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FINANCIALS: Phoenix 1H24: Narrative Intact But Tough To See Further Tightening

FINANCIALS
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Phoenix Group (PHNXLN: BBB+) 1H24 results are marginally ahead of consensus on cash generation with few surprises elsewhere. We’re less concerned about the below-the-line variance items. Its one index bond (PHNXLN 4 3/8 01/24/29) has outstripped €IG insurers recently and we struggle to see that pushing meaningfully tighter again today.

  • Key credit stats: the SCCR (S2) ratio is 168%, down 11pts in the period with the debt paydown being the largest driver here. This is sub-consensus (of 176%) but shouldn’t be a surprise, in our view. Operating cash generation is 14% ahead of expectations (GBP647m vs. 566m est.), so key credit measures appear solid to us.
  • Operating performance: IFRS profit is 3% ahead of consensus and leaves the company on a good trajectory for its 2026 target which is still a few %pts ahead of consensus right now. Below-the-line, there’s another “experience variance” loss from the group’s hedging strategy. The aim is to protect operating cash generation, which it does appear to do, such that we’re less concerned about this, from a credit perspective.
  • Phoenix is only 6 months into a 3yr strategy but, so far, the narrative remains intact.

Conf call is 0930 (London time) at: https://storm-virtual-uk.zoom.us/webinar/register/WN_7VBBqJ07RMWM6zkWgq2AOQ#/registration

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Phoenix Group (PHNXLN: BBB+) 1H24 results are marginally ahead of consensus on cash generation with few surprises elsewhere. We’re less concerned about the below-the-line variance items. Its one index bond (PHNXLN 4 3/8 01/24/29) has outstripped €IG insurers recently and we struggle to see that pushing meaningfully tighter again today.

  • Key credit stats: the SCCR (S2) ratio is 168%, down 11pts in the period with the debt paydown being the largest driver here. This is sub-consensus (of 176%) but shouldn’t be a surprise, in our view. Operating cash generation is 14% ahead of expectations (GBP647m vs. 566m est.), so key credit measures appear solid to us.
  • Operating performance: IFRS profit is 3% ahead of consensus and leaves the company on a good trajectory for its 2026 target which is still a few %pts ahead of consensus right now. Below-the-line, there’s another “experience variance” loss from the group’s hedging strategy. The aim is to protect operating cash generation, which it does appear to do, such that we’re less concerned about this, from a credit perspective.
  • Phoenix is only 6 months into a 3yr strategy but, so far, the narrative remains intact.

Conf call is 0930 (London time) at: https://storm-virtual-uk.zoom.us/webinar/register/WN_7VBBqJ07RMWM6zkWgq2AOQ#/registration