Phoenix Group Holdings completed four bulk purchase annuity transactions totalling £4.0 billion in premiums during the second half of 2021, including £3.6bn in external deals and a further £0.4 billion tranche of the Group’s pearl pension scheme.
This equates to £5.5bn in total BPA premiums contracted for the year (FY20: £2.5bn).The capital strain for all BPA transactions written in 2021 is currently expected to be c.6.5 per cent (FY20: 9 per cent) and the cash multiple to be c.2.6x (FY20: 2.3x), with the second half transaction economics reflecting the current low credit spread environment.
Phoenix says that this performance demonstrates its success in driving organic growth, and it reflects the Group’s investment in both its Open business and internal asset management function. Phoenix is establishing a BPA team and asset sourcing capability to support a comprehensive BPA solutions offering, which is now being distributed to the market under the Standard Life brand.
Phoenix expects to generate more than £1bn in total new business long-term cash generation in 2021, more than offsetting the run-off of the in-force business
Phoenix CEO Andy Briggs says: “I am delighted with the progress we are making in building a market-leading bulk purchase annuity business which contracted £5.5nb of premiums in 2021, more than double our 2020 premiums. As a result, we have now delivered on our ambition for our new business cash generation to more than offset the run-off of our Heritage business and have “proven the wedge”. This reflects the investment we are making into our growing Open business and the Standard Life brand, which supports us in delivering Phoenix’s purpose of helping people secure a life of possibilities.”
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