March 9, 2020 / 7:37 AM / 3 months ago

UPDATE 1-Pension buyout specialist Phoenix posts pre-Brexit boom

(Adds details on background, quote from statement)

March 9 (Reuters) - Insurer Phoenix Group reported higher annual profit on Monday as its business of buying and operating corporate pension schemes benefited from British companies rushing to offload risk in the run up to Brexit.

Most British companies are trying to eject pension obligations from their balance sheet to gain financial flexibility.

A company’s pension obligations sit on its balance sheet and can limit its financial and strategic options, so most boards are keen to pass the burden on.

That boom in deals helped the blue-chip company post a 14.4% rise in operating profit to 810 million pounds ($1.06 billion) for the 12 months ended Dec. 31.

“We see significant potential for further value creation in the Bulk Purchase Annuities market,” Chairman Nicholas Lyons said.

“I remain convinced that the drivers for consolidation are inevitably increasing and will tip the balance toward more institutions seeking to divest their capital-heavy legacy businesses to leaders in the Heritage space such as Phoenix.”

Late last year, FTSE 100-listed Phoenix, which agreed to buy the British ReAssure business of Swiss Re for 3.2 billion pounds, said it was on track to close the deal mid-2020.

Phoenix has 10 million policy-holders and 245 billion pounds in assets under administration with operations in UK, Ireland and Germany.

It increased its 2019-2023 cash generation target by 0.1 billion pounds to 3.9 billion pounds for new business written last year.

Separately, Phoenix, whose Chief Executive Officer Clive Bannister is set to retire this month, said finance chief Jim McConville would stand down in May after eight years with the business.

$1 = 0.7621 pounds Reporting by Muvija M in Bengaluru; editing by Patrick Graham, Bernard Orr

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