Phoenix Share Discussion Threads

[speedsgh] 16/3/2018 11:03

Phoenix follows Standard Life tie-up with new acquisition -

Phoenix, which crunches together old insurance books, is in talks to buy another business.

The development comes weeks after Phoenix revealed its biggest deal to date, a £3.2 billion transaction to buy the majority of Standard Life Aberdeen’s insurance business and become Europe’s largest manager of books of mature business.

Clive Bannister, Phoenix’s chief executive, said the likely acquisition, over which the company is in exclusive talks, would be much smaller. It is to buy a so-called bulk annuity business, where insurers take over final salary pension schemes from companies which no longer want to manage the risk of meeting their obligations to pay out promised sums to pensioners...

[jonwig] 16/3/2018 06:40

edmundshaw - agree about the dividend policy. 'Strong and stable' ... but without any irony!

Something in the results which has hardly been mentioned - possible purchase of a bulk annuity book. Could this be Equitable Life, or have I got the wrong kind of business?

[edmundshaw] 15/3/2018 13:58

The company gives what it says it will give with dividends. If they generate more cash than expected the policy seems to be to keep it for the next acquisition, or to elongate dividend sustainability. So for me the dividend is exactly as expected. And next year it will be almost exactly 3% higher as epcected. And after that it will probably rise only on further acquisitions.

If you want racy, this is not a good share. If you want dependable good performance I think this is a good bet, and currently rather undervalued (which of course we hope will correct!) given the extended sustainability of cashflow and the tightening central banks.

[stun12] 15/3/2018 09:54

Picked a few more up in the mid 770s. I thought that the divi was much as expected given the higher share count after the last rights issue?

[sogoesit] 15/3/2018 08:58

Disappointed in the dividend declaration so I expect a partial share price retrace.

[speedsgh] 15/3/2018 08:32

For some reason results announcement is not currently showing on Investegate website...

2017 Highlights
· £653 million of cash generation2 (2016: £486 million). The Group now expects to achieve the top end of the £1.0 - 1.2 billion cash generation target range for the two year period between 2017 - 2018.
· Solvency II surplus of £1.8 billion3 as at 31 December 2017 (£1.1 billion as at 31 December 2016).
· Shareholder Capital Coverage Ratio of 164% as at 31 December 20174 (139% as at 31 December 2016).
· Group operating profit of £368 million (2016: £351 million).
· Proposed final dividend of 25.1p per share, a 5% increase on the 2016 final dividend.
· Credit rating upgrade from Fitch Ratings achieved in July 2017, with the rating reaffirmed following the announcement of the proposed Standard Life Assurance acquisition.
· Strong 92% customer satisfaction score.

Integration of acquisitions substantially complete
· Integration of the AXA Wealth and Abbey Life businesses is substantially complete, ahead of plan.
· 2017 cash generation of £165 million from the AXA Wealth business (£282 million of cash generation to date since completion of the AXA Wealth acquisition) and £236 million from Abbey Life.
· Combined cost savings of £27 million per annum delivered against a target of £17 million per annum.

2018 Outlook
· New long-term cash generation target for 2018 - 2022 of £2.5 billion.
· Proposed acquisition of Standard Life Assurance and Strategic Partnership with Standard Life Aberdeen plc due for completion in Q3 2018, subject to regulatory approval.
· In exclusive talks on first Bulk Purchase Annuity transaction.
· Final stage of onshoring project to complete as soon as practicable after Standard Life Assurance transaction.

Commenting on the results, Group CEO, Clive Bannister said:
"Phoenix has enjoyed a highly successful year. The Group continues to deliver strong cash generation and remains on track to achieve its targets, supported by capital and cost synergies from the integration of the AXA and Abbey Life acquisitions which are now substantially complete. Our success with integrating both acquisitions demonstrates our ability to deliver benefits for both investors and policyholders alike.

Our proposed acquisition of Standard Life Assurance and the Strategic Partnership with Standard Life Aberdeen plc announced last month is consistent with our strategy and value accretive. We look forward to welcoming Standard Life Aberdeen as a 19.99% shareholder in the enlarged Group. It will make Phoenix the pre-eminent closed fund consolidator in Europe and deliver increased size in an industry that rewards scale. We remain committed to maintaining a high level of customer service throughout this acquisition and transition process."

[hvs] 15/3/2018 07:17

Very good statement and good opportunities going forward.

[lauders] 10/3/2018 01:35

Would be nice for pensioners if the Government actually address the cold calling matter quickly and DOES bring the ban into play:

Good to see that "Three in four (75%) of our policies are now receiving an annual bonus (up from less than 40% four years ago)" per PHNX's March 1st release here:

[fenners66] 07/3/2018 22:18

So economics has a way of self balancing , supply and demand , here's an idea, life expectancy up, government deficits up, more borrowing to pay for more pensioners, interest rates down to cope with deficits and fix the economies, gilt yields down , pensioners incomes down, pensioners switch of heating (apparently 3000 people a year die because of this) , life expectancy falls , funds release makes up for low gilt yields..... what's next ?

[jonwig] 07/3/2018 14:41

@ boonkoh - yes, it seems evident from the quotes above. Their H1 results were a bit unclear (to me!) in that they gave some indication of solvency benefits but not, I think, cashflow.

It's also the case that life cos suffered from low gilt yields (hold lots of bonds, get lower coupon reinvesting when they mature), so rising yields can help. But equity falls won't be a help at all, if - when.

[boonkoh] 07/3/2018 14:11

Jonwig, so is it fair to say PHNX should also see the benefits from revised life expectancy projections?

[jonwig] 07/3/2018 08:36

FT comment re L&G:

... set to benefit from a slowing, if not a shortening, of our future life expectancy.

Back in August, Legal & General reported a £126m boost to its half-year operating profit simply because the long-term trend of increasing life expectancy had slowed. This allowed it to adjust its reserves to take account of these new assumptions about mortality.

This morning, it updated that figure for the full year: a £332m increase to profit from those mortality changes - exactly in line with forecasts from analysts at RBC Capital Markets.
...

Back in August, Legal & General reported a £126m boost to its half-year operating profit simply because the long-term trend of increasing life expectancy had slowed. This allowed it to adjust its reserves to take account of these new assumptions about mortality.

This morning, it updated that figure for the full year: a £332m increase to profit from those mortality changes - exactly in line with forecasts from analysts at RBC Capital Markets.

[rcturner2] 06/3/2018 08:31

I hold LGEN in addition to Phoenix and they are similarish businesses, both paying handy dividends. LGEN reports this week and I am expecting good numbers.

[hvs] 05/3/2018 14:00

lol !!!!

THey only buys ones it goes up.

[jonwig] 05/3/2018 11:46

Numis (28 Feb) target price raised from 785p to 838p. Retains 'Hold'.

[garycook] 05/3/2018 07:36

jonwig,Totally agree.

[jonwig] 05/3/2018 07:30

FT:

A round of applause is not a common feature of company meetings with analysts. But that is exactly what Phoenix chief executive Clive Bannister got when he finished describing his £3.2bn acquisition of Standard Life Aberdeen’s insurance business to the assembled number crunchers last month.

The deal is a watershed for the specialist insurer, at a stroke vastly increasing its scale and giving it a platform for more acquisitions, potentially across Europe.



Includes: "Phoenix will become the 35th biggest dividend payer in the UK after the deal, making it as important to income investors as companies such as Associated British Foods, Land Securities and Marks and Spencer."

With FTSE100 inclusion and equity income funds hungry, we ought to get a rerating here.

[edmundshaw] 04/3/2018 22:13

They hedge some of the risk, but not all, if I remember right.

[jonwig] 04/3/2018 17:45

A worsening outlook for life expectancy in the UK is expected to boost the profits of insurance companies by hundreds of millions of pounds when they report results this week.

Figures published last week showed gains in life expectancy between 2011 to 2017 slowing sharply and “significantly lower” than any other recent six-year period.


Longevity assumptions feed into life companies through, I think, the discount rates used in their asset calculations and, of course, reduced annuity costs. Phoenix has swap contracts against increases, but I don't know how they work with decreases.

Worth looking out for on the 15th.

[joan of arc] 04/3/2018 13:22

One of my boyhood heroes. We're next.

[jonwig] 04/3/2018 12:56

Sir Roger Bannister -

[jonwig] 02/3/2018 07:18

Equitable life up for sale (what's left of it). Key paras:

The market for so-called closed books of life insurance businesses has been growing rapidly as companies seek to shed unwanted assets. These books become less efficient over time as the policies run off but the costs associated with them largely remain in place.

“It is easy to deal with the variable costs, however in a Solvency II world you need a number of risk and actuarial people and the fixed costs become a bigger and bigger proportion [of the total],” added Mr Wiscarson.

Several companies have sprung up to consolidate these books, creating economies of scale as they add new policies to their existing cost bases.

These companies, which include Phoenix, Chesnara and Swiss Re-owned ReAssure, could be possible bidders for all or part of Equitable Life.

ReAssure last year raised £800m from Japanese insurer MS & AD to pursue deals. Phoenix, meanwhile, last week agreed a £3.2bn deal to buy Standard Life Aberdeen’s life insurance business. The scale of that deal could preclude it from making other acquisitions in the short term.

Alternatively, bankers say that the business could interest private equity buyers or other insurers that have with-profits funds, such as Prudential or Royal London.



Phoenix tends to integrate one acquisition before moving on, and another fundraising is out of the question for the present. This would be about £1bn I think.

[hyden] 01/3/2018 11:03

Actually, on reflection, I think a 1 for 3 Rights Issue leaves a discount to the current share price which is just too narrow (~8%) so Numis may be right after all.