Phoenix Group, the zombie insurance fund consolidation company, is on course to deliver on its stated targets for 2012 after what it hailed as a solid financial performance in the first quarter.
The group, which is aiming to generate between £500m and £600m of cash this year, generated £100m of the green and folding stuff in the year up to and including May 4th, leaving it some work to do to hit those targets. However, the group has indicated that performance in this regard will be weighted to the second half of the year.
The group said just £6m of cash was received by its holding companies in the first three months of 2012, with a further £94m received subsequently, mostly from Phoenix Life.
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Of the £100m of cash received in the year-to-date, £25m has been generated through management actions, including the transfer of the business of NPI Limited to Phoenix Life Limited.
On the capital side, the estimated Insurance Group Directive (IGD) surplus was unchanged at the end of March from the end of 2011 figure of £1.3bn; the IGD sets out minimum capital requirements for insurance companies.
Estimated IGD headroom increased by £0.1bn to £0.5bn as at March 31st from the end of 2011 level, while estimated IGD Excess Capital also increased by £0.1bn, from £3.1bn at December 31st 2011 to £3.2bn at March 31st 2012.
The increases in IGD headroom and IGD Excess Capital were primarily driven by the completion of the transfer of the business of NPI Limited, which became effective following regulatory and court approvals.
Following this transfer, all the UK life business in what the group calls the Impala silo is now within Phoenix Life Limited. Work is underway to progress a further merger within the Pearl silo.
The group's asset management business, Ignis, generated net third party asset inflows of £388m, primarily in the Absolute Return Government Bond Fund and liquidity and property funds. The inflows partially offset the run-off of the closed life funds which contributed to a decline in total group assets under management to £71.6bn at March 31st, from £72.1bn at the end of 2011.
"I remain confident in our ability to deliver on our stated 2012 financial targets, and to progress discussions with our lenders regarding the re-terming of our bank debt on terms which are sensible for all stakeholders," revealed Clive Bannister, Group Chief Executive.
"The transfer of the NPI business to Phoenix Life demonstrates our capacity to generate substantial value for both shareholders and policyholders. It is one of a number of management actions that we will progress in 2012, which will accelerate cash flow, enhance MCEV [Market Consistent Embedded Value] and improve the group's capital position," Bannister added.
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