HomeUKBritish insurer Phoenix praises retirement sector boost due to high inflation

British insurer Phoenix praises retirement sector boost due to high inflation

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High inflation has provided a boost to the UK retirement sector, as rising pay awards increase the amount people contribute to their pension, according to FTSE 100 life insurance group Phoenix.

Official data last week showed UK wages grew by 7.8 per cent – the fastest pace on record – in the three months to July, as workers reacted to cost-of-living increases by negotiating higher salary increases with their employers. Since many workplace retirement plans are directly linked to salaries, any salary increases lead to higher pension contributions.

“Counterintuitively, as far as our sector is concerned, the UK economic environment is accelerating our growth, so we really feel positive about the drivers of market growth,” said Phoenix CEO, Andy Briggs, in an interview with the Financial Times.

Briggs also pointed to a booming market for bulk annuity purchases, in which companies roll over their defined benefit pension plans to insurers such as Phoenixdriven by rising interest rates.

Higher interest rates reduce the present value of future plan liabilities and therefore make pension transfer arrangements more affordable for companies. According to consultants Lane Clark & ​​Peacock, the first half of the year saw a record volume of transactions.

Briggs was also optimistic about the prospect of more M&A activity. Historically, much of Phoenix’s growth has come from acquisitions, adding closed life books. sure business to its own operations. In the first half of the year, the company completed its £250 million acquisition of Sun Life of Canada UK, and Briggs expects more deals as inflation drives up costs for life insurers.

His comments came as Phoenix reported summary results for the first half of the year. Net new business fund flows, a measure of the amount of new money the company was given to manage, rose 72 per cent to £3.1bn.

Overall, Phoenix’s operating businesses generated £898 million in cash. This was down from the £950m delivered in the same period last year, but the company said the full-year figure would be at the upper end of its target range of £1.3bn to £1.4bn. millions.

The first half dividend was increased by 5 per cent to 26 pence per share.

Phoenix has delayed publishing a full set of accounts for the first half of the year until next week, blaming the “operational complexity” of the transition to the new IFRS 17 accounting standard.

Phoenix shares rose just under 1 percent in early trading Monday.

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