By Scott Wright

THE pensions and savings giant that now owns the Standard Life brand has said it is on track to deliver cash generation at the upper end of guidance, after a record first half of the year.

Phoenix Group, which acquired the life and pensions business of Standard Life for £3.2 billion in 2018, generated £950 million of cash from its operating companies in the six months to June 30, up from £872m at the same stage last year. And the company underlined its confidence in its future growth prospects, despite the “uncertain economic backdrop”, as it highlighted its ability to harness major trends in the UK long-term savings and retirement market, through acquisition, bulk purchase annuities, and workplace and individual pensions and savings.

“These offer Phoenix multiple, long-term structural growth opportunities,” the company said.

Phoenix said its first-half performance meant it was on track to deliver cash generation of between £1.3bn and £1.4bn, at the top end of its target for the year.

While Phoenix built its name as a consolidator of closed pension books and insurance policies, it positioned itself for growth in the open market with the Standard Life deal.

In the first half, it reported a record £430m of new business from its open activities, compared with £206m in the first half of 2021. Around £282m of the new business long-term cash generation came from bulk purchase annuities, up from £80m in the first half of last year, and £148m from its capital-light fee-based businesses, up from £126m.

But it continues to target expansion through the acquisition of closed books. Earlier this month, it announced a £250m deal to purchase Sun Life UK, a closed book UK life insurance company from Sun Life Financial.

Phoenix expects the deal, which was the first it has funded from its own cash resources, to deliver around £470m in long-term cash generation, around 30 per cent of which is expected to emerge in the first three years. It also expects around £125m of cost and capital integration synergies.

Phoenix said at the time that it will continue to look for further deals.

Andy Briggs, Phoenix Group chief executive, said yesterday: “Phoenix has performed very strong in the first half of the year despite the challenging macro environment.

“We have once again delivered a record set of financial results, which was underpinned by the strong progress we have made across our strategic priorities. We have identified strong cash generation of £950m and maintained our resilient balance sheet.”

The Phoenix board underlined the company’s strong performance by lifting the interim dividend by three per cent to 24.8p per share, equal to its final dividend for 2021, and recommending a further 2.5% increase in its final dividend for this year. Mr Briggs said the latter reflects the value that the company expects to create from the Sun Life UK deal.

The company employs around 2,800 people at the Standard Life operation in Edinburgh. In July it cut around 50 customer service roles in the city as roles were outsourced to TCS Diligenta, a Mumbai-based digital company.

Phoenix Group has around 13 million customers, around four million of whom are on Standard Life books. It reported yesterday that assets under administration had dipped to £269bn by June 30 from £310bn at the end of last year, “due to £38bn of adverse market movements”.

But it said that “our hedging approach protects our fee income to deliver resilient cash generation”.

First-half operating profit was said to have “remained strong” at £507m, down from £527m.

The company announced yesterday that it had made a net payment of £1,000 to all employees, excluding its top 100 leaders, in August, to help them meet the current cost of living challenges.