Phoenix Share Discussion Threads

[snorky123] 07/8/2019 07:10

Cracking results,

[skinny] 07/8/2019 07:03

.

PHOENIX GROUP EXPECTS TO BE TOWARDS THE UPPER END OF ITS 2019 CASH GENERATION TARGET AND IS ON TRACK TO REALISE £1.2 BILLION STANDARD LIFE ASSURANCE ACQUISITION SYNERGY TARGET

Phoenix Group, Europe's largest life and pensions consolidator1, announces strong results for the six months ended 30 June 2019.

Financial highlights

· Strong cash generation2 of £287 million in H1 2019 (H1 2018: £349 million). The Group expects to be towards the upper end of its cash generation target range of £600 million - £700 million3 for full year 2019.

· Solvency II surplus of £3.0 billion4 as at 30 June 2019 (£3.2 billion5 as at 31 December 2018).

· Shareholder Capital Coverage Ratio of 160%4,6 as at 30 June 2019 (167%5,6 as at 31 December 2018).

· Group operating profit of £325 million in H1 2019 (H1 2018: £216 million).

· Interim dividend of 23.4p per share, a 3.5%7 increase on the 2018 interim dividend.

· New business contribution8 of £116 million from UK Open and Europe (H1 2018 pro forma9: £100 million).

· £250 million of incremental long-term cash generation from H1 2019 new business (H1 2018 pro forma9:
£303 million), enhancing the sustainability of our dividend.

· Assets under administration of £245 billion as at 30 June 2019 (£226 billion as at 31 December 2018).

· Leverage ratio10 of 23% as at 30 June 2019 (22% as at 31 December 2018) remains under target range
of 25% - 30% and new £1.25 billion revolving credit facility in place.

Transition programme

· Remains on track to deliver the £1.2 billion total synergy target for the Standard Life Assurance businesses transition.

· £115 million of capital synergies delivered in H1 2019 taking cumulative capital synergies to £615 million against a target of £720 million (85% of total).

· £21 million per annum cost savings delivered to date against a target of £75 million per annum (28% of total).

· £17 million one-off cost synergies delivered to date against a target of £30 million (57% of total).

Delivering on strategic priorities

· Brexit preparations complete with £250 million of capital injected into an Irish subsidiary prior to a Part VII transfer of our European branch businesses completed in March 2019.

· £3.5 billion gross new business inflows for UK Open and Europe businesses in H1 2019 (H1 2018 pro forma9: £4.6 billion).

· £0.5 billion of bulk purchase annuity liabilities contracted in the period (H1 2018: £0.5 billion) and a further
£0.2 billion contracted in August.

· £1.1 billion buy-in from the PGL Pension Scheme successfully completed.

· £0.5 billion of illiquid assets sourced, taking allocation of illiquid assets backing annuity liabilities to 22%.

· Regulatory approval for two master trust schemes, looking after over 240,000 customers and £5 billion assets under administration, enabling Phoenix to access this rapidly growing market.

Commenting on the results, Group CEO, 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 delivered £287 million of cash generation year to date, Phoenix expects to be towards the upper end of the £600 - £700 million 2019 target range. We also continue to make good progress across all phases of our transition programme and remain on track to meet the £1.2 billion total synergy target announced in March.

Whilst 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 workplace schemes have increased, and new annuity business in our Heritage segment has been strong. The £250 million of incremental long-term cash generation from this new business in H1 2019 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.

more.....

[rcturner2] 05/8/2019 16:54

I'll wait for 650p as that was my original target when I sold at 720p.

[edmundshaw] 05/8/2019 16:54

Yes, the imminent dividend makes these feel cheaper. Added a few at 6.559 myself... discounting the dividend (in an ISA) this is 6.325p... so a yield of 7.4% if you ignore the couple of months' wait.

[robsy2] 05/8/2019 12:25

I have bought a few more this morning at 660p. I have my eye on the 23.4 p divi due in october, that’s a useful 3.5% return in a couple of months.
R2

[jonwig] 05/8/2019 07:11

ReAssure has acquired Quilter's closed book:

[ianood] 04/8/2019 15:33

jonwig - rereading the announcement I agree with you. It's the Artemis article that mentions swaps and sent the mind scurrying! I suppose ultimately that PICA will have the issue of how to lay it off in some manner but hey ho not our problem by the way that this reads.

[jeff h] 04/8/2019 15:22

This is what JP Morgan expects for Weds Interims:-

Phoenix is due to report 1H19 results on 7th August and our focus will be on cash flows, capital position and update on M&A. Cash flows at quarterly results at Phoenix are pretty lumpy, currently we forecast gross cash flows of £300m, IFRS operating profits of £313m and DPS per share of 23.4p a share at 1H19e results. Solvency II surplus is expected to come in at £2.9bn which is a drop of £0.3bm HoH. We reiterate our OW on Phoenix as we believe management is well positioned to deliver on further M&A in coming quarters and its shares offer an attractive dividend yield of 6.6%.

Cash generation: We forecast 1H19e gross cash flow of £300m and compares with full year 2019 guidance of £600-£700m. We note that cash flows are typically lumpy in nature. Consensus expectations for 1H19e cash flows is £231m.

Solvency II surplus is expected to be £2.9bn (touch below consensus expectation of £3.0bn) and a drop of £0.3bn HoH. A large part of the drop in Solvency II surplus is driven by £250m planned Brexit cost i.e. excluding this we believe that capital generation and management actions will be offset by interim dividend and negative markets.

IFRS operating profit is expected to come in at £313m and compares with £216m for 1H18 and company compiled consensus of £306m. The increase is mainly due to the full inclusion of Standard Life UK business.

Interim dividend is expected to come in at 23.4p, representing a 4% YoY increase, in line with management's guidance and company compiled consensus.

[bamboo2] 04/8/2019 14:27

Possible triple top, currently unconfirmed.
Confirms with an eod close below 652.5, tp approx. 614

Historical support approx. 629.5
200sma support approx. 656 and rising.

[jonwig] 04/8/2019 09:48

ian - I read it as merely as a premium for insurance transaction.

[ianood] 04/8/2019 09:42

What worries me about this is unlike most commodity swaps there is no natural counterparty i.e. the market is all one way as buyers of protection. Therefore, any product has to be massively structured via volatility matches etc. Can't help but cast the mind back to the heavily structured CDOs and we all know where that ended up!

[jonwig] 04/8/2019 06:07

Interesting, thanks.
What's involved?
Answer:

[lauders] 04/8/2019 05:04

More news from PHNX: NEWARK, N.J., August2,2019–ThePrudential Insurance Company of America (PICA), a subsidiary of Prudential Financial, Inc. (PFI)(NYSE: PRU), a financial services leader with more than $1 trillion in assets under management as of June 30, 2019, withoperations in the United States, Asia, Europe, and Latin America,and The Phoenix Group, Europe’s largest life and pensions consolidator and one of the fastest-growing providers of life and pension insurance in the United Kingdom, have entered into an inaugural longevity reinsurance agreement covering U.K. retirees.

[rcturner2] 02/8/2019 08:18

650p doesn't seem that far away any more.

[lauders] 28/7/2019 04:04

A clean energy (reads better than wind farm) investment by PHNX:

Mike Chappell, Head of Illiquid Credit, said: “Phoenix is committed to investing in clean energy projects that contribute to the UK’s renewable energy target.This investment provides us with a stable and predictable long-term return, helping us to match our long-term liabilities.”

[edmundshaw] 23/7/2019 08:27

tournesol, investors were worried about bad outcomes at certain times. The market recovered from those worries. I am not writing as for the BBC just commenting that the market dropped due to political noises then recovered. It was an a moment of fear in the stock market which meant a classical Buffett "buying when others are fearful" opportunity.

From an investing perspective I am quite apolitical. Your assumptions about my political views are completely in your own head, I did not express any.

[tournesol] 18/7/2019 13:39

Fenners66

Thanks for your support.

Actually though, I am not suggesting there is no link. I am simply saying that asserting something does not make it so.

If Brexit caused the drop - why then? why not earlier? why not later? why was its effect felt so strongly on PHNX and less so elsewhere? why has PHNX recovered considerably? Will it happen again?

We'd all like to figure out the direction of travel looking forward. We will not be helped in that if we confuse cause and effect in our thinking.

If Brexit cut PHNX off at the knees last year then is that likely to happen again? Is PHNX likely to be worse affected than other comp[anies in my portfolio? Is any fall more to do with sentiment than fundamentals? Will sentiment inspired falls create opportunities

I used to work in Egypt and found it very difficult to analyse causation because people often attributed problems to divine providence so they stopped thinking about the real causes. I think it's easy to fall into that trap. I'd like to avoid doing that.

[skinny] 18/7/2019 13:09

And therein lies the rub.......

[fenners66] 18/7/2019 13:01

As far as blaming brexit is concerned ..

I have worked in a company that had to report to US owners poorer results .... naturally since it was something they had heard of and not necessarily tangible, brexit got the blame.....

It had nothing to do with brexit......

[fenners66] 18/7/2019 12:59

Masurenguy
16 Jul '19 - 19:58 - 3375 of 3386

"tournesol - 19:48: So the bad stuff is caused by Brexit, but not the good stuff? I think you are simply attributing blame because of your internal bias.

A totally unnecessary and unwanted comment. edmundshaw is a respected poster and you are just demonstrating your own political bigotry in that post."

You did not have a problem with edmundshaw introducing politics and brexit to this board - so why when tournesol suggests there is not a link ?

[ianood] 17/7/2019 17:30

And, mortality rates aren't going anywhere. Look at the yield!

[tournesol] 17/7/2019 17:25

schoflp

So do you think that the weak pound was what caused the fall in PHNX at the end of last year?

Might one argue that a weak pound makes UK stocks cheaper for those from other currency zones - so likely to support the share price rather than depress it?

[schofip] 17/7/2019 13:08

Well I am off on my holidays in a week and the exchange rate is £1 = 1.1 Eur.
Before the referendum the pound was £1 = 1.5 Eur. That is a lot of my holiday money that has disappeared. Now shall I put this down to brexit or some other plausible reason. This was predicted before the referendum and is no project fear rather project reality.

[tournesol] 17/7/2019 11:12

RCT

I agree that the potential for post Brexit disruption is plausible. But that does not mean that concerns about Brexit can be identified as the cause of any particular movement in any particular stock at any particular time. Plausibility is not enough.

Every day our news broadcasts are peppered with plausible sounding causal links which do not stand up to scrutiny.

In the case of Brexit, the pre referendum forecasts were for economic meltdown, which sounded all too plausible but which turned out to be grotesquely inaccurate. ISTM that those who disagree with the desirability of Brexit attribute any kind of undesirable event to its influence. That attribution is often based on nothing but supposition. I think we need more rigour in analysis. If Brexit was indeed the cause of the fall in PHNX, then why did it happen at that time? Why did it not occur sooner? why did PHNX make such a strong recovery? what else was happening around that time? What other causes might we identify?

I'm not arguing the case for Brexit. I'm not arguing the case for PHNX being affected by Brexit. I'm simply saying that it is not enough to make an assertion of causality. Such assertions need to be supported by analysis and by evidence.

[jonwig] 17/7/2019 08:59

CWA - suggest you just filter particular posters for a while, till they've exhausted their bile and gone elsewhere.