The Phoenix Group Holdings (LON: PHNX) on Thursday estimated its annual cash generation at £1.7 billion, representing over 100% growth over the previous year. The cash inflow, he added, also exceeds his own upward revised estimates for the recently completed financial year.
Phoenix Group opened Thursday with a plus of about 0.5%, but lost all intraday profit in the next hour. Including the price action, the stock is now changing hands at £7.32 per share after recovering from a year low of £4.67 per share in March when the impact of the COVID 19 crisis peaked.
Phoenix shares started the year at £7.54 per share. The share price action should prove useful if you are interested in investing in the stock market.
The Phoenix Group benefited from a number of mass annuity contracts
The insurer attributed robust cash generation to a number of mass pension contracts as companies sold their pension obligations amid the ongoing coronavirus pandemic and the uncertainties surrounding brexite. The COVID 19 crisis has so far infected more than 1.6 million people in the UK and caused over 59 thousand deaths.
In a separate news release from the UK earlier this week, Topps Tiles said its profits had fallen 78% as the health crisis devastated the construction industry.
In a statement last week, the Phoenix Group had already announced that it was looking at strategic options for its operations in Europe. Earlier this year, the FTSE 100-listed company bought the UK ReAssure business from Swiss Re. It also sold its units in Germany and Ireland for £587.42 million.
Phoenix Group Solvency II ratio rises to £5 billion
At the end of September, Phoenix reported that its Solvency II surplus was £5 billion, compared to £4.4 billion in June. In 2019, the insurance company had generated £707 million in cash. For 2020, it raised its cash generation target to up to £1.6 million in August.
CEO Andy Briggs commented on the report on Thursday and said
“Our balance sheet remains resilient, supported by our high quality portfolio of assets and our unique approach to risk management, and our 159% shareholder coverage ratio remains robust”.
The Phoenix Group performed quite well in the equity market last year with an annual profit of more than 30%. At the time of writing this report, it is estimated at GBP 7.36 billion and has a price-earnings ratio of 10.00.