Life consolidator Phoenix Group has completed four Bulk Purchase Annuity (BPA) transactions during the second half of 2021, covering £4.0 billion of premiums.
These transactions also comprised of £3.6 billion of external deals and a further £0.4 billion tranche of the group’s Pearl Pension Scheme.
This equates to total BPA premiums of £5.5 billion contracted for the year.
The capital strain for all BPA transactions written in 2021 is currently expected to be c.6.5% and the cash multiple c.2.6x, with the second half transaction economics reflective of the current low credit spread environment.
These transactions highlight Phoenix’s ability to drive organic growth, whilst reflecting the investment the group is making into both its open business and internal asset management function.
Phoenix is building a market-leading BPA team and asset sourcing capability, which supports a comprehensive BPA solutions offering that is now distributed to the market under the Standard Life brand.
As a result, Phoenix Group now expects to deliver in excess of £1 billion of total new business long-term cash generation for 2021, which will more than offset the run-off of the in-force business (currently c.£0.8 billion of annual cash generation).
Andy Briggs, CEO of Phoenix Group, commented: “I am delighted with the progress we are making in building a market-leading Bulk Purchase Annuity business which contracted £5.5 billion of premiums in 2021, more than double our 2020 premiums.
“As a result, we have now delivered on our ambition for our new business cash generation to more than offset the run-off of our Heritage business and have “proven the wedge”.
“This reflects the investment we are making into our growing Open business and the Standard Life brand, which supports us in delivering Phoenix’s purpose of helping people secure a life of possibilities.”