Phoenix Share Discussion Threads

[jonwig] 17/7/2012 08:52

Thanks, so that could explain the rise over the past weeks.

Earlier this month broker Berenberg upgraded to buy from hold, believing a deal to transfer 300,000 retirement policies to Guardian Financial Services made Phoenix a more attractive bid target.

And of course, PHNX management could well have planned exactly that.

[stemis] 28/6/2012 09:17

The 40p dividend costs £70m, small in the scheme of things.

Whilst that's true of course it wouldn't matter if they had no money.

What we do know is that the Impala loan of £1.993 bn is due for payment by 30 November 2016 as it the Pearl facility of £375m. Whilst these should be eminently refinancable, the market is clearly waiting for news. Once we get that news (assuming it's positive) then the shares should easily trade north of 700p (which would only be about 5 x annual cashflow of £250m).

[jonwig] 28/6/2012 07:17

...presumably refinancing of these is what hangs over the shares.

I'm convinced of that.
They have been pressed on this point a number of times during results podcasts and have always been very relaxed about the rates paid and the outlook for refinancing.

I think the way they put it is "rebalancing the maturity profile".

The 40p dividend costs £70m, small in the scheme of things.

[stemis] 27/6/2012 21:03

Total debt is still nearly £3bn

Yes, although there is also holding company cash of £837m so net debt is £2.14bn.

That's interesting compared to a market cap of £829m.

In the short term they need to generate about £450m pa to maintain loan repayments of £150m and not erode holding company cash balances. However there are some chunky loan repayments coming up in the next few year and presumably refinancing of these is what hangs over the shares.

[jonwig] 27/6/2012 11:37

Of course, front-loading the £200m cashflow rather than (say) £10m pa over 20 years shouldn't noticeably impact the "500m - 600m pa" target, except in the first year.

They might, as you suggest, reduce the guidance to something like 450m - 550m.

I think they have scheduled debt repayments of £150m annually and volunteered an extra £21m last year. The Impala facility seems to be the one they have to keep happy (£2bn). Total debt is still nearly £3bn.

[scburbs] 27/6/2012 08:26

Excellent news this morning. Their ability to do this deal MCEV neutral is also good to see. Interesting to see the ex-Phoenix team at Guardian are the buyers.

I agree with Jonwig (or at least I would if he were a cynic!) as I do not expect them to hit £500-600m cash flow (or £700-800m as it would now be). However, I wasn't expecting them to hit it prior to the announcement. There is now a good chance they will hit £500-600m in absolute terms.

A bit more firepower for some cheeky discounted debt buybacks?

[jonwig] 27/6/2012 08:14

The effect of the annuity transfer today is pretty clearly explained in the RNS, and it will be just the thing the debt holders want to hear.

If I were a cynic I'd read "The acceleration of cash resulting from this transaction was not contemplated at the time the Group's current cash generation targets were set. A further update will be provided on the Group's cash generation targets in due course" as a possible softener to lowering current targets of £500-600m.

[scburbs] 20/6/2012 17:10

Better dividend yield with RSL (I am a holder), but RSL is distributing a larger proportion of the underlying cashflows. If they both distributed the same proportion then I expect that the PHNX yield would be higher (i.e. the relative undervaluation of PHNX is higher, but that is understandable as it is riskier).

Clearly PHNX currently have gearing restrictions that prevent any dividend increase. It will be interesting to see how these restrictions are impacting by the refinancing.

[envirovision] 20/6/2012 13:19

mind, rsl can still be had for a 10% yield

[envirovision] 20/6/2012 10:28

indeed meanwhile sit back and enjoy your 42p per year dividend paid bi annually 8th May was the last one I had so I guess roll on November for the next filip

[scburbs] 20/6/2012 10:19

Yes, the share price turnaround is both good and bad news. I managed to pick up a good few tranches to materially increase my position, but was looking to buy some more ...

On the other hands there are plenty of mouths (politicians) around so if the wrong foot gets in the wrong mouth you still might get at opportunity to buy at £4.

[zcaprd7] 19/6/2012 15:15

Damn, wanted another nibble at £4...

[bubbleandleek] 18/6/2012 13:37

pretty sure it had something to do with friday's index re-weightings

[envirovision] 16/6/2012 12:15

Its probably hedge funds closing all manner of short positions ahead of the greek tragedy. There is no telling what coordinated central bank and government policies could be pulled out of the bag after Sunday and those remaining short could easily get fried alive at the drop of a some politicians hat at any time from sunday night onwards.

[skyship] 16/6/2012 08:21

hmm - perhaps don't read too much into those after-hours auction prices. There were a load of apparently mis-priced trades those on my Monitor after the close, so perhaps just a feed fault - see PCTN, PIN, LMS...

[hyden] 15/6/2012 19:24

Interesting price action today. Do we think that the deal with Resolution is back on? Or perhaps encouraging talks on debt re-negotiation?

[envirovision] 15/6/2012 16:44

1 mill odd at 4.63

[ursus] 15/6/2012 16:41

ullo ullo -- see the closing auction price and volume

[envirovision] 31/5/2012 14:50

I have also added

[scburbs] 31/5/2012 14:37

I wonder whether Cinven might come knocking soon.

"Private equity firm Cinven has kicked off a £20bn strategy to consolidate the "zombie" life insurance sector with a £275m deal to buy Guardian Life."

I wonder who they have put in the key management positions of Guardian Life ...

"Jonathan Yates, Chief Executive, joins the Company on 1 March 2012. Previously Group Finance Director of Phoenix Group, the largest UK consolidator of closed life assurance funds, he was formerly Chief Executive of Admin Re, the closed life division of Swiss Re, and has extensive experience in the UK closed life assurance industry.

Paul Dixon, Chief Investment Officer, previously worked for Phoenix Group and co-founded the internal asset manager Axial which saw assets grow from zero to £13 billion in three years and was then merged within the Phoenix Group. Prior to Phoenix, he spent 15 years in investment banking and global markets, latterly as Managing Director of Merrill Lynch. He joins Guardian on 3 January 2012.

Simon Davis, Chief Risk Officer, joined on 15 December 2011. He was formerly Managing Director of his own consulting business advising Phoenix Group across a number of risk-related areas. Prior to that, he was Corporate Services Director at Admin Re."

[jonwig] 31/5/2012 14:31

Meanwhile, in the boardroom, they have replaced their FD with (surely) an excellent appointment:

Mr McConville has more than 22 years' experience in the UK retail banking and insurance sector. He joins from Northern Rock plc where he was Chief Finance Officer from 2010 to early 2012. Previously, he was at Lloyds Banking Group for over 20 years, where he held a number of senior finance roles, including Finance Director of both Scottish Widows Group and the Insurance and Investments Division.

How old will he be, about 50?

[scburbs] 31/5/2012 14:11

I added yesterday and again today and when I look down there seems to be blood all over the floor along with a collection of knives. I am adding in small chunks so their is plenty more blood to spill before I am in need of a transfusion!

Its cheap, but the adverse investment variances will be killing this years surplus generation at Phoenix Life level. However, given they have squirrelled away £900m at holding company level it is difficult to see why that should create quite such a distressed valuation.

Presumably the market is increasingly worried about the debt extension talks, although this may also create an opportunity to take out certain lenders on the cheap.

The ever falling gilt yield will also be putting increasing pressure on returns as existing gilts expire (how exposed they are to guaranteed returns is another key question).

[skyship] 31/5/2012 13:35

Hmm - decided to buy in yesterday and already regretting it!

This fall beginning to look rather worrying - could there really be something untoward here?

[jonwig] 24/5/2012 12:08

Yes, the sector is tempting, but diversification amongst insurers still gets you big correlation in the face of macro shocks ...

Yields amongst the safest bonds are lower than ever.

An unreconstructed Solvency II could be much harsher than currently expected, if for instance the EU panel decides insurers need even more capital. This would constrain dividend paying ability, but I think we should escape rights issues. (I wonder if there are still lingering fears there on RSA after 2009?)