Key facts

THE LARGEST UK CONSOLIDATOR OF CLOSED LIFE ASSURANCE FUNDS

Our business manages closed life funds in an efficient and secure manner, protecting and enhancing policyholders' interests whilst maximising value for the Group's shareholders.

As a closed life fund consolidator Phoenix Life focuses on the efficient run-off of existing policies, maximising economies of scale and generating capital efficiencies through operational improvements.


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Phoenix Group's Fundamentals (PHNX)

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James Salmon - Will Phoenix rise in 2015?

Phoenix has six million customers but will be unfamiliar to most households. This is because it specialises in running old ‘zombie’ pensions and life insurance policies which are no longer available to new customers.

It was formed by a merger of the closed life fund consolidators set up by former pizza king Hugh Osmond and Resolution Life founder Clive Cowdery.

It was saddled with debt just before the 2008 financial crisis. But it has made significant progress since then, paying off £700 million in 2013. It is also generating a lot of cash – a key measure of success for an insurance company – and has become more profitable.

Healthy cash flow generation is one of the reasons Aviva wants to buy Friends Life, which, like Phoenix, also has a big book of closed life and pensions funds.
Some experts believe there could be more consolidation in the sector and that Phoenix could be an attractive take- over target.

One potential spanner in the works could be the Financial Conduct Authority’s investigation into whether customers with closed pensions, investments and life insurance are being treated fairly.

I bought into these last April on the sector panic @639p.

Worth a look for yield hunters.

JP Morgan Cazenove Overweight 839.00 839.00 915.00 925.00 Reiterates

Full year results on 18th March

Pop!

A new high @874 - results on Wednesday.

Phoenix Group Holdings - 2014 Annual Results

Financial Highlights
· Operating companies' cash generation of £567 million (2013: £817 million), above the top end of the £500 - 550 million target range. A further £390 million was received on completion of the divestment of Ignis, resulting in full year cash generation of £957 million
· Market Consistent Embedded Value ('MCEV') increased to £2,647 million as at 31 December 2014 (2013 : £2,378 million)
· Delivered MCEV enhancing management actions of £261 million, a significant part of the £300 million target between 2014 - 2016
· Strong Group IFRS operating profit of £483 million (2013: £439 million)
· £988 million of cash at holding companies as at 31 December 2014 (2013: £995 million)
· IGD surplus of £1.2 billion as at 31 December 2014 (2013: £1.2 billion)
· PLHL ICA surplus of £0.7 billion as at 31 December 2014 (2013: £1.2 billion)
· 2014 final dividend of 26.7p per share, in line with 2013 final dividend

Comprehensive debt refinancing significantly strengthening balance sheet
· Total debt repayment of £601 million in 2014
· Gearing(4) reduced to 34% as at 31 December 2014 (2013: 44%)
· Bank margin reduced by 37.5 bps to 312.5bps due to reduction in Financial Leverage(5)
· £300 million unsecured 7 year bond issue
· Refinancing of the Group's remaining senior bank debt and PIK notes into a single £900 million facility
· Exchange offer of Tier 1 bonds into new subordinated notes with a maturity of 2025 completed in January 2015, with a 99% take up rate by bondholders

Operational Highlights
· Distributed £185 million of estate to a total of 95,000 policyholders through final bonuses on their with-profits policies
· Vesting customers given options to take full advantage of the extensive changes introduced by the 2014 Budget
· Completed Phoenix Life transformation with outsourcing partner HSBC to consolidate investment fund accounting, unit pricing and custody arrangements

Solvency II
· Although there remains considerable uncertainty with regard to the implementation of and transition to Solvency II, the Group is currently on track to formally apply for regulatory approval of its Internal Model in June 2015
· Expect to be well capitalised under the new Solvency II regime, with the Group capital position under Solvency II expected to be in excess of the current PLHL ICA surplus, subject to regulatory approval

Financial Targets
· Given the current uncertainty in relation to the transition to Solvency II capital regime, 2015 cash generation target range is £200 - 250 million due to the retention of capital in the life companies in the short term
· Long-term operating companies' cash generation target for 2014 - 2019 unchanged at £2.8 billion, supporting the Group's stable and sustainable dividend policy
· Cumulative incremental MCEV target increased by £100 million to £400 million between 2014 - 2016
· In future, gearing will be managed to a level consistent with the achievement and maintenance of an investment grade rating

One of many making new highs today.

Q1 2015 Interim Management Statement

Phoenix Group announces cash generation of £87 million in the three months to 31 March 2015 and remains on track to meet all its financial targets

Financial and operational highlights in the three months to 31 March 2015

· £87 million of cash generation1 in the 3 months to 31 March 2015 (3 months to 31 March 2014: £235 million).

· Total holding company cash2 of £1,032 million at 31 March 2015 (FY14: £988 million).

· Estimated IGD3 surplus of £1.2 billion at 31 March 2015 (FY14: £1.2 billion).

· Estimated PLHL ICA3 surplus of £0.7 billion at 31 March 2015 (FY14: £0.7 billion).

· Estimated Phoenix Life free surplus of £271 million at 31 March 2015 following distribution of cash to holding companies (FY14: £196 million).

· The Group continues to expect to be well capitalised under the Solvency II capital regime, with the Group capital position under Solvency II expected to be in excess of the current PLHL ICA surplus, subject to regulatory approval.

· Continued discussions with rating agencies to seek an investment grade rating for Phoenix Group, with process expected to complete during 2015.

· Impact of new pension freedoms within the expected range of outcomes, with the existing partnership with Just Retirement expanded to allow Phoenix Life to offer a wider range of products and services to our customer base.

· Acquired a £0.3 billion portfolio of equity release mortgages, in line with the strategy to diversify the asset portfolio by investing in new asset classes to support the Group's annuity liabilities.

· On track to meet financial targets, comprising
o operating companies' cash generation of £200 - £250 million in 2015, and £2.8 billion between 2014 and 2019; and
o cumulative incremental MCEV enhancements of £400 million in the period from 2014 - 2016.

Skinny, am just doing some research on this company, but the figures look a little bizarre.
2015 & 2016 forecasts revenue up considerably, but pre-tax profit only a quarter of previous years. EPS way down, PE way up yet divi steady and thus yield the same.
Am hunting around for good divi payers (as usual!) but can't get my head around the profit figure.
Of course divi cover figure is greatly reduced as well.

Any thoughts on this one skinny?

Sorry Harry, I missed your earlier post - I still hold - largely from 638p, and will continue to for now - I'm not sure how much upside there is short term, but the yield is still @6.30%.

Even the Barclay's 'underweight' TP is 797p (link in the header).

Have a look at Hansard for dividend - TP reiterated today @120p.

Is JLIF one you follow?

Yes and I also bought JLG recently.

Thanks for that. As usual I am on my hunt for good divi payers, but am trying to spread the risk over different sectors. Lots of high divi payers in the Equity Investment and Financial Services sectors, but am hoping mining will get back into favour soon. Utilities of course in the mix, but a tad dull!!!

It is becoming more difficult to find decent yielders - I'm more than heavy enough in the utilities and have dumped CNA this morning - hoping to find better options near term!

I still like CLLN and the yield is still 5.4% in 2016, but the 15% declared short interest worries me big time. I don't understand why it's so high.
Also looking at HSTN, LMP, INPP, AMFW, KIE and LGEN.

Thanks - I'll have a look - the only one of those that I hold is LGEN and they are +157%, so I'm thinking of trimming my holding - caveat being my previous post!

Investment Grade Rating

Phoenix Group Holdings ("Phoenix" and, together with its subsidiaries, the "Group") is pleased to announce that its two principal operating life companies, Phoenix Life Limited and Phoenix Life Assurance Limited have been assigned the Insurer Financial Strength ("IFS") ratings of "A" with a stable outlook by Fitch Ratings.

This is Phoenix's inaugural rating and reflects the Group's strong capital position, cash flows and track record. The rating also reflects the strength of the Group's competitive position as a leading closed life fund consolidator.

The "A" ratings for the Group's life companies and investment grade ratings for the Group's senior and hybrid debt mark the achievement of an ambition set out during 2014.


more....

JP Morgan Cazenove Overweight 870.00 870.00 925.00 925.00 Reiterates