Phoenix Share Discussion Threads

[deepe] 20/3/2017 07:22

Results are out and looking good:

 £486 million of cash generation2 (2015: £225 million), meeting the Group’s 2016 cash generation target
 Solvency II surplus of £1.9 billion3 as at 31 December 2016, compared to £1.3 billion as at 31 December
2015
 Shareholder Capital Coverage Ratio of 170% as at 31 December 20164 (154% as at 31 December 2015)
 Group operating profit of £351 million (2015: £324 million)
 Proposed final dividend of 23.9p per share, an equivalent 5% increase on the 2015 final dividend5

[dennisten] 17/3/2017 17:46

Looking forward to the results on Monday....

[edmundshaw] 13/3/2017 08:08

Results in a week. Hopefully that will boost the share price...

[garycook] 13/3/2017 07:48

Yes 4% of the fund.Shows confidence in PHNX,by Mark Slater,and his MFM Income fund.

[masurenguy] 13/3/2017 07:38

Phoenix is currently the largest individual holding in the Mark Slater MFM Income Fund.

[woodhawk] 03/3/2017 13:23

Indeed! I was talking near term, though.

[garycook] 03/3/2017 13:18

And higher long term £9/10,in time.

[woodhawk] 03/3/2017 12:07

Exactly what I thought, Gary. Potential 6%+ divi and excellent growth prospects... and less volatile than some of my other holdings :-) Could easily break out to 800p, I would have thought?

[garycook] 03/3/2017 12:02

Woodhawk,Welcome more the merrier.But a bit more quiet than the GVC thread.The dividend not sure until results,but should be between 45/50p,around a 6% yield.Great core holding.

[woodhawk] 03/3/2017 11:29

Just decided to join you here - very nice prospective dividend yield.

[mozy123] 16/2/2017 11:28

Theres a pearl assurance house building in a town near me. Looks empty!

[rl34870] 16/2/2017 11:23

Phoenix Assurance building in my home town is now student flats. Now there's a surprise!

[edmundshaw] 15/2/2017 23:11

Oh, Pearl. My first dealing with an insurance company was with Pearl, insured my first bike! A Honda 125. Sadly I wasn't insured for over-revving the engine... :-)

[rl34870] 15/2/2017 17:11

Alter ego : Thanks for that. With technology evolving as fast as it is the financial sector will surely change markedly over the next 40 years!

[alter ego] 15/2/2017 16:38

rl3487015 here is the history of Phoenix Group



Although Phoenix Assurance (Aka Phoenix Life) is one of the original components along with the Pearl, the Group as it stands today is unrecognisable from the old Phoenix I also worked for.

[rl34870] 15/2/2017 16:12

dangersimpson2 :thanks for the comprehensive explanation. I think I am right in saying that this is the same company of old ( my twin sisters first job was working for Phoenix Assurance in 1975) although how the company share capital has evolved over time I am not sure. Seems like the company over time will have plenty of opportunity to prevent it's own extinction. Valuing the company against its open book peers still seems tricky although most commentators suggest it is a great value stock.

[dangersimpson2] 15/2/2017 12:47

Roughly speaking they get cash from 2 sources:

1. Run off of the book. This is what MCEV is expected to represent although is highly dependent on a number of assumptions. Companies often trade at a discount to represent the risk of those assumptions being unrealistic.

2. 'management actions' this is where closed book transactions are accretive to the company. Partly by combining the IT systems and getting scale of administration but more importantly combining many policies narrows the variation of outcomes via the law of large numbers and means that the combined book has to hold less regulatory capital than the two books individually. This released capital is then available to management to pay out to shareholders or buy more closed book business.

So while cash flows from 1 will continue during wind down the real added value is from 2. That's why being a closed book consolidator is a good business and the transactions they do are win-win provided that a) there's enough books to consolidate, b) you don't over pay due to competition from other consolidators. The added benefit of 2. as well is that they come within the first few years of completing a transaction so their NPV is much higher than run off cash flows.

So cash flows don't cease if PHNX stop consolidating but they will slow down after a few years of the last completed transaction.

[sogoesit] 15/2/2017 12:06

Ok, so these companies "run out of business"... providing a yield for that risk along the way... but how long is this time period to run out (knowing that the discounted cash flow beyond, say, 20 years is meaningless in discounted terms but not nominal terms); 25 years, 40 years...?

[jonwig] 15/2/2017 11:51

I think it's a real possibility. At present there's a rush to get rid of closed books if they're viewed as non-core. At some point this will slow and companies might well prefer to keep them rather than dispose.
Also, Phoenix and others need to raise funds to buy closed books. They don't want more debt and equity might be hard to come by.

The present MCEV (or 'economic value' as it seems to be called) is a decent enough measure of what investors will get back (future-discounted) as these closed books run off. From memory, a broker marked PHNX as a 'sell' a year or so back based on this possibility*. For myself I wouldn't mind holding it if I knew I'd get back a decent premium to the existing share price.

EDIT: *In post #1688 I think.

[sogoesit] 15/2/2017 11:31

Not sure I understand your comment rl34870... are you saying people might no longer assure themselves until death and need a service for that?

[rl34870] 15/2/2017 11:25

In terms of the companies long term business model,what will be the direction of travel when the closed life book market dries up ? Presumably the yield is only sustainable until this area of business runs out.

[stun12] 13/2/2017 10:19

That would be quite the lump to add. Personally, I'd like to see it happen, though no doubt some volatility in PHNX share price would ensue. Is this why we've had a few days of mild down when the wider market has been ticking up?

[jeff h] 11/2/2017 12:14

Prudential to withdraw from UK annuity market and may dispose of its back book:-

[garycook] 04/2/2017 04:25

Totally agree,and not before time.

[mister md] 03/2/2017 20:34

great move up this week for PHNX