Phoenix Share Discussion Threads

[robsy2] 07/6/2010 12:20

Yes Agreed
I had a look at the presentation and it is worth a read because it really focusses on the robustness of the business model, the simplicity or rathre the predictability of what they do ,the future cash flow and the extent of the twin demands on cash flow, an issue highlighted by Chairman2 as a possible reason for the lacklustre rating.I think as the company becomes more "normal" and they continue to do what they say they are going to do ( faultless so far) this will re-rate and give us a handsome dividend and steady capital appreciation as MCEV increases. I see it as a 15%-20% a year all weather stock over the next 5 years or so.
The re-building of credibility is important because they are keen to expand the business. I am not sure how they will fund any planned expansion, loans or rights issues?

[jonwig] 04/6/2010 07:58

All looks very promising:



AGM in Jersey. Pity, as I'd quite like to have gone!

[robsy2] 03/6/2010 18:17

OK so the ten in the bush are contingent rights amounting to 36m shares if the share price reachs 13-15€ and the 9 in the hand is the issue of 32.4m shares right now. In some ways if they refuse the offer its quite a bullish sign and if they accept it its positive as well, Win Win !
I am still a buyer.

[jonwig] 02/6/2010 18:52

I hadn't taken a lot of notice of these before, but the details are on p102 of the 2009 AR.

The rights holders seem to have got a good deal, as the original terms would have meant waiting for a given share price (€13-15). They'll get the divis too, now, and can trade their shares.

Equally, the company will get its primary listing and a cleaned-up balance sheet. Win-Win, maybe?

We shall see!

[robsy2] 02/6/2010 17:50

I suppose so. I am not familiar with the whys and wherefores of the contingent rights( Are you?) but I suppose the holders might see the benefit in giving a bit if it helps get the stock fully listed and therefore more marketable....

[jonwig] 01/6/2010 15:26

Nine in the hand is worth ten in the bush?

[mctmct] 01/6/2010 14:26

"The Company can also confirm that discussions are at an advanced stage and that
the shape of the proposals being discussed includes an exchange of the
Contingent Rights in question at the rate of around nine new Ordinary Shares for
every ten shares that would have been issued had the Contingent Rights
crystallized in the normal way."

How does that seem?

[robsy2] 31/5/2010 18:16

There has been a strong response from LUX.

Current price 8.10 €

Last close 7.45
Day volume 15,655

Security PGH Day high 8.28 €
Wkn KYG7091M1096 Day low 7.35 €
Exchange NYSE Euronext
Amsterdam 52 weeks high 10.03 €
Currency € 52 weeks high date 03 Sep 2009
Last traded time 05:45 pm CET 52 weeks low 6.40 €
Last traded date 31 May 2010 52 weeks low date 16 Feb 2010
Last sale 8.10 € Bid -- €
Day open 7.35 € Last bid --
Change in cents 0.65 Ask -- €
Change in percent 8.72 % Last ask

[jonwig] 31/5/2010 10:22

Thanks - may be a response to the FT article. Should be posted as aLondon RNS tomorrow?

[robsy2] 31/5/2010 10:17

good find.This is a complex situation that makes valuation difficult. The management seem to be ironing out the problems.Hopefully we will have more news tomorrow and if the float goes ahead as planned then that should perk up the share price A very large trade went through on Friday.....
R2
Also saw this today

[jonwig] 31/5/2010 07:54

Phoenix deal paves way for flotation

By Sam Jones

Published: May 30 2010 21:52 | Last updated: May 30 2010 21:52

Phoenix Group, the closed life assurance fund business formerly known as Pearl, has reached an agreement with the investor Hugh Osmond that will finally clear the way for its listing in London next month.

[robsy2] 20/5/2010 18:40

general sentiment is negative in the markets and this is impacting on the insurance sector in particular because of a raft of issues. Insurance losses,solvency rules, exposure to sovereign debt,the downward movement in equities itself, legislative changes, huge rights issues in the sector etc etc .......

You can't argue with market sentiment but IMO a lot of the above worries are not that significant in real terms to phnx,
phnx is being dragged down.
I am focussing on the IMS which talks of cash generation of around 700m GBP this year from a company that has a market cap of about 900m GBP.
I was happy to buy at 700p so I will continue to drip money in at these lower levels.
A total of 13000 shares were traded today!

[jonwig] 18/5/2010 08:12

Pensions and tax reform to hit life industry:



But analysts are divided on just how and how much! From my reading, closed life funds should be less affected, if much at all. It suggests leaving such as RSL off the radar until the situation becomes clearer - as well as its possible involvement with the outcome at the Pru.

[jonwig] 17/5/2010 19:43

Webcast a bit dull, though new FD said he was very excited about prospects.
Only two questions, neither one particularly searching.
I'd have thought there would have been a question about the more precise conditions for restoring freedom to pay dividends as they wish.

[jonwig] 17/5/2010 17:49

Yup - me too. I want to catch up with the analyst podcast, may have time this evening if it's still on the website.

[robsy2] 17/5/2010 17:12

Yes it seems very good progress is being made all round .
This business is beginning to throw off a lot of cash . The management actions are on track and mean that the business could throw off £700m in 2010, and increase EV by £145m
So 2010 cash generation could be 350p a share
The divi is 45p a share
and 2010 EV could increase this year by 70p a share.
FUM is nicely up
the listing looks on track
Bondholders have been placated



I am enthused. What i like is that running this is just a big admin job so there is little to knock management off course. It is just a question of draining off money from the £69 billion pot of money they manage.

As they say ·

"These results demonstrate the strength of our closed-book business model."

I will be buying more
R2

[jonwig] 17/5/2010 07:51

IMS looks to be very much in line with targets for the FY:



I see Ignis are increasing their FUM quite nicely (up from £66.9bn to £69.4bn despite maturing policies dropping out. They've been advertising new stuff in the weekend press for some time.

The fact that they have a timetable in place for the premium listing is encouraging:

· The Company continues to negotiate with the contingent rights holders to reduce the outstanding dilutive instruments to below the threshold required for the Premium Listing. Any agreement would be subject to the approval of shareholders at the Company's AGM on 23 June.

· Provided agreement is reached with the contingent rights holders, the Company expects to issue a prospectus in early June and for the Premium Listing to become effective by the end of June 2010.

[robsy2] 14/5/2010 10:42

Yes waiting until the IMS seems sensible.The share price looks fairly stable and I have noticed that trading in the € stock is on an upward trend.
Lets keep our eyes on it.
I had a brief look at RSL and I like FP, but the impression I get is that running and growing a live book of business in the UK is complicated...
R2

[jonwig] 12/5/2010 14:23

Actually, it could be pretty relevant for RSL since Friends Provident is busy in Europe and beyond. (I've been researching and considering RSL this week.)

I've read some articles which suggest Solvency II might be demanding, but less so than feared (for the general insurance sector, that is) since some companies which took part in trials found their preliminary capital safeguards accepted by the CEIOPS board.

Anyway, I've some money now to add into PHNX if the IMS on 17/05 warrants it!

[robsy2] 12/5/2010 14:15

Solvency II impact becoming clearer 12 May 2010 by Simon Danaher, Senior Online Reporter, Last Word Media

The Solvency II directive on capital requirements is likely to have a greater impact on cross-border life companies than first thought according to Acuity Consultants.

Acuity says with the Committee of European Insurance and Occupational Pensions Supervisors Level 2 advice on the calibrations for calculating Solvency II capital having been published last month the requirements on firms is becoming much clearer.

The firm estimates that for a cross-border life company writing 95%+ linked-life business, the solvency capital required by the current 'one dimensional' Solvency I measurement might be reduced by as much as one third. However, Acuity says the new risk-based elements of Solvency II are likely to see increases in solvency capital requirements due to some specific aspects of cross-border life business.

Acuity says of relevance to cross-border life companies will be requirements to assess:

•Lapse risk – perhaps the risk with potentially the biggest impact on solvency capital, especially for those companies writing regular premium business with poor levels of persistency
•Counterparty default risk – this would almost certainly include indemnity commission debts
•Life company expense risk – 'soft' payments to distributors and 'marketing costs' might form part of this but might also include the impact of changing expense rates, mismatching income and expenses
•Asset concentration risk – a relevant issue where the cross-border life company ends up holding a large portion of a boutique fund via a series of portfolio bond investments
The firm added that while there is a possibility for most cross-border life companies the Solvency II bill could mean their capital requirements are lower than they are currently, for those writing traditional international regular premium business it is clear "a number of the sectors' historic demons may be about to be a little harder to ignore".


Not entirely relevent because it refers to cross border business but what struck me is that increases in solvency requirements largely relate to new business. We don't do that so our solvency requirements could go down which releases capital = good news.

[robsy2] 06/5/2010 17:20

Yes a sharp fall .Jonwig If you look at the slide 56 in the Results slides in Reports and presentations section on the website you get a more detailed picture of the exposure.At 31.12.09 exposure to Italian, Greek, Irish and Spanish Governmemt bonds represented 6.3% of the the 1.345 billion thay have invested ie 85m GPB , small beer?
If this falls a lot it may present a good buying opportunity.
The downsidein holding these assets is also mitigated for Phoenix because it is the policyholders who hold the investments and have most of the risk.

[jonwig] 06/5/2010 16:15

There may be some worry about exposure to Greek, etc. euro debt. The accounts have nothing to say about this, but the balance sheet has debt instruments of £38bn out of total financial assets of £62bn. (Note 36, p 135.)

[jonwig] 04/5/2010 07:43

Very graphic, Robsy!

New FD appointed. See also the mention of completing preparations for the LSE premium listing:



IMS is 17 May.

[robsy2] 03/5/2010 17:29

Yes agreed MCEV (complex to me) gives us a real measure of the shareholders stake.
I had a look "under the bonnet" to see more closely how the machine generates cash.
I see the machine as a quite simple yet robust cash generator.The machine needs 3 things to run,a large supply of "policies",some funding and finally some machine operators.

I note that the machine is a static "Type Zombie" and as such runs on secondhand policies rather than new policies. This is good because the second hand policies are plentiful and often cheaper to buy than the new policies that the "Open Book" machines need to make them run.

The Zombie works by mixing all the policies together in huge fermentation tanks(the fewer the better), these are maintained at a fairly constant temperature under strict conditions while the contents are coverted into "cash". This is a slow process. The cash residue created, is drawn off at regular intervals. Some of the cash is paid to the policy holders, some is used for funding and the rest is converted into dividends and paid to the owners of the Zombie.

The "Type 2 Phoenix" Zombie (T2P)has already got 6.7 million policies in the fermentation tanks already , enough to keep it running for many, many years to come.

The policies were all bought some time ago and can last 20 years and beyond so they are not that perishable. More secondhand policies can be bought as and when required and usually at a reasonable discount.

Funding is also needed to make the beast run. The T2P bought so much fuel that it required a lot of funding. This has caused a bit of a concern but the impression I get is that the T2P is seen as being more than capable of creating enough cash to pay for the policy holders , the funding, the return of capital and the dividends.

In the unlikely event that all the policy holders and everyone else was paid off tomorrow the indications are that there would be an enormous amount of cash in the tank left for the shareholders to be taken as dividends.

In general The Zombie also tends to be much more reliable than the "Open Book" machines that run on new policies. There are many reasons for this. Firstly the machine itself , The Zombie is static , so it's running costs are quite predictable and it has far less moving parts, which not only makes it more reliable, but also much less costly to maintain and crucially it only requires a limited number of qualified "machine hands" to keep it running.

By all accounts once the Zombie is correctly set-up,the actual running of the machine can be contracted-out to small teams of specialists at a profit. I heard of one such Zombie called "a Type one Chesnera" that was generating tens of millions of cash a year, yet only required 15 machine hands to run it, but apparantly the Chesnera began to run out of the secondhand fuel so they have adapted the machine to run on an experimental new Swedish fuel but no-one knows if the experiment is going to work.

For this reason I am now favouring the T2P.
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I could go on but I should probably do something more productive with my time!
All the best
R2

[jonwig] 01/5/2010 12:21

Robsy - "Chairman2" seems to know a lot about Life Funds, maybe he is an IFA or similar.
For myself, as I said on the CSN thread, the MCEV tells me everything I need to know about shareholders' stake in the fund.

Also, does it really matter how fees are allocated between Phoenix and Ignis? After all, the latter is a subsidiary, and all we need are the consolidated accounts.

Having said that, I wouldn't disagree with your conclusions!