Phoenix Group swings to FY pretax loss

Phoenix Group has swung to a FY pretax loss of £70m, from a year-ago profit of £152m, in what it penned as a pivotal year for the company. It increased its proposedfinal dividend.

Chairman Henry Staunton said 2016 was a pivotal year for Phoenix, noting the acquisitions of AXA Wealth's pension and protection businesses for £373m and Abbey Life for £933m.

These deals had together transformed the size of the group. Life company assets have increased to £76bn, managed on behalf of over 6m policyholders.

Net premiums written totalled £924m, from -£1.4bn. Proposed final dividend was 23.9p a share, up 5% on the year.

Phoenix said the two deals referred to above met its strict acquisition criteria, allowing an increase in the dividend per share whilst strengthening the balance sheet.

"The Group also received significant support from both its shareholders and its lending banks in relation to the acquisitions, with the £735m rights issue to finance the Abbey Life acquisition achieving a 98% take-up by shareholders," said Staunton.

"Phoenix is currently focused on the efficient integration of the acquired businesses to deliver the planned synergies whilst ensuring policyholders remain protected.

"The Group has already realised significant benefits, delivering £282 million of cash from the AXA Wealth acquisition to date."

However, Staunton also added that this corporate activity had been undertaken against a backdrop of challenging market conditions, including a sharp decline in long-term interest rates during the year.

"Phoenix has shown considerable agility in navigating the volatile interest rate environment and has continued its track record of meeting publicly stated targets, successfully executing management actions and further improving customer outcomes.

"The interest rate hedging strategies implemented during the course of 2016 helped mitigate the adverse impacts of market movements and underpinned Phoenix's resilient capital position."

Looking ahead, Staunton said it was likely that the uncertain market environment would prevail for a while longer.

"However, I believe the changing regulatory landscape and macroeconomic pressures will lead to further consolidation in the UK life industry sector. Phoenix is primed to take advantage of further opportunities as they arise," he added.

At 9:27am: (LON:PHNX) Phoenix Group Holdings share price was +14p at 805.5p