Phoenix cash, profits, gearing and MCEV ahead of expectations in H1

21st Aug 2014 11:33

Closed life insurer Phoenix Group significantly lifted profits and slashed debt in the first half of 2014 thanks in part to the sale of Ignis to Standard Life.Pre-tax profits soared to £290m compared with £13m in the same period in the prior year.The group, the UK's largest consolidator of specialist closed life funds, said it had generated £332m cash in the first of half 2014, largely thanks to "management actions", a figure which is well in line with the group's annual target of between £500m and £550m.A further £390m was received after the sale of Ignis early in July, a deal which supported a £250m pre-payment of bank debt and a reduction in the level of senior debt from over £1.7bn to £1.2bn.This enabled Phoenix to declare an interim dividend of 26.7p per share, in line with the 2013 interim dividend.Group chief executive Clive Bannister said the dividend was not increased due to the the run-off nature of the group's business. He wants the group to "build its financial flexibility to execute its growth strategy" and will keep the dividend under review.Gross premium from continuing operations fell to £513m from £672m, while cash and cash equivalents at the end period went from £9.33bn to £8.76bn. Market consistent embedded value (MCEV), a common metric of value used by the industry to show present value of future profits plus adjusted net asset value, was £2.6bn on a pro forma basis, up from £2.4bn.Broker Berenberg said: "Phoenix has reported another strong set of numbers this morning, with cash generation, IFRS operating profits, gearing and MCEV all coming in ahead of consensus expectations. Much of the beats here were fuelled by further management actions, continuing to highlight the quantum of value that can be created through closed book consolidation."Phoenix shares were down 0.42% to 712p at 10:03 on Thursday.DC