UK insurer Phoenix set to deliver positive net fund flows from 2024

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Sept 18 (Reuters) – British insurer Phoenix (PHNX.L) said on Monday it was on track to deliver positive net fund flows from 2024 for the first time in its history, after net fund flows from new business surged in the first half of 2023.

Phoenix, which has historically specialised in managing books of life insurance businesses that are closed to new customers, reported a 72% increase in new business net fund flows to 1.3 billion pounds ($1.6 billion) in the six months to June.

The UK retirement market is positive despite challenging conditions in other sectors, with workplace pensions one of the key drivers of growth for the company, CEO Andy Briggs told Reuters in an interview after the results.

The market for workplace pension schemes has grown rapidly due to an ageing population and the move from defined benefit to defined contribution pension schemes, and also because of auto-enrolment.

Briggs said he expects the bulk annuity market – which insures company-defined benefits, or final salary and pension schemes – to grow to a record of over 40 billion pounds this year as higher interest rates make it more affordable. It has been around 30 billion pounds in the last couple of years.

Phoenix, through its Standard Life brand, has been looking to expand into bulk annuities as demand for corporate pension insurance deals grows against a backdrop of rising interest rates which have driven up yields.

“There are a number of very large schemes …in excess of 10 billion pounds that are engaging with the market around considering buying out some or all of the scheme, and that’s part of the driver of why the market is so strong,” Briggs said.

“We’re not likely to be writing those super large cases …(we) will be quite happy picking up the mid sized cases,” he added.

In July, Phoenix completed a 1.2 billion pound pensions buy-in with British pub operator Mitchells & Butlers (MAB.L) .

The insurer expects 2023 cash generation at the top-end of its 1.3 billion pounds to 1.4 billion pounds forecast range after new business long-term cash more than doubled in the first half.

The company’s total cash generation for the six months ended June 30 came in at 898 million pounds, ahead of analysts’ average forecast of 733 million pounds.

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