At a time when many insurers are riding a wave of uncertainty amid low interest rates, political volatility and a host of frustrations relating to the discount rate and insurance premium tax, one specialist insurer has suggested its future is even brighter than it expected.
Phoenix made headlines last year when it completed two major deals – and now it is looking to steal the spotlight again by declaring that it has increased its five-year cash generation target by 40%.
The company, which specialises in running life insurance businesses that are not open to new customers any more, made a deal for AXA Wealth worth £373 million in November and followed that up by buying Abbey Life from Deutsche Bank for £933 million during December. Now it expects to take in £2.8 billion during the period.
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According to Financial Times report, the company now boasts £76 billion in assets with policies for 6.1 million customers and Clive Bannister, the firm’s chief executive, told the publication that business after both deals is going well.
“It is one thing doing the cash flow modelling,” he said. “It is a much harder task to do the integration. AXA is ahead of where we thought we’d be. We thought we’d be able to take out £10 million of costs, but it will be £13 million to £15 million.”
In addition, he noted that consolidation is likely to continue with more deals ahead because the “old structure of the industry if breaking apart.” He believes that as much as £300 billion of life insurance assets are likely to come up for sale.
“The old business models are under threat,” he said. “We find ourselves in an industry where there is reallocation and redeployment of capital, and we intend to play a full part.”
The company is reportedly looking for many different types of life insurance assets and has the capabilities to finance deals up to £500 million from its own resources – turning to shareholders for larger deals.
Related stories:
Regulators approve £375 million AXA-Phoenix deal
Sale of Abbey Life to Phoenix Group now official
