Phoenix Group increases 2013 interim dividend by 27%

DividendMax Ltd.

Phoenix Group increases 2013 interim dividend by 27%

Financial highlights

− Interim dividend of 26.7p per share, a 27% increase vs. 2012 interim dividend and in line with 2012 final dividend

− £416 million of cash generation in H1 2013 (HY12: £119 million). On track to achieve FY13 cash generation target of £650 million - £750 million

− MCEV of £2.2 billion at 30 June 2013 (FY12 pro forma: £2.3 billion), with £384 million of incremental MCEV enhancement now delivered towards £400 million target from 2011 to 2014

− Gearing reduced from 55% at 31 December 2012 to 48% at 30 June 2013, towards our target of 40% by the end of 2016

− IGD surplus of £1.1 billion and IGD headroom of £0.4 billion at 30 June 2013 (FY12 pro forma: £1.2 billion and £0.4 billion respectively)

− PLHL ICA surplus of £1.0 billion at 30 June 2013 (FY12 pro forma: £0.8 billion)

− Group IFRS operating profit of £186 million in H1 2013 including £24 million from management actions vs. HY12 of £217 million, including £59 million from management actions

− Ignis IFRS operating profit of £19 million in H1 2013 (HY12: £19 million)

− £0.9 billion of net third party asset inflows generated by Ignis Asset Management (HY12: £0.9 billion)

− Total Group assets under management of £67.1 billion at 30 June 2013 (FY12: £68.6 billion).

Operational highlights

− Progressed preparation for Part VII transfer of £5 billion of annuity liabilities and related assets to Guardian Assurance Limited, with completion expected towards the middle of H2 2013

− Continued to build a better business for the future;

Completed migration of 3.2 million in-force policies administered by Diligenta onto the new administration platform, making policy administration more efficient and giving customers access to their policies online

Continued to streamline the Group's actuarial modelling systems, with the new model being run in parallel with existing models for FY13, simplifying modelling processes and allowing consistent capital management across the business

Progressed Phoenix Life and Ignis transformation with partner HSBC to consolidate investment back office, accounting and unit pricing, with completion expected in 2014

− Worked closely with our outsource partners to prevent transfers to pensions liberation fraud schemes

− Maintained investment outperformance at Ignis, with 73% of total assets performing above benchmark.

Preliminary discussions with Swiss Re Ltd

Phoenix Group's preliminary discussions with Swiss Re Ltd ('Swiss Re') in relation to a possible combination of Phoenix and Swiss Re's Admin Re Business Unit are ongoing. If successful, this would result in Swiss Re taking a minority shareholding in Phoenix in consideration. There is no certainty that these discussions will lead to any transaction or of the terms on which any such transaction might proceed. Further statements will be made as and when appropriate.

Clive Bannister, Group Chief Executive, commented:

"I am pleased to announce a strong set of results for the six months to 30 June 2013 and to reiterate all of our financial targets, comprising cash generation, de-gearing and incremental value.

The underlying strength of the business model and stable and predictable cash generation has enabled us to declare a 2013 interim dividend of 26.7p per share, which is in line with the 2012 final dividend and represents an increase of 27% compared to the 2012 interim dividend.

The first half of 2013 was transformational for Phoenix Group, with the capital raising and debt re-terming providing greater financial flexibility and putting in place a longer-term capital structure which has strengthened the Group financially and strategically. We are now able to consider opportunities for growing the business."


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