Press release

07:00 A.M. Friday 27 August 2010

Phoenix Group Holdings
Interim results for the half year ended 30 June 2010

PHOENIX REPORTS STRONG FIRST HALF RESULTS
AND SETS £725M CASH TARGET FOR YEAR END

Phoenix Group Holdings released strong first half results today, and said that full year cash inflows were likely to be at the top of its previous target range of £625 - £725m. Embedded value was up 7% at almost £2bn. Having successfully completed its Premium Listing on the LSE in July, Phoenix also said that it expects to enter the FTSE 250 Index in September.

Financial Highlights

  • Strong first half cash inflows to the Holding Companies of £335m
  • Target of £725m for cash flows in 2010, including £225m of management actions, at top of previous range
  • Impressive growth in Group MCEV, up 7% to £1,962m including £116m of management actions
  • Robust IGD capital surplus estimated at £1.3bn, £0.4bn in excess of regulatory requirements2
  • Group IFRS operating profit of £176m, up £146m on the pro forma comparative period
  • Assets under management of £69bn, up 3% since 31 December 2009, £800m of net new third party business
  • Ignis Asset Management IFRS operating profit of £22m, up 38 percent on the pro forma comparative period
  • Proposed interim dividend of 21 pence3

Corporate Highlights

  • Achieved a Premium Listing on the London Stock Exchange on 5 July 2010, with expected inclusion in the FTSE 250 index in September 2010
  • Significant simplification of the capital structure
  • Successful conclusion to Tier 1 bondholder negotiations and resumption of coupon payment
  • Continued focus on fund mergers. The National Provident Life Limited restructure was completed in Q1 2010
  • Successful consolidation of the operations of Ignis, providing an enhanced platform for future growth
  • Further strengthening of management and corporate governance
  • Submitted the Solvency II pre-application process qualifying criteria template to the FSA in July 2010, demonstrating readiness to join the pre-application process for Solvency II internal model approval

Commenting on the results, Group Chief Executive Jonathan Moss said:

“This has been a pivotal period for us, completing many key corporate objectives including the Premium Listing on the London Stock Exchange and a significantly simplified capital structure. At the same time we have reported a strong operational performance and continued to deliver on our financial targets in terms of cash flow, embedded value and capital.

“We are now well placed to deliver on both our corporate and financial objectives for the remainder of 2010 and beyond, including simplification of our banking facilities and further fund mergers, all underpinned by continued strong and highly predictable cash flow generation. This will provide a sound foundation for pursuit of the Group’s closed life fund consolidation strategy.”

Presentation

There will be a presentation for analysts and investors on 27 August 2010 at 9.30am (BST) at:

Deutsche Bank,
Winchester House,
1 Great Winchester Street,
London,
EC2N 2DB.

A live webcast of the presentation will be available at
www.thephoenixgroup.com/investor-relations

Participants may also dial in as follows:
020 3059 5845 (UK)
+44 20 3059 5845 (outside UK)
Participant password: Results

Presentation materials will be available on www.thephoenixgroup.com/investor-relations before commencement of the presentation.

Enquiries

Investor Relations

Lorraine Rees
+ 44 (0) 20 7489 4456
+ 44 (0) 7872 413 277 (Mobile)

Media

Daniel Godfrey
+ 44 (0) 20 7489 4517
+ 44 (0) 7894 937 890 (Mobile)

Notes

  1. Phoenix Group Holdings, formerly Liberty Acquisition Holdings (International) Company (“Liberty”), was formed as a non-operating special purpose acquisition company in 2008. In the third quarter of 2009 it acquired a group of businesses that specialise in the consolidation and management of closed life and pension funds referred to as the Pearl businesses.

    The Interim Report for 2010 includes the consolidated results of Phoenix Group Holdings and its subsidiaries (the Pearl businesses) for the half years ended 30 June 2010 and 30 June 2009 and for the year ended
    31 December 2009 presented in accordance with International Financial Reporting Standards (“IFRS”). The results of the Pearl businesses are included from 28 August 2009, the IFRS date of acquisition.

    To assist users and give shareholders a basis for comparison, the Directors have provided additional financial information on a pro forma basis. This information includes for the half year ended 30 June 2009 the Pearl businesses for the period from 1 January 2009 to 30 June 2009 in addition to the consolidated results of Phoenix Group Holdings from 1 January 2009 to 30 June 2009 and for the year ended 31 December 2009 the Pearl businesses from 1 January 2009 to 27 August 2009 in addition to the consolidated results of Phoenix Group Holdings from 1 January 2009 to 31 December 2009.

    Pro forma information is separately referenced throughout the Interim Report and is predominantly located within the sections covering Performance and the Market Consistent Embedded Value (“MCEV”) supplementary information.

    The following timeline details the key developments in the history of the Group since 2009.

  2. Any references to IGD Group, IGD sensitivities, or IGD relate to the relevant calculation for Phoenix Life Holdings Limited, the ultimate EEA Insurance parent undertaking as at 30 June 2010.
  3. The proposed interim dividend of 21 pence per share is subject to compliance with the processes set out in the Group's main credit facilities. The dividend represents 50 per cent of our stated annual dividend policy. We expect to revisit this policy should our dividend restriction be removed. The Company will be offering a scrip dividend alternative and details will be made available on the Group's website, www.thephoenixgroup.com.
  4. This announcement in relation to Phoenix Group Holdings and its subsidiaries (the “Group”) contains forward looking statements concerning future events. Those forward looking statements are based on the current information and assumptions of the Group’s management concerning known and unknown risks and uncertainties. Forward looking statements do not relate to definite facts and are subject to risks and uncertainty. The actual results and financial condition of the Group may differ considerably as a result of risks and uncertainties relating to events and circumstances beyond the Group’s control. This may include among other things, domestic and global economic and business conditions; market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities, the impact of competition, inflation, and deflation; experience in particular with regard to mortality and morbidity trends, and lapse rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; the impact of changes in capital, solvency or accounting standards; and the impact of changes in tax and other legislation and regulations in the jurisdictions in which members of the Group operate. The Group cautions that expectations are only valid on the specified dates, and accepts no responsibility for the revision or updating of any information contained in this announcement.