Phoenix Group’s full-year cash generation tops bumped-up estimates

Written by: Wajeeh Khan
December 3, 2020
  • Phoenix Group’s full-year cash generation tops bumped-up estimates.
  • The London-based insurer benefitted from a series of bulk annuity deals.
  • Phoenix Group’s Solvency II ratio climbs to £5 billion as of September end.

Phoenix Group Holdings (LON: PHNX) valued its annual cash generation at £1.7 billion on Thursday, that represents an over 100% growth as compared to last year. Cash generation, it added, also topped its own upwardly revised estimates for the recently concluded financial year.

Phoenix Group opened about 0.5% up on Thursday but lost the entire intraday gain in the next hour. Including the price action, the stock is now exchanging hands at £7.32 per share after recovering from a year to date low of £4.67 per share in March, when the impact of the COVID-19 crisis was at its peak.

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Phoenix shares had started the year at a per-share price of £7.54. The price action should come in handy if you’re interested in investing in the stock market.

Phoenix Group benefitted from a series of bulk annuity deals

The insurer attributed robust cash generation to a series of bulk annuity deals as companies dump their pension obligations amidst the ongoing Coronavirus pandemic and Brexit uncertainties. The COVID-19 crisis has so far infected more than 1.6 million people in the United Kingdom and caused over 59 thousand deaths.

In separate news from the UK, Topps Tiles said earlier this week that its profit slid 78% as the health crisis wreaked havoc on the construction industry.

In a statement last week, Phoenix Group had already announced that it was exploring strategic options for its businesses in Europe. Earlier this year, the FTSE 100 listed company bought Swiss Re’s British ReAssure business. It also offloaded its units in Germany and Ireland for £587.42 million.

Phoenix Group’s Solvency II ratio climbs to £5 billion

As of the end of September, Phoenix said that its Solvency II surplus stood at £5 billion versus £4.4 billion in June. In 2019, the insurance services provider had recorded £707 million of cash generation. For 2020, it had raised its cash generation target in August to up to £1.6 million.

CEO Andy Briggs commented on the report on Thursday and said:

“Our balance sheet remains resilient, underpinned by our high-quality portfolio of assets and unique approach to risk management, and our shareholder capital coverage ratio of 159% remains robust.”

Phoenix Group performed fairly upbeat in the stock market last year with an annual gain of more than 30%. At the time of writing, it is valued at £7.36 billion and has a price to earnings ratio of 10.00.