British life insurer Phoenix targets pensions as sets new cash goal

By Carolyn Cohn

LONDON (Reuters) - British life insurer Phoenix set a target to generate around 1.5 billion pounds ($1.83 billion) in long-term cash from new business by 2025 on Tuesday, as it looks to build on growing demand for corporate pensions insurance deals.

Phoenix specialises in managing books of life insurance business which are closed to new customers, but is also aiming to expand in areas such as bulk annuities - insuring company defined benefit, or final salary, pension schemes.

The new target is 25% above the 1.2 billion of incremental new business long-term cash generation Phoenix expects in 2022, it said in a trading update ahead of an investor day.

"We're a growing, sustainable business," Phoenix CEO Andy Briggs told a media call.

"It's shaping up to be another exceptional year for Phoenix," he added.

Phoenix reported seven bulk annuity deals in the second half totalling 3.2 billion pounds in premiums. Industry players expect a liquidity crisis for pension schemes, driven by a sharp rise in gilt yields in September, to encourage more companies to offload such schemes to an insurer.

Phoenix said it did not have exposure to liability-driven investments, the strategy at the heart of the gilt market storm, and met all calls for collateral on its hedging instruments during the market volatility.

The insurer also said it remains on track to deliver 2022 cash generation from existing business at the top end of its target range of 1.3-1.4 billion pounds.

Phoenix's shares were up 1.1% at 0853 GMT, outperforming a flat FTSE 100 index.

KBW analysts said the new business target was likely to have a "positive impact on future dividend expectations", reiterating their outperform rating on the stock.

The insurer's investor day is focusing on the Standard Life brand, which Phoenix bought from abrdn last year.

($1 = 0.8214 pounds)

(Reporting by Carolyn Cohn, editing by Kirstin Ridley and Alexander Smith)