ii view: Phoenix Group plans name switch to Standard Life

First-half results to 30 June 2025

• Operating cash generated up 9% to £705 million
• Reported loss of £156 million, improved from 2024’s H1 loss of £646 million
• Adjusted operating profit up 25% to £451 million
• Capital cushion or Shareholder Capital Coverage Ratio up 3% to 175%
• Interim dividend up 2.6% to 27.35p per share

Guidance:

• On track to achieve cumulative three-year total cash generation of £5.1 billion between 2024 and 2026
• On track to achieve adjusted operating profit for 2026 of £1.1 billion

Chief executive Andy Briggs said:

"This is a strong first half performance with progress against all key financial metrics we use to drive the business, demonstrating continued momentum towards our 2026 targets. 

“We are increasingly well placed to serve our customers' retirement needs and create further customer and shareholder value as we fulfil our vision to become the UK's leading retirement savings and income business.”

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

ii round-up:

Phoenix Group Holdings (LSE:PHNX) today announced plans to change its name to Standard Life from March 2026, although the life and pensions company also announced a half-year loss worse than City forecasts. 

A first-half fully reported net loss of £156 million compared with analyst expectations of a £20 million profit. The company blamed the cost of management hedging policies made to protect its capital cushion against interest rate and equity market volatility.  

Shares in the FTSE 100 company fell 5% in UK trading having come into these latest results up by a close to a third so far in 2025. That’s below a gain of 40% for rival Aviva (LSE:AV.) year-to-date. The FTSE 100 index is up almost 12% over that time. 

Industry consolidator Phoenix has acquired over 100 insurance brands in its time, including Pearl Assurance and Abbey Life. The pending change of name brings the group’s most trusted brand to the forefront as well as aiding its objective to simplify the business. 

Operating cash generation for the period of £705 million leaves Phoenix on track to generate total cumulative three-year cash generation of £5.1 billion by 2026, supporting a 2.6% increase in the interim dividend to 27.35p per share payable to eligible shareholders on 30 October.

A capital cushion or Shareholder Capital Coverage Ratio (SCCR) of 175% is up 3% from late December and remains towards the upper end of its 140% to 180% target range.

Adjusted operating profit for the half year rose 25% to £451 million, with Phoenix reiterating its expectation to achieve an adjusted annual operating profit of £1.1 billion during 2026. That’s potentially up from 2024’s £825 million.

ii view:

Started in 1857, Phoenix today supports 12 million customers in managing over £295 billion in assets under administration. The group’s day-to-day businesses include workplace pensions, customer savings as well as bulk annuities provided to help corporations outsource the payment of pensions from company staff schemes.   

High competition and pressure on life and pensions providers to reduce costs has allowed Phoenix to grow via acquisitions and then strip costs. Debt acquired in the process is now being reduced, aided by ongoing cash generation.  

For investors, hedging policies executed to protect the group’s capital cushion have and may continue to hinder fully reported profits. Elevated borrowing costs may still be pushing some customers to reduce savings in favour of meeting increased loan and mortgage repayments. A previously planned and later scrapped sale of its SunLife business raised strategic questions, while an estimated share price-to-net asset value above the three-year average may suggest the shares are not obviously cheap. 

• Insider: chief backs Aviva with big share purchase
• ii view: income play L&G remains ‘firmly on track’
• The Week Ahead: AB Foods, Dunelm, Fevertree, Vistry

On the upside, previously outlined targets for cash generation and adjusted profit have been reiterated. A change of name to Standard Life should help reduce costs. The group’s SCCR remains within management’s target range, while a push to cut group debt is ongoing. 

In all, and despite ongoing risks, more than five years of consecutive annual dividend increases and a forecast dividend yield of over 8% should keep fans of this UK savings giant loyal.

Positives: 

• Potential for further bolt-on acquisitions
• Attractive dividend payment (not guaranteed)

Negatives:

• Regulatory changes can impact
• Uncertain economic outlook

The average rating of stock market analysts:

Strong hold