Phoenix Group has for the first time moved into a positive cash flow position, with the purchase of the Standard Life brand and the income from its workplace pensions and bulk annuity business now offsetting the income from its its closed books of business.
In its published annual results for 2021 the company said it had enjoyed its best financial year ever, with record cash generation of £1,717m. This exceeded its target range of £1.5bn to £1.7bn.
It aded that record new business long-term cash generation stood at £1,184m in 2021, up from just £766m in 2020.
The insurer said its had achieved its highest ever bulk purchase annuity premiums of £5.6bn – a 124 per cent increase. A further £400m of this cash generation was attributed to cost savings arising from the integration of the Standard LIie and ReAssure insurance brands.
Phoenix also announced strong returns from its workplace pensions division. It says momentum has been building , with 41 new schemes added during 2021. It says this represents significant growth from a low base in the preceding years.
Phoenix says this proved “the wedge” hypothesis for the first time, with organic growth from its open business more than offsetting the natural run-off of the company’s heritage business, which currently stands at around £800m per annum.
The company, which is increasing it dividend payments for the first time, said it hopes to generate up to £1.4billion in cash this year, and generate a total of £4billion in total between 2022 and 2024. This is said would ensure it continues to make more cash its new open businesses, rather than its heritage assets.
Andy Curran, CEO of Standard Life and part of Phoenix Group, said: “The past year has been a hugely successful year for Phoenix Group and included the major milestone of us acquiring the Standard Life brand.
“The Standard Life brand’s strength and the financial backing of the group is proving powerful — for the first time ever our open business has more than offset the run-off of our heritage business.
“We want to deliver on our purpose of helping people secure a life of possibilities by making financial security in retirement more achievable, more widespread and generally fairer. Data and insights drive our innovations, digital technologies drive our customer experience, and our scale and size make us a reliable long-term partner.”