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Phoenix shares advance as it hikes dividend after profits jump

Phoenix said a deal to buy the bulk of Standard Life Aberdeen's insurance business last year was on track to deliver £1.2bn in savings

Phoenix Group Holdings PLC -
The life insurance sector continues to consolidate

Phoenix Group Holdings PLC (LON:PHNX) shares gained as the insurance firm hiked its interim dividend after a sharp rise in first-half profit.

The company said operating profit jumped 50.5% to £325mln in the six months to the end of June as it took over a number of closed pension schemes from UK companies looking to offload the long-term risks.

Cash generation fell 18% £287mln in the period but Phoenix expects cash generation to be at the top end of its target of £600mln to £700mln for the year.  The group has set a long-term cash generation target of £3.8bn 2019–2023.

Phoenix said a deal to buy the bulk of Standard Life Aberdeen PLC’s (LON:SLA) insurance business last year was on track to deliver £1.2bn in savings.

Assets under administration stood at £245bn at the end of June, compared to £226bn at the end of December, even as new business inflows to its UK and European open businesses fell to £3.5bn from £4.6bn.

“Whilst net inflows into our open businesses are down overall year on year reflecting market uncertainty from Brexit and a tail off in defined benefit to defined contribution transfers, contributions to our auto-enrolment workplace schemes have increased, and new annuity business in our Heritage segment has been strong,” said chief executive Clive Bannister.  

He said as the life insurance sector continues to consolidate, the company is “ready to do deals that meet our acquisition criteria”.

Phoenix said it has completed its Brexit preparations with £250mln of capital injected into an Irish subsidiary.

The interim dividend was lifted 3.5% to 23.4p per share. 

Shares rose 2% to 670p in morning trading. 

Quick facts: Phoenix Group Holdings PLC

Price: 674.2 GBX

LSE:PHNX
Market: LSE
Market Cap: £6.74 billion
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