Phoenix Group Holdings Transfer of £5bn of annuity in-payment liabilities (2123G)
27 Junho 2012 - 3:00AM
UK Regulatory
TIDMPHNX TIDMPHNW
RNS Number : 2123G
Phoenix Group Holdings
27 June 2012
Phoenix Group Holdings announces an agreement to transfer
approximately GBP5 billion of annuity in-payment liabilities to
Guardian Financial Services in a transaction which accelerates the
release of capital and increases cash generation by approximately
GBP200 million in 2012. This is incremental to the Group's existing
cash generation target of GBP500-600 million for 2012
Summary
Today, Phoenix Group announces that it has entered into a
re-insurance agreement to transfer approximately GBP5 billion of
annuity in-payment liabilities to Guardian Financial Services
("Guardian"). This transaction accelerates the release of capital
and increases cash generation by approximately GBP200 million in
2012.
Phoenix Group has an ongoing programme of management actions to
accelerate cash flows, enhance MCEV and improve the Group's capital
position. As part of this programme, Phoenix has examined a range
of options with regard to its annuity portfolios, against which the
Group is required to hold a significant amount of capital. This
transaction significantly de-risks the Group's balance sheet
through the transfer of longevity and investment risk and increases
the financial flexibility of the Group.
Transaction highlights
-- Re-insurance of approximately GBP5 billion of annuity
in-payment liabilities to Guardian, effective 1 July 2012
-- The transfer of annuity in-payment liabilities will be made
from Phoenix Life Limited (GBP3.4 billion), National Provident Life
Limited (GBP0.6 billion) and Pearl Assurance Limited (GBP1.0
billion)
-- The Group will make an associated transfer of GBP4.9 billion
of assets to Guardian as the related re-insurance premium for the
transferred annuity liabilities
-- It is expected that the re-insurance agreement will be
replaced by a formal Part VII transfer of the annuity liabilities
to Guardian in 2013
-- Phoenix Group and Guardian have agreed terms for Ignis Asset
Management, Phoenix's asset management arm, to continue to provide
investment management services to Guardian in respect of assets
backing the transferred annuity in-payment liabilities
Financial impacts
Cash
-- Accelerated delivery of cash flows that would otherwise emerge over time
-- Expected increase in 2012 cash generation of approximately GBP200 million
-- The acceleration of cash resulting from this transaction was
not contemplated at the time the Group's current cash generation
targets were set. A further update will be provided on the Group's
cash generation targets in due course
Capital
-- Release of regulatory capital backing the transferred annuity in-payment liabilities
-- Estimated GBP25 million increase in estimated IGD surplus and IGD headroom
-- Further capital benefits are expected to arise on successful
completion of a Part VII transfer of the re-insured liabilities
MCEV and IFRS
-- Broadly neutral impact from an MCEV perspective
-- No material impact on 2012 recurring IFRS operating profit
Clive Bannister, Group Chief Executive, commented:
"We are very pleased to have concluded this agreement with
Guardian for the transfer of a significant block of annuity
liabilities. This transaction will generate a number of important
benefits for the Group. Principally, it will accelerate the cash
flows from our operating business and release regulatory capital,
thereby strengthening our balance sheet."
Enquiries
Investors:
Katherine Jones, Head of Investor Relations, Phoenix Group
+44 (0) 20 7489 4879
Media:
Neil Bennett, Maitland
Peter Ogden, Maitland
+ 44 (0) 20 7379 5151
Further information
The financial information contained in this announcement has not
been audited or reviewed by the Group's auditors.
Forward looking statements
This announcement in relation to Phoenix Group Holdings and its
subsidiaries (the 'Group') contains, and we may make other
statements (verbal or otherwise) containing, forward-looking
statements about the Group's current plans, goals and expectations
relating to future financial conditions, performance, results,
strategy and/or objectives.
Statements containing the words: 'believes', 'intends',
'expects', 'plans', 'seeks', 'targets', 'continues' and
'anticipates' or other words of similar meaning are
forward-looking. Forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances
that are beyond the Group's control. For example, certain insurance
risk disclosures are dependent on the Group's choices about
assumptions and models, which by their nature are estimates. As
such, actual future gains and losses could differ materially from
those that we have estimated.
Other factors which could cause actual results to differ
materially from those estimated by forward-looking statements
include but are not limited to: domestic and global economic and
business conditions; asset prices; market related risks such as
fluctuations in interest rates and exchange rates, and the
performance of financial markets generally; the policies and
actions of governmental and/or regulatory authorities, including,
for example, new government initiatives related to the financial
crisis and the effect of the European Union's "Solvency II"
requirements on the Group's capital maintenance requirements; the
impact of inflation and deflation; market competition; changes in
assumptions in pricing and reserving for insurance business
(particularly with regard to mortality and morbidity trends, gender
pricing and lapse rates); the timing, impact and other
uncertainties of future acquisitions or combinations within
relevant industries; risks associated with arrangements with third
parties, including joint ventures; inability of reinsurers to meet
obligations or unavailability of reinsurance coverage; the impact
of changes in capital, solvency or accounting standards, and tax
and other legislation and regulations in the jurisdictions in which
members of the Group operate.
As a result, the Group's actual future financial condition,
performance and results may differ materially from the plans, goals
and expectations set out in the forward-looking statements within
this announcement. The Group undertakes no obligation to update any
of the forward-looking statements contained within this
announcement or any other forward-looking statements it may make.
Nothing in this announcement should be construed as a profit
forecast.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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