Standard Life Plc · LSE:SDLF
Standard Life — Phoenix Group Holdings — H1 2024 Earnings Presentation
41 slides from Standard Life's earnings presentation, Sep 16, 2024
Slide 1: Half year 2024 results
Half year 2024 results Phoenix Group Holdings plc 16 September 2024
Slide 2: Executing on our 3-year strategy
Executing on our 3-year strategy Andy Briggs Group Chief Executive Officer
Slide 3: Phoenix is on a 3-year journey to build the UK's leading retirement savings and income business
Phoenix is on a 3-year journey to build the UK's leading retirement savings and income business Building a compelling customer experience… 2023 H1 2024 2026 Range of attractive retirement savings and income solutions offered through Standard Life Innovative Heritage Open Pensions Retirement business
Slide 4: Good financial performance in H1 as we progress towards our financial targets
Good financial performance in H1 as we progress towards our financial targets H1 2024 progress Our 3-year targets • £1.4 billion of Operating Cash Generation in 2026 £647 million Operating Cash Generation ‘OCG’ +19% Cash year-on-year • £1.4-1.5 billion of total cash generation in 2024 £950 million T
Slide 5: Investing to grow, optimise and enhance on the next phase of our journey
Investing to grow, optimise and enhance on the next phase of our journey Our capital allocation framework… …supports the delivery of our strategic objectives over the next three years Key underpins: Grow Optimise Enhance Progressive and sustainable ordinary dividend policy(4) Key delivery: 140-180%
Slide 6: Demonstrable progress against our strategic priorities in H1
Demonstrable progress against our strategic priorities in H1 H1 2024 investment: H1 2024 delivery: Launched Standard Life Smoothed Return Pension Fund and Standard Life Guaranteed Fixed-term Income annuity products £164m Went live with a full-service market proposition for BPA buy-out customers and
Slide 7: Our Pensions and Savings propositions help customers journey to retirement
Our Pensions and Savings propositions help customers journey to c.£184bn AUA and through retirement Our capital-light fee-based Pensions and Savings business H1 strategic execution Strong financial performance Workplace: retain our existing schemes and attract new schemes Strong Workplace net fund i
Slide 8: Our Retirement Solutions help customers secure income certainty in retirement
Our Retirement Solutions help customers secure income certainty c.£39bn AUA in retirement Our capital-utilising spread-based Retirement Solutions business H1 strategic execution Strong financial performance Bulk Purchase Annuities (BPA): disciplined deployment of capital to optimise IRRs £1.7bn of a
Slide 9: Successfully executing on our strategy to create shareholder value
Successfully executing on our strategy to create shareholder value Grow Grow Optimise Enhance Profitably growing our Disciplined deployment of Deleveraging and Progressing our legacy Pensions and Savings capital into annuities to delivering recurring migrations and simplifying business by growing ou
Slide 10: Delivering our financial framework
Delivering our financial framework Stephanie Bruce Interim Group Chief Financial Officer
Slide 11: H1 2024 financial results summary
H1 2024 financial results summary Cash Capital Earnings Operating Cash Generation Shareholder Capital IFRS adjusted Coverage Ratio operating profit £647m 168%(1,2) £360m HY23: £543m FY23: 176%(2,9) HY23: £313m(10) Total cash generation Solvency II leverage ratio(3) IFRS loss after tax £950m 35% £(64
Slide 12: Strong operating momentum with consequences from Solvency II hedging strategy
Strong operating momentum with consequences from Solvency II hedging strategy Strong H1 operating performance Our hedging strategy underpins our sustainable dividend Hedging strategy delivers a sustainable dividend by Operating Cash Generation +19% YOY protecting cash generation from unrewarded mark
Slide 13: Confident of delivering at the top-end of cash generation target range for 2024
Confident of delivering at the top-end of cash generation target range for 2024 Cash 19% growth in Operating Cash Operating Cash Generation more than £950m of H1 total cash generation gives Generation to £647m covers our recurring uses and dividend confidence in £1.4-1.5bn target range £950m +19% No
Slide 14: Positive recurring capital generation with utilisation focused on deleveraging
Positive recurring capital generation with utilisation focused on deleveraging Capital 140-180% SCCR 176%(2,9) +3%pts 179% (11)%pts 168%(1,2) operating of recurring capital generation of utilisation in the period range Recurring capital generation of +£0.1bn Non-recurring capital utilisation of £(0.
Slide 15: Deleveraged by £250m and intend to repay at least £250m more by end of 2026
Deleveraged by £250m and intend to repay at least £250m more by end of 2026 Capital Targeting c.30% Solvency II leverage ratio by the end of 2026 • £250m repayment in H1 reduced leverage ratio by 2%pts • +1%pt impact from Own Funds reduction, driven principally 36% by hedging impact of higher intere
Slide 16: Strong earnings growth in our core businesses
Strong earnings growth in our core businesses Earnings 15% year-on-year growth in IFRS adjusted operating profit • Strong growth in Pensions and Savings operating profit: o c.90% of assets are capital-light investment contracts +15% £360m o Average AUA in H1 grew 9% vs FY 2023 £304m o Operating prof
Slide 17: Shareholders' equity reduced in H1 primarily due to hedging consequences
Shareholders’ equity reduced in H1 primarily due to hedging consequences Earnings Decline in shareholders’ equity • IFRS adjusted operating profit broadly covers due to adverse economic key recurring items of dividend and debt interest £0.4bn movements from SII hedging strategy accounting mis-match
Slide 18: Growing CSM is a significant store of future value, driven by Retirement Solutions
Growing CSM is a significant store of future value, driven by Retirement Solutions Earnings Strong growth of +10% in Group CSM since FY23 • New business CSM principally driven by Retirement Solutions annuities growth +10% £167m £3,278m • Management actions in CSM primarily relate to investment manag
Slide 19: On track to deliver our targeted financial outcomes for shareholders
On track to deliver our targeted financial outcomes for shareholders Growing Operating Cash Generation supports our dividend policy Focused on a clear set of supporting targets Cash +c.25% £1.4-1.5 billion of total cash generation in 2024 £1.4bn £4.4 billion of total cash generation across 2024-2026
Slide 20: Summary
Summary Andy Briggs Group Chief Executive Officer
Slide 21: Our vision is to become the UK's leading retirement savings and income business
Our vision is to become the UK’s leading retirement savings and income business We are successfully We are delivering We are deleveraging and We are on track to deliver executing on our 3-year profitable growth through will grow our balance sheet our 2026 targets across strategy to build a sustainab
Slide 22: Q&A
Q&A ail Phoenix
Slide 23: Appendices
Appendices ail Phoenix
Slide 24: Appendices
Appendices 1. Group cash flow analysis 14. ESG ratings and key targets 2. Change in Life Company Free Surplus 15. Footnotes 3. Debt maturity profile and leverage ratios as at 30 June 2024 4. Movement in assets under administration 5. Movement in assets under administration by segment (Pensions and S
Slide 25: Appendix 1: Group cash flow analysis
Appendix 1: Group cash flow analysis HY24 • Strong total cash generation of £950m in the period funds our uses of cash Cash and cash equivalents at 1 January 2024 £1,012m • Non-operating net cash outflows of £185m (HY23: £178m net cash inflows) include: Total cash generation(1) £950m o £164m of inve
Slide 26: Appendix 2: Change in Life Company Free Surplus
Appendix 2: Change in Life Company Free Surplus £0.1bn £0.2bn £0.4bn £2.2bn £0.1bn £(1.0)bn £1.7bn £(0.1)bn £(0.1)bn £(0.1)bn Free surplus Surplus generation Recurring Other Cash remittances New business Cash remittances Economics Other Free surplus as at FY23(1) and release of management management
Slide 27: Appendix 3: Debt maturity profile and leverage ratios as at 30 June 2024
Appendix 3: Debt maturity profile and leverage ratios as at 30 June 2024 Debt maturity profile Leverage ratios £500m FY23 HY24 SII leverage(3,6) 36% 35% £250m $500m(1,2) Fitch basis(4,6) 23% 22% £500m (1) £500m $500m (2) €500m (2) £350m (1) $350m (1,2) IFRS basis(5,6,7) 46% 48% $250m (1,2) £197m 1H2
Slide 28: Appendix 4: Movement in assets under administration
Appendix 4: Movement in assets under administration Movement in AUA from 1 January 2024 to 30 June 2024 Split by segment £11.0bn £8.8bn £288.5bn £282.5bn £(13.8)bn £28.3bn £(2.8)bn Group net fund outflows £37.5bn £288.5bn £39.1bn £183.6bn Opening AUA Gross Gross Market movements Closing FY23 inflows
Slide 29: Appendix 5: Movement in AUA by segment (Pensions and Savings)
Appendix 5: Movement in assets under administration by segment (Pensions and Savings) Pensions and Savings – Total AUA Pensions and Savings – Workplace Pensions and Savings – Retail and Legacy FY23 AUA £57.5bn FY23 AUA £116.9bn c.10% Gross inflows Gross inflows £2.8bn £1.2bn - new - new Gross inflow
Slide 30: Appendix 6: Movement in assets under administration by segment
Appendix 6: Movement in assets under administration by segment Retirement Solutions With-Profits Europe and Other FY23 AUA £40.4bn FY23 AUA £28.6bn FY23 AUA £39.1bn Gross inflows Gross inflows £1.7bn £0.9bn - new Gross inflows - new £0.1bn - existing Gross inflows Net flows of Net flows of Gross inf
Slide 31: Appendix 7: Estimated PGH Solvency II surplus and coverage ratios
Appendix 7: Estimated PGH Solvency II surplus and coverage ratios PGH Shareholder Capital Coverage Ratio(1,2) PGH Solvency II Regulatory Coverage Ratio(1) 176% 168% 154% 149% Surplus Surplus Surplus Surplus £3.9bn £3.9bn £3.5bn £3.5bn £8.9bn £8.6bn £11.1bn £10.5bn £7.2bn £7.0bn £5.0bn £5.1bn FY23(9)
Slide 32: Appendix 8: Change in Solvency II Own Funds and SCR
Appendix 8: Change in Solvency II Own Funds and SCR £0.3bn £0.2bn £0.2bn £8.9bn £8.6bn £(0.4)bn £0.0bn £(0.1)bn £(0.3)bn £(0.2)bn Change in Own Funds Recurring Own Funds generation of +£0.1bn Non-recurring Own Funds utilisation of £(0.4)bn Shareholder Own Surplus Recurring Operating costs, New busin
Slide 33: Appendix 9: PGH Solvency II Shareholder Capital Coverage Ratio sensitivities
Appendix 9: PGH Solvency II Shareholder Capital Coverage Ratio sensitivities Unrewarded market risks(13) Demographic risks(13) Rewarded market risks(13) Base position Equities Long-term Long-term Long-term Currency Currency Lapse Longevity Property† Credit Credit†† 20% fall in rates rates inflation
Slide 34: Appendix 10: IFRS income statement
Appendix 10: IFRS income statement HY23(10) HY24 Pensions and Savings £76m £149m Retirement Solutions £179m £210m With-Profits £6m £3m Europe and Other £85m £50m Corporate Centre £(33)m £(52)m Adjusted operating profit £313m £360m Non-operating items: Economic variances £(313)m £(698)m Amortisation
Slide 35: Appendix 11: Movement in Group Contractual Service Margin
Appendix 11: Movement in Group Contractual Service Margin, including segmental split Movement of the Group CSM from 1 January 2024 to 30 June 2024 +10% £167m £3,278m £134m £3,134m £92m £32m £713m £2,853m £(144)m £2,350m £2,140m £784m Total CSM Tax Total CSM New business Interest Assumption Other Tot
Slide 36: Appendix 12: Shareholder credit portfolio
Appendix 12: Shareholder credit portfolio Prudently positioned shareholder credit portfolio Credit rating AAA AA A BBB 13% 12% 37% 32% 18% 1% 32% BB & below £36.7bn Shareholder credit assets are a small proportion of our c.£289bn balance sheet (c.13%) 43% 10% Our prudent portfolio is c.99% investmen
Slide 37: Appendix 13: Diversification of illiquid asset portfolio
Appendix 13: Diversification of illiquid asset portfolio as at 30 June 2024 Equity Release Mortgages Commercial Real Estate £4.7 billion with AA rating £0.7bn £1.1 billion with BBB rating • Broad regional spread with average LTV of 33% £0.9bn • Structured with robust covenant protection, a combinati
Slide 38: Appendix 14: ESG ratings and key targets
Appendix 14: ESG ratings and key targets Strong ESG ratings Key 2024 commitments ESG Theme: Planet Ratings agency FY23 HY24 Change Complete • Begin implementing customised decarbonising benchmarks for our listed equities and create a roadmap for rolling out decarbonising strategies across the remain
Slide 39: Appendix 15: Footnotes
Appendix 15: Footnotes 1. 30 June 2024 Solvency II capital position is an estimated position and reflects a dynamic recalculation of transitionals for the Group's Life Companies and recognition of the foreseeable 2024 interim shareholder dividend of £267m. Had the dynamic calculation not been assume
Slide 40: Appendix 15: Footnotes
Appendix 15: Footnotes 12. The Group identified material corrections to previously reported results resulting in a restatement of comparative information, including the restatement of the FY 2023 shareholders’ equity from £2.5 billion as reported to £2.7 billion. Further information on this restatem
Slide 41: Legal disclaimer
Legal disclaimer This presentation in relation to Phoenix Group Holdings plc and its subsidiaries (the ‘Group’) contains, and the Group may make other statements (verbal or otherwise) containing, forward-looking statements and other financial and/or statistical data about the Group’s current plans,
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