Phoenix Group Holdings (PHNX.L) on Wednesday said it has entered into a re-insurance agreement to transfer around 5 billion pounds of annuity in-payment liabilities to Guardian Financial Services, effective July 1.
The transfer of annuity in-payment liabilities will be made from Phoenix Life Limited, National Provident Life Limited and Pearl Assurance Limited. The Group will make an associated transfer of 4.9 billion pounds of assets to Guardian as the related re-insurance premium for the transferred annuity liabilities.
This transaction accelerates the release of capital and increases cash generation by around 200 million pounds in 2012. It will have no material impact on recurring IFRS operating profit in 2012.
Phoenix said as part of its programme of management actions to accelerate cash flows, enhance MCEV and improve capital position, it examined several options with regard to its annuity portfolios, against which the group is required to hold a significant amount of capital.
This transaction significantly de-risks the group's balance sheet through the transfer of longevity and investment risk and increases the financial flexibility of the group.
Clive Bannister, CEO, said, "We are very pleased to have concluded this agreement with Guardian for the transfer of a significant block of annuity liabilities. This transaction will generate a number of important benefits for the Group. Principally, it will accelerate the cash flows from our operating business and release regulatory capital, thereby strengthening our balance sheet."
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by RTT Staff Writer
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