"Steady as it goes" may be the term Phoenix (PHNX) chief executive Clive Bannister uses to describe the strategy of this consolidator of closed-life insurance books, but it could not escape the extraordinary economic conditions during the first half. Lower interest rates have myriad effects on the so-called 'zombie insurer', not least pushing up the group's capital requirements and forcing down its Solvency II coverage ratio by 10 percentage points.
Policyholders are also hanging onto policies with higher interest rate guarantees for longer. Taking a £51m provision against this dampened the group's operating profits, which fell 23 per cent to £108m. However, the good news was cash remitted to Phoenix Life from its companies increased a third to £147m, more than half of which came from the sale of assets held by reinsurance company Opal Re.
Mr Bannister says the group is on track to achieve its full-year cash generation target of between £350m and £450m and its longer-term goal of £2bn between 2016 and 2020. The acquisition of Axa Wealth’s pensions and protection businesses is also scheduled to complete later this year. Crucially management expects to then increase the 2016 final dividend by 5 per cent to 28p, or 56p on an annualised basis.
Analysts at Shore Capital expect adjusted net asset value (NAV) of 790p per share at December 2016.
PHOENIX (PHNX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 872.5p | MARKET VALUE: | £2.16bn | |
| TOUCH: | 872-872.5p | 12-MONTH HIGH: | 952p | LOW: 718p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 1,131p | SOLVENCY RATIO: | 144% | |
| Half-year to 30 Jun | Gross life premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 415 | 48 | 22.7 | 26.7 |
| 2016 | 449 | 60 | 0.2 | 26.7 |
| % change | +8 | +25 | -99 | - |
Ex-div: 8 Sep Payment: 3 Oct *Includes intangible assets of £1.47bn, or 594p a share | ||||
