Commenting on the results announcement, Phoenix Group CEO, Andy Briggs said:

“Phoenix’s vision is to be the UK’s leading retirement savings and income business, and I am pleased with the initial progress we have made in executing on our 3-year strategy, as our 2024 interim financial results demonstrate.

We have delivered 19% growth in Operating Cash Generation and remitted total cash generation of £950 million in the first half. We have generated 3%pts of recurring Solvency II capital and our resilient balance sheet has enabled us to repay £250 million of debt and to invest in our business. Strong growth in our capital-light Pensions and Savings business in particular has supported a 15% increase in operating profit. The Board has declared an Interim dividend which is a 2.5% year-on-year increase.

I am confident that as we continue to execute on our strategy we are building a growing business that is on track to deliver our financial targets and create shareholder value.”

H1 2024 financial results highlights

Cash

• £647m Operating Cash Generation¹ (H1 2023: £543m) increased 19%, driven by increased surplus from our growing business and strong delivery of recurring management actions.
• £950m total cash generation² (H1 2023: £898m) and we are confident of delivering at the top-end of our £1.4-1.5bn target range in 2024.

Capital 

• +3%pts of recurring Solvency II (‘SII’) capital generation in H1, supported by recurring Own Funds growth.
• £3.5bn³ SII surplus remains resilient (FY 2023: £3.9bn), after planned £0.25bn debt repayment and c.£0.2bn investment into our strategic priorities.
• 168%3,4 Shareholder Capital Coverage Ratio (FY 2023: 176%⁴), remains in top-half of our 140-180% operating range.
• £250m of debt repayment in the period, in line with our intention to repay at least £500m by the end of 2026; SII leverage ratio reduced to 35% (FY 2023: 36%), with (2)%pts debt repayment benefit partly offset by a reduction in Regulatory Own Funds from higher interest rates due to our SII hedging approach.

Earnings

• IFRS adjusted operating profit increased 15% to £360m (H1 2023: £313m⁵), driven by profitable growth in both Pensions and Savings (£149m) and Retirement Solutions (£210m).
• IFRS loss after tax of £(646)m (H1 2023: £(245)m), primarily due to £(698)m of adverse economic variances from higher interest rates and global equities which are the consequence of our SII hedging approach.
• IFRS shareholders’ equity therefore reduced to £1.8bn (FY 2023: £2.7bn⁶ restated), but the reduction in interest rates since June has reversed some of the economic variances and this reversal will continue as interest rates reduce further.
• Contractual Service Margin (gross of tax) grew 10% to £3.1bn (FY 2023: £2.9bn), driven by new business, management actions and the one-off impacts of the buy-out of an internal pension scheme and modelling refinements.

A progressive and sustainable ordinary dividend policy⁷

• The Board has declared a 2024 Interim dividend of 26.65p per share, equal to the 2023 Final dividend, a 2.5% increase compared to the 2023 Interim dividend.

H1 financial performance enabled by progress across our strategic priorities of Grow, Optimise and Enhance

Grow

• 83% growth in Workplace net fund flows to £3.3bn (H1 2023: £1.8bn), as we retain our existing customers and win new schemes; H1 includes c.£900m new scheme win asset transfer from a technology business.
• Launched Standard Life Smoothed Return Pension Fund and Standard Life Guaranteed Fixed-term Income products to support reduction in net fund outflows over time.
• £1.7bn of annuity premiums written (H1 2023: £3.2bn), with a further £0.4bn of BPAs transacted since the end of June and an additional £2.2bn of exclusive BPA transactions in progress.
• Reduced annuity capital strain to c.3%⁸ (FY 2023: 4.7%), reflecting full benefit of the Part VII funds merger completed in 2023 and balance sheet diversification.
• Expect to deploy c.£200m of capital into annuities this year and to write annual premiums of c.£6bn.

Optimise

• £250m debt repayment in June as we deleverage our balance sheet.
• £264m of recurring management actions in H1 across a large number of BAU actions to more efficiently manage our portfolio, with no change in our risk profile; now expect to deliver c.£400m of recurring management actions in 2024.
• Launched a new private markets investment manager – Future Growth Capital – in partnership with Schroders.

Enhance

• Combined our Heritage and Open divisions into a single Group-wide structure and continue to progress our migrations with c.550k ReAssure customers scheduled to migrate to the TCS Diligenta platform by the end of September.
• Business simplification progress means we expect to deliver c.£50m of run-rate cost savings by the end of 2024.

Phoenix discontinues the SunLife sale process

• SunLife is a leading provider of financial protection products direct to the over 50s market in the UK and a valuable asset which contributes to the Group’s new business growth.
• Given the current uncertainty in the protection market, the Board has decided to discontinue the sale process and will focus on enhancing the value it generates within the Group.

On track to deliver our financial targets which support our progressive and sustainable dividend

• Cash
  • Operating Cash Generation target of £1.4bn in 2026.
  • Total cash generation 1-year target range of £1.4-1.5bn in 2024 and 3-year target of £4.4bn across 2024-26.
• Capital
  • Continue to operate within our 140-180% Shareholder Capital Coverage Ratio operating range.
  • Targeting a SII leverage ratio of c.30% by the end of 2026.
• Earnings
  • Targeting £900m of IFRS adjusted operating profit in 2026.
  • £250m of annual run-rate cost savings by the end of 2026.