Standard Life Plc · LSE:SDLF
Standard Life — Phoenix Group Holdings — Investor Day (December 2022)
64 slides from Standard Life's investor day presentation, Dec 6, 2022
Slide 1: Capital Markets Event 2022
Capital Markets Event 2022 Delivering sustainable organic growth 6 December 2022 Phoenix Group Holdings plc
Slide 2: Phoenix Group is the UK's largest long-term savings and retirement business
Phoenix Group is the UK’s largest long-term savings and retirement business We have scale businesses across the We offer a compelling equity story …with another year of strong delivery long-term savings and retirement market through our clear financial framework… in 2022 c.£25bn Cash On track to mee
Slide 3: Agenda for today
Agenda for today Strategic Overview Andy Briggs | Group Chief Executive Officer, Phoenix Group Organic Growth Overview Andy Curran | Chief Executive Officer, Standard Life Retirement Solutions Tom Ground | Managing Director, Retirement Solutions Pensions and Savings Colin Williams | Managing Directo
Slide 4: Key messages for today
Key messages for today 1 We are ‘helping people secure a life of possibilities’ through our clear and differentiated strategy We have significant growth opportunities from meeting more of the evolving needs of our existing customers 2 across their lifecycle and through acquiring new customers The sc
Slide 5: Strategic Overview
Strategic Overview Andy Briggs Group Chief Executive Officer, Phoenix Group
Slide 6: The UK long-term savings and retirement market is attractive
The UK long-term savings and retirement market is attractive The market is large and growing… …and there is an opportunity to help more customers in planning for retirement The long-term savings and retirement market… Only of individuals take advice on their journey to and through retirement(4) c.£3
Slide 7: Our purpose of 'helping people secure a life of possibilities' drives all that we do
Our purpose of ‘helping people secure a life of possibilities’ drives all that we do Colleagues Customers The best people with Customer obsessed, focused differentiated capabilities, on the outcomes that matter diverse and highly engaged most to our c.13m customers Our purpose: Helping people secure
Slide 8: We will help customers journey to and through retirement by meeting their needs
We will help customers journey to and through retirement by meeting their needs Saving for retirement Transitioning to retirement Securing income in retirement Wealth Pension consolidation Income drawdown and individual annuities Retail savings for retirement Defined benefit pension income Savings i
Slide 9: Our strategy drives growth by meeting more of the evolving needs of our existing customers
Our strategy drives growth by meeting more of the evolving needs of our existing customers and acquiring new customers ORGANIC GROWTH M&A GROWTH Meet more of our existing customers’ needs We will undertake M&A to: and acquire new customers by helping them to: • Acquire new customers and transform •
Slide 10: Our scale in-force business provides us with three unique competitive advantages
Our scale in-force business provides us with three unique competitive advantages Capital efficiency Customer access Cost efficiency Diversification of risk c.13 million existing customers Market-leading administration & IT Highly resilient Deep customer insight Simple operating model Single internal
Slide 11: Our strategic priorities enhance our competitive advantages
Our strategic priorities enhance our competitive advantages and enable us to help people secure a life of possibilities Optimise our in-force Grow organically and Enhance our operating business through M&A model and culture Leveraging our scale in-force business to Meeting more of our existing custo
Slide 12: Phoenix Group delivers cash and resilience, and is growing its in-force cash generation
Phoenix Group delivers cash and resilience, and is growing its in-force cash generation We have set our first organic growth target… …to support growth in our in-force Cash cash generation In-force business covers our dividend over very long term Annual incremental new business long-term cash genera
Slide 13: Organic Growth Overview
Organic Growth Overview Andy Curran Chief Executive Officer, Standard Life
Slide 14: Key messages for today
Key messages for today 1 Our growth opportunities align to the largest stocks and flows in the market 2 We will combine Phoenix Group’s competitive advantages with Standard Life’s strengths to grow organically 3 We have already made significant progress in building our businesses and have a clear st
Slide 15: We have a complementary portfolio of businesses that underpin our organic growth
We have a complementary portfolio of businesses that underpin our organic growth Savings and Retirement Andy Curran – CEO, Standard Life Standard Life Retirement Pensions and SunLife Intl. (Europe) Solutions Savings Mark Screeton - Nigel Dunne - Tom Ground - MD Colin Williams - MD CEO CEO + Defined
Slide 16: Our growth opportunities align to the largest stocks and flows in the market
Our growth opportunities align to the largest stocks and flows in the market, where we already have scale businesses Long-term savings Retirement Our customer solutions Defined contribution Retail savings Pension Income drawdown and Home equity Defined benefit workplace pensions for retirement conso
Slide 17: Phoenix Group's competitive advantages are combined with Standard Life's strengths
Phoenix Group’s competitive advantages are combined with Standard Life’s strengths Capital efficiency Brand recognition Diversified balance sheet and strong asset The Standard Life brand is well known and deployment capabilities enable us to offer the full trusted by customers and advisers range of
Slide 18: We are building market leading businesses and have grown cash generation by c.35% CAGR
We are building market leading businesses and have grown incremental new business long-term cash generation by c.35% CAGR since 2019 We have built our businesses in a logical order… …to support growth in incremental new business long-term cash generation Current position: c.35% CAGR Retirement £1,18
Slide 19: Our businesses are working together to innovate and meet our customers' evolving needs
Our businesses are working together to innovate and meet our customers’ evolving needs Phoenix can meet the emerging demand from customers, with 78%(6) of …as we combine our businesses’ strengths to deliver people looking for greater income certainty in retirement… innovative solutions Retirement So
Slide 20: We have a clear opportunity to grow our in-force cash generation organically
We have a clear opportunity to grow our in-force cash generation organically Key messages c.13 million c.£17 billion(7) of Recurring premiums to policy maturity assuming existing in-force in-force long-term virtually all customers leave at retirement • Phoenix has a large in-force business customers
Slide 21: We are confident of growing incremental new business long-term cash generation to c.£1.5 billion
We are confident of growing incremental new business long-term cash generation to c.£1.5 billion per annum by 2025 We have a clear strategy for delivering future growth… …and we are setting our first organic growth target c.+25% We operate in structurally growing markets c.£1.5bn c.£1.2bn c.£0.5bn W
Slide 22: Retirement Solutions
Retirement Solutions Tom Ground Managing Director, Retirement Solutions
Slide 23: Key messages for today
Key messages for today 1 We operate across three large, growing and attractive markets 2 We have built the key capabilities that we need to win We will deliver sustainable incremental new business long-term cash generation of c.£1 billion p.a. by 2025 3 for the Group, while limiting our credit risk
Slide 24: Retirement Solutions: We can access substantial flows across the market
Retirement Solutions: We can access substantial flows across the market Long-term savings Retirement Our customer solutions Defined contribution Retail savings Pension Income drawdown and Home equity Defined benefit workplace pensions for retirement consolidation individual annuities release pension
Slide 25: Retirement Solutions: Our businesses help customers secure income certainty in retirement
Retirement Solutions: Our businesses help customers secure income certainty in retirement Defined Benefit (DB) Solutions Retirement Income Mortgage Solutions Supporting corporates in de-risking their Providing income certainty to individuals Enabling individuals to access their DB pension scheme lia
Slide 26: Retirement Solutions: We will leverage the Group's competitive advantages
Retirement Solutions: We will leverage the Group’s competitive advantages and the strengths of Standard Life to grow Capital efficiency Brand recognition Leveraging our diversified balance sheet and Utilising the strength of the Standard Life brand asset deployment capabilities to reduce our to bols
Slide 27: DB Solutions: We have invested in building our capabilities
DB Solutions: We have invested in building our capabilities, delivering c.£3 billion of incremental new business long-term cash generation since 2018 We entered the market in 2018 2019 2020 2021 2022 Premiums £0.8bn £1.1bn £2.5bn £5.6bn c.£4.8bn Long-term cash £250m £235m £522m £950m c.£0.9bn genera
Slide 28: DB Solutions: We provide innovative de-risking solutions to support defined benefit pension schemes
DB Solutions: We provide innovative de-risking solutions to support defined benefit pension schemes Our ambition Our strategy Key focus areas Be a market leader in providing Grow organically and through M&A innovative de-risking solutions to support DB pension schemes Leveraging our customer proposi
Slide 29: DB Solutions: Leveraging our strong customer proposition to support our growth
DB Solutions: Leveraging our strong customer proposition to support our growth Great progress in building a leading customer proposition… …and growth from follow-on transactions with existing customers Strong relationships and early engagement with customers c.35% of our total BPA premiums have been
Slide 30: DB Solutions: Reducing our capital strain to optimise our returns
DB Solutions: Reducing our capital strain to optimise our returns We intend to reduce our capital strain to c.5% by 2025 Three areas of focus to reduce capital strain: >50% reduction Capital Model Optimisation We improve our capital efficiency by optimising our (7)% internal model and diversifying t
Slide 31: DB Solutions: Utilising our asset management partnership model
DB Solutions: Utilising our asset management partnership model for best-in-class asset deployment We partner with the very best asset managers across the globe… …with a clear focus on sustainability in line with our purpose We work with over 20 asset managers, This model delivers: £1.4bn including:
Slide 32: DB Solutions: Actively managing our credit risk exposure as we grow our annuities
DB Solutions: Actively managing our credit risk exposure as we grow our annuities Illustrative growth in shareholder credit risk exposure in 2022 Diversified balance sheet, with only c.13%(1) exposure to annuities £4.8bn Proactive management of high £(3.0)bn quality credit portfolio We have a conser
Slide 33: Retirement Income: We will launch competitive, open market individual income solutions
Retirement Income: We will launch competitive, open market individual income solutions to meet the needs of our current and future customers Our current position in the market Our strategy and ambition Key focus areas We have clear strengths… • Launch open market annuity Scale and deep expertise fro
Slide 34: Mortgage Solutions: Enabling individuals to access their property wealth in retirement
Mortgage Solutions: Enabling individuals to access their property wealth in retirement Our current position in the market Our strategy and ambition Key focus areas We have clear strengths… • Originate mortgages through 3rd Strong player in the market, having To offer innovative mortgage party fundin
Slide 35: Retirement Solutions: Our strategy will deliver sustainable long-term cash generation
Retirement Solutions: Our strategy will deliver sustainable long-term cash generation We are setting our first organic growth target… …that reflects our ambition to grow our business c.+25% c.£1.5bn Reduce BPA capital strain to c.5% by 2025 c.£1.2bn Disciplined investment of around £300m of capital
Slide 36: Pensions and Savings
Pensions and Savings Colin Williams Managing Director, Pensions and Savings
Slide 37: Key messages for today
Key messages for today 1 We are operating in a large, growing and attractive market 2 We have the capabilities to compete and win 3 We are already making great progress with our clear and distinctive strategy Pensions and Savings will be a material contributor to the organic growth of the Group, tar
Slide 38: Pensions and Savings: We can access substantial flows across the market
Pensions and Savings: We can access substantial flows across the market Long-term savings Retirement Our customer solutions Defined contribution Retail savings Pension Income drawdown and Home equity Defined benefit workplace pensions for retirement consolidation individual annuities release pension
Slide 39: Pensions and Savings: Our businesses help customers journey to and through retirement
Pensions and Savings: Our businesses help customers journey to and through retirement Workplace Retail Direct Retail Intermediated Serving employers, trustees and members Helping customers without advisers Supporting advisers to help their in saving for retirement with traditional journey to and thr
Slide 40: Pensions and Savings: We have a simple business with a straightforward way to succeed
Pensions and Savings: We have a simple business with a straightforward way to succeed Grow our assets Maximise our revenue Leverage our cost efficiency Meet more of the needs of our existing Offer competitive pricing across our Utilise core Group infrastructure and TCS customers through their saving
Slide 41: Pensions and Savings: We will leverage the Group's competitive advantages
Pensions and Savings: We will leverage the Group’s competitive advantages and the strengths of Standard Life to grow Capital efficiency Brand recognition Balance sheet strength and broad range of best- Utilising the strength of the Standard Life brand in-class investment solutions enables us to bett
Slide 42: Foundational partnership with TCS underpins our cost efficiency
Pensions and Savings: Foundational partnership with TCS for customer administration and servicing underpins our cost efficiency Our operating model utilises the relative strengths of each …and delivers a number of key benefits to our business partner… • Leading-edge digital solutions enabled by TCS
Slide 43: Pensions and Savings: We are engaging customers through our strong digital capabilities
Pensions and Savings: We are engaging customers through our strong digital capabilities Our digital capabilities are among the best in the market… …reflected in strong customer engagement and industry awards Comprehensive self-service functionality in the Standard Life app 4.7 / 5 Apple App Store ra
Slide 44: Our asset management capabilities support best-in-class investment solutions
Pensions and Savings: Our asset management capabilities support best-in-class investment solutions for customers Our asset management partnership model provides abrdn helped develop our successful Sustainable Multi us with access to the best asset managers globally Asset fund which is helping us to
Slide 45: Workplace: The workplace market is large, growing and changing structurally
Workplace: The workplace market is large, growing and changing structurally Fundamental customer, economic and regulatory trends… …support organic growth and structural change in Workplace Assets under Administration(1) Established auto-enrolment system underpins £1,250bn 1 ongoing scheme member and
Slide 46: Workplace: A capital-light organic growth engine
Workplace: A capital-light organic growth engine with growth in flows generated by existing schemes New schemes Baseline growth already inherent through existing schemes c.250k Salary increases New members to new members Growth from existing existing schemes annually schemes accounts for >90% of gro
Slide 47: Workplace: We have invested to re-build a winning proposition and brand
Workplace: We have invested to re-build a winning proposition and brand 2019 2020 2021 2022 Our new Number - 1 41 68 scheme AUA - c.£0.2bn c.£0.2bn c.£2bn wins… Members - 4k 10k 47k Improving our member experience through our digital first strategy …reflect the investment we Significant investment i
Slide 48: Workplace: Our progress is reflected in our improving financial performance
Workplace: Our progress is reflected in our significantly improving financial performance, with our strong margins expected to continue We are growing inflows and stemming …to grow our net fund flows… …which is growing incremental new outflows… business long-term cash generation x10 c.+40% £1.7bn c.
Slide 49: Workplace: We have a clear ambition and strategy to drive greater net fund flows
Workplace: We have a clear ambition and strategy to drive greater net fund flows Our ambition Our strategy Key focus areas To become a Top 3 Workplace Grow organically and through M&A provider A market leading, Investing in distribution to develop deeper comprehensive and relationships with advisers
Slide 50: Retail: We have a significant opportunity to retain and attract customers
Retail: We have a significant opportunity to retain our existing customers and attract new customers by leveraging common capabilities and infrastructure Market Opportunity (c.£80-100bn flows p.a.(11)) c.£7-9bn outflows p.a. Win new and Retain Win new and consolidate existing consolidate existing Re
Slide 51: Retail – Direct: We will support both new and existing customers
Retail – Direct: We will support both new and existing customers with engaging and innovative solutions to help them reach their financial goals Our current position in the market Our strategy and ambition Key focus areas We have clear strengths… Offer retirement solutions with Strong and trusted br
Slide 52: Retail – Intermediated: We will re-energise our adviser presence
Retail – Intermediated: We will re-energise our adviser presence with deep customer insight, efficiency through technology and compelling propositions Our current position in the market Our strategy and ambition Key focus areas We have clear strengths… Offer state-of-the-art retirement- Strong and t
Slide 53: Pensions and Savings: Our strategy will deliver sustainable long-term cash generation
Pensions and Savings: Our strategy will deliver sustainable long-term cash generation through growth in net fund flows We are setting our first organic growth target… …that reflects our ambition to grow our business c.+25% c.£1.5bn c.£1.2bn c.£0.5bn Growth in net fund flows across 2023-2025 c.£0.3bn
Slide 54: Summary
Summary Andy Briggs Group Chief Executive Officer, Phoenix Group
Slide 55: We have a clear and differentiated strategy: growing in-force business organically and through M&A
We have a clear and differentiated strategy: we are growing our in-force business both organically and through M&A ORGANIC GROWTH M&A GROWTH Pensions and Savings Retirement Solutions Backbook M&A Capability M&A • Workplace • DB Solutions • Cost and capital • Accelerates • Retail • Retirement Income
Slide 56: We have invested in building our capabilities and are confident of growing in-force cash generation
We have invested in building our capabilities and are confident of growing our in -force cash generation We have more than proven the wedge again in 2022... …and are sustainably growing our in-force cash generation M&A M&A Cash generation Cash generation Management Management actions actions Open c.
Slide 57: From 2025, we expect to generate c.£0.5 billion per annum of long-term free cash
From 2025, we expect to generate c.£0.5 billion per annum of long-term free cash that can support sustainable dividend growth Illustrative long-term free cash generation 2025+ Key messages c.£1.5bn £0.2bn From 2025 we expect to generate c.£0.5bn per annum of long-term free cash from organic growth c
Slide 58: Phoenix Group is unique in the insurance sector
Phoenix Group is unique in the insurance sector Cash Resilience Growth In-force business covers our Highly resilient Growing organically and dividend over very long term capital position through M&A Phoenix Group is a growing business with a defensive balance sheet and offers a uniquely reliable div
Slide 59: Key messages from today
Key messages from today 1 We are ‘helping people secure a life of possibilities’ through our clear and differentiated strategy We have significant growth opportunities from meeting more of the evolving needs of our existing customers 2 across their lifecycle and through acquiring new customers The s
Slide 60: Q&A
Q&A ail Phoenix
Slide 61: Appendices
Appendices ail Phoenix
Slide 62: Appendix 1: Footnotes
Appendix 1: Footnotes 1. As at 30 June 2022 2. Sources: LCP report (Insurance enters a new phase: a skyrocketing market, October 2022) and Broadridge report (Navigator - UK Defined Contribution and Retirement Income 2021) 3. Sources: LCP report (Insurance enters a new phase: a skyrocketing market, O
Slide 63: Appendix 1: Footnotes cont.
Appendix 1: Footnotes cont. 14. Estimated 31 December 2022 position 15. Excluding market movements 16. Sources: Broadridge report (Navigator - UK Defined Contribution and Retirement Income 2021), NMG UK Stock & Flow Model and Phoenix estimate 17. Source: Office for National Statistics 18. At present
Slide 64: Disclaimer
Disclaimer This presentation in relation to Phoenix Group Holdings plc and its subsidiaries (the ‘Group’) contains, and the Group may ma ke other statements (verbal or otherwise) containing, forward-looking statements and other financial and/or statistical data about the Group’s current plans, goals
Phoenix Group Holdings — Investor Day (December 2022) on 6ix