Phoenix completes further £1.1bn buy-in with own scheme
Phoenix Life has completed a £1.1bn buy-in with its own defined benefit (DB) plan, the PGL Pension Scheme, it has announced.
The insurer said it had completed a total of nearly £1.6bn of bulk annuity deals in the first six months of the year.
In its half-year results, published today (7 August), Phoenix said the deal had been completed in March, covering the remaining pensioner and deferred members of the scheme not covered by an initial £1.2bn buy-in completed with the scheme in 2016.
It comes after the insurer, which remains fairly new to the bulk annuity market, also conducted a £460m buy-in with the Marks and Spencer Pension Scheme in April - and the half-year results confirmed a further £200m deal had been contracted earlier this month.
In total, Phoenix has completed £1.8bn of bulk annuity transactions so far this year, up from the £805m recorded throughout the entire of last year. The aggregate value of bulk annuities transacted so far this year now amounts to £17.3bn, alongside a £7bn longevity swap.
The figures add to a strong start to the year for the business, which recorded an operating profit of £325m, compared to £216m in the same period last year.
Group chief executive Clive Bannister said: "I am delighted to announce our H1 2019 results today which demonstrate Phoenix's commitment to meeting the targets it has set.
"Having deliver £287m of cash generation year to date, Phoenix expects to be towards the upper end of the £600m to £700m 2019 target range. We also continue to make good progress across all phases of our transition programme and remain on track to meet the £1.2bn total synergy target announced in March."
Less new business
Despite the success in bulk annuities, the group suffered a £1.1bn fall in gross new business inflows to its UK open and Europe businesses, partly due to a decline in defined benefit (DB) to defined contribution (DC) transfers, it said. This resulted in net inflows drastically dropping from £2.1bn to £0.8bn.
Bannister continued: "While 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 (AE) workplace schemes have increased, and new annuity business in our heritage segment has been strong.
"The £250m of incremental long-term cash generation from this new business in H1 2019 brings sustainability to Phoenix and its dividend."
Phoenix's gross workplace product inflows grew, in contrast, from £1.9bn to £2.3bn, largely because of increases in AE minimum contributions. The group's two DC master trusts - added amid its acquisition of Standard Life Assurance - were authorised by the regulator in June.
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