standard Life brand, has been looking to expand into bulk annuities as demand for corporate pension insurance deals grows against a backdrop of rising interest rates which have driven up yields.
‘There are a number of very large schemes …in excess of 10 billion pounds that are engaging with the market around considering buying out some or all of the scheme, and that’s part of the driver of why the market is so strong,’ Briggs said.
‘We’re not likely to be writing those super large cases …(we) will be quite happy picking up the mid sized cases,’ he added.
The group’s losses skyrocketed by £1billion last year following a decline in the value of assets backing the company’s pension schemes.
The firm reported a £1.76billion loss for 2022, up from £709million the previous year, as increasing yields, inflation and a widening of credit spreads impacted its investment returns.
Losses were further impacted by an accounting discrepancy from retirement schemes that were the subject of buy-ins
The insurer expects 2023 cash generation at the top-end of its £1.3 billion pounds to £1.4 billion pounds forecast range after new business long-term cash more than doubled in the first half.
The company’s total cash generation for the six months ended June 30 came in at £898million, ahead of analysts’ average forecast of £733million.
Phoenix Group shares were up by 1 per cent to 543.40p in afternoon trading on Monday
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