Phoenix Share Discussion Threads

[panshanger1] 14/5/2020 15:55

Added here today Dividend paid next Tuesday and the board have stress tested it !!

[skinny] 11/5/2020 16:41

"Person Closely Associated to PDMR, Stephen Jefford".

Group HR Director :- .

[netcurtains] 11/5/2020 09:16

Its worth noting (but a bit sad) that during times like this many people might be thinking about death and thus getting life insurance (or increasing it). A bit sad, but there you go. I just need to find a quoted company that does Wills and I'll have my "end of the world" portfolio sorted!

[masurenguy] 09/5/2020 10:09

JOHCM UK Equity Income Funds is one of the largest in the Investment Association’s UK Equity Income sector. It has fallen 34.8% so far in 2020, compared to a 23.5% loss on the FTSE All Share Index.

"The fund has more exposure to life assurers, which carry fewer liabilities relating to business disruption, than general insurers. They picked out Phoenix, a 3.5% position, as the ‘most defensively positioned’ insurer ‘with most risk assets materially hedged’. Despite that, it yields more than 8%." Citywire May 5

[panshanger1] 07/5/2020 11:11

Particularly liked the bit :After assessing the impact of very severe scenarios on our solvency position

[panshanger1] 07/5/2020 11:08

Snaffled a few more BT pulled there's today too ( div)Market cap too small for the big funds but the smaller ones looking for yield ...

[lauders] 07/5/2020 10:32

-- After careful consideration, the Board has concluded that the proposed 2019 final dividend of 23.4 pence per share is prudent and consistent with Phoenix's risk appetite.

-- The Board also recognises that dividends are an important income stream both for retail shareholders, and the end consumer who invests in institutional income funds. They are typically ordinary savers and pensioners who need this income stream at this time more than ever, which in turn supports the broader economy. The majority of our shareholders are income funds and retail investors.

-- Therefore the Board continues to support payment of the proposed 2019 final dividend which remains subject to approval by shareholders at the AGM on 15 May 2020.

My bold. Well done PHNX BOD. Many people dependent on income will be happy they are invested with you.

[rik shaw] 07/5/2020 10:27

Positive update and recommendation to pay dividend:

[rimau1] 04/5/2020 17:07

Agreed, dividend safe. Closed life is always a little understood and all too often gets banded together with general insurers. Well worth a top up at these levels. Directors loaded up recently and so did I!

[rcturner2] 04/5/2020 14:27

I think so too. There are going to be very few decent dividend payers left by the end of this year.

[panshanger1] 04/5/2020 14:05

AddedThis dividend looks secure and at a very attractive level IMO Think the eq income funds will look at this more closely in the light of the devastation elsewhere GLA

[davebowler] 01/5/2020 08:26

Mentioned here-

[lauders] 01/5/2020 03:20

Only 12 working days to go until the dividend is paid. Looks like it will be my only dividend for a while unless PHNX spring a nasty surprise. Can't see them doing that though!

[cassini] 28/4/2020 20:21

Thanks folks, lots to learn ;0)

[rcturner2] 28/4/2020 07:50

Cassini, the money they give back to shareholders through the dividend is essentially the cash released from the policies each year relative to what needs to be held for regulatory purposes. The reason eps and operating profit figures don't make a lot of sense is that the cash released cannot be said to come from day to day operations it is essentially a balance sheet gain.

[jonwig] 28/4/2020 06:46

CASSINI - yes, the term 'Zombie Fund' was fairly common a few years ago. (Now it's 'Zombie Companies' which are something different.)

As for the accounts, other posters are correct, and you haven't missed anything obvious by looking for standard stuff such as dividend cover.

If you take the balance sheet equation "Assets - Liabilities = Equity", it reads, for PHNX:

242.7 - 237.1 = 5.6 (£bn)

which for any "ordinary" trading company would be quite uninvestable, a small change in A or L could wipe out the equity. But for things like banks and life companies it's pretty usual.
The point is that the A and L are closely matched with protective hedging; most of the A are owned by policyholders and most of the L are owed to policyholders.
Paying out a dividend to that small sliver of shareholder equity is essentially a matter of squeezing a bit of extra juice from the orange.
The narrative parts in the annual report (near the beginning) make more sense than the statutory accounts for us ordinary folk.

[cassini] 27/4/2020 23:05

Aha! Found a snippet on PHNX from Motley Fool. I guess I now know what the 'Zombie Fund' comment in the header means.

MF have a mixed opinion on it, although it's an old piece.

[cassini] 27/4/2020 22:50

Jimbox, Edmundshaw,

Thanks for your input. I think I can safely say then that the answer to my questions is that... 'it's complicated' ;0)

I see that the company consider 'operating' profit to be the more useful figure for measuring profitability and of course that is ~89p/share as opposed to the basic eps of 8.7p. That's reassuring.

I would have thought though that exceptionals and one-off charges and impairments would be reflected in an 'adjusted' EPS which didn't inflict them all on the balance sheet in one financial year, which is what threw me - adjusted EPS the same as the basic EPS, this year at least.

I think it's a bit confusing that companies can make up their own metrics of profitability - it makes any comparison with let's say an industry average very difficult.

I shall go away and read a bit more on this business as there's clearly a lot more to it than I thought, thanks all.

[cassini] 27/4/2020 22:37

RCTurner2,

You are correct I don't understand their business. Nor do I own any shares in PHNX. I am trying to figure out how to interpret some metrics for the Life Insurance sector though as I would like to diversify into it perhaps, to spread my risk a little. I'm trying to apply some basic metrics to PHNX - like the dividend cover - but it isn't working out.

I thought at first there were exceptionals and this was just a year with a lot of exceptionals and I should be looking at adjusted EPS but it's the same as the unadjusted...

I do know that Aviva and Lgen have single digit P/E ratios and PHNX's is 65! Whilst they have different splits of business - Life/General insurance etc, I would have thought insurers would have lowish P/E ratios, averaged over time.

Looking around I see LGEN, AV. and RSA all have relatively low P/Es, single digits or nearly so, SLA is near 20, PRU about 40-something and PHNX 65. M&G is quoted with a P/E of 2.92! What a vast range.

Given that dividends must be paid out of profits, I would also think that, over time anyway, profits (EPS) must exceed dividends (DPS). Looking at the LSE data for the last five years for PHNX, net EPS adds up to 127p (some EPS' were negative), net dividends to 247p!

Of course I'm no doubt missing some glaringly obvious point here and I appreciate this is probably noddy stuff to those who know how to read balance sheets, but everyone has to start somewhere, although perhaps not on a share bulletin board ;0)

[edmundshaw] 27/4/2020 22:04

Cassini, you cannot hope to understand a company's preformance by looking at ADVFN numbers - or indeed the numbers produced by any broad coverage of the stock market by a financial services company. Basic EPS is frequently misleading and not useful. But adjusted EPS, operating profit etc can also be misleading. Unfortunately some leg-work is necessary.

Here is a quote from the 2020 results RNS. If you want to know EXACTLY what is excluded from the operating profit, you need to read some parts of the results RNS: the financial statements and the relevant notes.

Whilst the excluded items are important to an assessment of the
consolidated financial performance of the Group, management considers
that the presentation of the operating profit metric provides useful
information for assessing the performance of the Group’s operating
segments on an ongoing basis. The IFRS results are significantly
impacted by the amortisation of intangible balances arising on acquisition,
the one-off costs of integration activities and the costs of servicing debt
used to finance acquisition activity, which are not indicative of the
underlying operational performance of the Group’s segments.
Furthermore, the hedging strategy of the Group is calibrated to protect
the Solvency II capital position and cash generation capability of the
operating companies, as opposed to the IFRS financial position. This can
create additional volatility in the IFRS result which is excluded from the
operating profit metric.
The Company therefore considers that operating profit provides a
more representative indicator of the ability of the Group’s operating
companies to generate cash available for the servicing of the Group’s
debts and for distribution to shareholders. Accordingly, the measure
is more closely aligned with the business model of the Group and
how performance is managed by those charged with governance.

[jimbox1] 27/4/2020 21:52

Cassini, I can't say that I fully understand how Phoenix continues with low levels of profitability (on an IFRS basis) year after year. Nevertheless, solvency and cashflow seem to have been sufficient for it to pay increasing dividends.

I was responding to your point regarding comparability with other insurance companies. If you want to compare PE ratios with Legal and General or Aviva or Chesnara, then they have to be measured using the same formula.

Many companies use their own non-GAAP performance measures, which tend to portray business performance in a flattering light. Typically, "non-recurring" items are excluded to give an idea of what the underlying performance is. There is a point of view that management should not be responsible for taxes, finance casts, impairments, non-cash charges, amortisations, restructuring etc. Phoenix is not alone in excluding all these items from their own, preferred, performance measures.

Inconveniently, the International Financial Reporting Standards (IFRS)require EPS to be reported after all the inconvenient costs have been included.

[cassini] 27/4/2020 20:33

jimbox1,

Is that the same as 'cashflow' per share then? All the money that came in prior to any and all impairments and charges? If so I'm back where I was, this share has a P/E ratio that's sky high and the dividend only looks to have been covered once in the past 4/5 years. I'm just wondering where they get the money from ? ;0) Ofcourse, shares like Shell also fail to cover their dividend with profits some years and pay it out of cash reserves (or scrip) but that can't go on forever.

The 2019 annual report for PHNX seems very positive, so I'm sure I'm missing some fundamental fact here but not being used to reading company statements I'm baffled at the positivity!

[rcturner2] 27/4/2020 20:28

Eps is very misleading for a company like Phoenix. If you are looking at that you don't understand their business.

[jimbox1] 27/4/2020 18:19

Basic Operating Earnings per share as a non-GAAP measure and ignores tax and other inconvenient charges like amortisation and impairments.
The true EPS on an IFRS basis does appear to be 8.7p for the year ended 31 December 2019

[cassini] 27/4/2020 18:16

Skinny,

Thanks for that. I now see there are two figures they quote - 'basic earnings per share' and 'basic operating earnings per share'. The former gives 8.7p/share, the latter 89.8p/share.

I confess I'm at a loss as to what the difference is. Usually in a case like this I go the the ADVFN 'financials' button in the header, click on it, finder the term that is confusing me in the statements and click on that (they are hyperlinked) for a definition. Trouble is, I can't find this 'basic operating earnings per share' mentioned in the ADVFN financials so can't get a clarification that way!