Phoenix Group is on track to deliver £1.2bn of incremental new business long-term cash generation in 2022, primarily through its Standard Life businesses, which contracted £4.8bn of bulk purchase annuity (BPA) premiums for the year, up from £5.6bn in 2021.

According to the group's trading update, this includes around £0.9bn from the group's Retirement Solutions business and around £0.3bn from its capital-light fee-based businesses, including Pensions & Savings, Europe and SunLife.

This also means that the group will more than offset the run-off of its in-force business, currently £0.8bn of annual cash generation, for the second year running.

The accounts suggested that the Workplace business within Pensions and Savings, in particular, delivered a "strong performance" in 2022, with positive net fund flows of £2bn, up from £0.2bn in 2021, and a 40 per cent increase in incremental new business long-term cash generation to £200m.

In light of the performance, the group said that it is "confident" in growing its incremental new business long-term cash generation further, setting its first target of £1.5bn per annum by 2025, to include around £1bn from retirement solutions and £0.5bn from pensions and savings, inclusive of Europe and SunLife.

Delivering on this target is expected to enable the group to generate "significant" net growth in its long-term free cash from 2025, which it intends to use to support future dividend growth.

To support these efforts, the Pensions and Savings business will look to grow its net fund flows, with an ambition for £5bn of annual net fund flows in its workplace business and around £2bn in its Retail businesses, by 2025.

Alongside this, the Retirement Solutions group will look to invest around £300m of capital per annum into BPA.

However, the group confirmed that the capital invested for 2022 will be slightly less than £300m, with an improved capital strain of c.6 per cent and an improved cash multiple of c.3x.

The accounts also confirmed that the group completed an additional seven BPA transactions during the second half of 2022, covering £3.2bn of premiums, although no further transactions are expected for the remainder of the year.

In total, the group contracted £4.8bn of BPA premiums for the year, down from £5.6bn in 2021.

Commenting on the update, Standard Life CEO, Andy Curran, commented: “As today’s update highlights, Standard Life has gone from strength to strength this year. It’s been a hugely successful year for both our Workplace and BPA businesses.

“The positive flows we’re experiencing in Workplace are a reflection of recent investment in the proposition and it’s particularly pleasing that we’re gaining traction and winning larger schemes now. Similarly, we’ve contracted £4.8bn of BPA premiums this year, helping secure the benefits of thousands of defined benefit scheme members.

“This momentum has been accompanied by a renewed focus on the iconic Standard Life brand which Phoenix Group acquired last year. In the second half of this year we’ve made a number of major investments in the brand including a series of high profile TV adverts and a new partnership with Race for Life.

“The brand is set to play a key role as we look to grow our presence across both intermediary and customer audiences in the coming years.”

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