Phoenix Group Holdings PLC

Phoenix Group Holdings PLC (LON: PHNX) is a London, United Kingdom-based largest specialist life and pensions consolidator of heritage life assurance funds in Europe. The group has a strategic partnership with Standard Life Aberdeen wherein the company operates an open business which underwrites and manufactures new products and policies.

On 9^th March 2020, the company will announce the 2019 Full Year Results.

Trading Update (as on 28^th November 2019)
In 2019, the cash generation stood at £707 million, an increase from the £664 million in 2018. This is exceeding the top end of the year 2019 cash generation of £600-£700 million target range. On 30^th September 2019, the solvency II surplus was £3 billion and remained the same from 30 June 2019.The shareholder capital coverage ratio decreased to 156% as at 30^th September 2019 against the 160% as at 30th June 2019. The incremental long-term cash generation from the new business was £440 million, includes new Open business of £205 million in 9M FY19 and 235 million pounds from 1.1 billion pounds of Bulk Purchase Annuity liabilities contracted year on year for nine months ended 30^th September 2019.On a year to date basis, the illiquid assets of £1.1 billion sourced with an average credit rating of A+ and delivering a Solvency II benefit of £116 million. This takes the allotment of illiquid assets backing annuity liabilities to 25 per cent. Before the trading update announced, the group confirmed an enlarged partnership with leading service and technology provider TCS (Tata Consultancy Services) to assist delivery of its IT operating model and Hybrid Customer Services. The company stays on track to deliver the total synergy target of 1.2 billion pounds for the (SLA) Standard Life Assurance businesses transition, and this is progressing as per the plan. The company persists in exceeding or meeting all client service metrics.

Share Price Performance

Daily Chart as at December-05-19, before the market closed (Source: Thomson Reuters)

On 5th December 2019, Phoenix Group Holdings PLC shares were trading at GBX 743.5 at the time of writing before the market close (at 11:15 AM GMT), up by 0.47% against the previous day closing price. Stock's 52 weeks High and Low are GBX 750.20/GBX 536.72. The company's stock beta stood at 0.88, reflecting the lower volatility as compared to the benchmark index.

The shares of the company have delivered a positive return of 8.31 per cent in the past six months. On a Year to Date basis, the company’s stock has given investors 31.09 per cent of a positive return.

Conclusion
The above trading update shows a strong performance, with exceeding the cash generation in 2019 from the given target range by the company.This also shows a further reinforces, the company’s conviction in its capacity to generate Cash and expand its business model. For the upcoming years, the group provides resilience and exploit multiple avenues of progress to deliver long-term sustainable cash generation. The company continues to improve customer outcomes and delivering a high level of customer service. Though the company's hedging programme brings resilience to the Group' solvency position and cash generation, the market is expected to remain turbulent till the Brexit dust settles down. The company look forward to exploring new growth prospects to create value for all investors and bring sustainability to the long-term cash generation.

Based on the above rationale, we have given a “Hold” recommendation at the closing price of GBX 740 (as on 4^th December 2019).

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