Phoenix Group Holdings PLC on Friday unveiled ‘ambitious’ new targets as it reported annual results which met and, in some areas, surpassed City expectations.

Shares in Phoenix Group jumped 9.3% to 533.40 pence each in London on Friday morning. It was the best performing stock in the broader FTSE 100, which was up 0.3%.

In 2023, the London-based life insurance provider reported total cash generation of £2.02 billion, up 35% from £1.50 billion the year prior.

This was above the company’s upgraded target of £1.8 billion, which was also the market consensus.

New business long-term generation rose to £1.51 billion from £1.23 billion, meeting City expectations, and achieving its 2025 target two years early.

Phoenix said this included strong growth from its Pensions and Savings business to £395 million from £249 million and an increase in its Retirement Solutions business to £1.07 billion from £934 million.

Phoenix said its solvency II surplus of £3.9 billion remained ‘resilient,’ and included a well-flagged £70 million consumer duty provision following a review of its back book products ahead of the July 2024 compliance deadline.

In 2022, the solvency II surplus was £4.4 billion.

IFRS adjusted operating pretax profit increased 13% to £617 million from £544 million, driven by strong growth in its Pension and Savings business, ahead of the £599 million consensus.

Phoenix said its pretax loss narrowed to £164 million from £3.51 billion.

Phoenix announced an ambition to grow operating cash generation by around 25% to £1.4 billion in 2026 from £1.1 billion in 2023, after which it is expected to grow at a mid-single digit rate over the long term.

These ‘ambitious’ growth targets will support a new ‘progressive’ and sustainable dividend policy, it said.

Phoenix increased the final dividend by 2.5% to 26.65 pence per share from 26.0p last year. This took the total payout to 52.65p from 50.8p, up 3.6%.

Total cash generation is targeted of £1.4 billion to £1.5 billion in 2024 with a 3-year target of £4.4 billion across 2024-26.

Phoenix intends to repay at least £500 million of debt by the end of 2026, and is aiming for £900 million of IFRS adjusted operating profit in 2026.

Around £250 million of annual cost savings are expected by the end of 2026.

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