Phoenix Group H2 Earnings Call Highlights

Standard Life’s management team used its full-year 2025 results presentation to emphasize operational progress under its three-year strategy and to outline how improving cash generation and balance sheet flexibility are expected to support shareholder returns and future capital allocation choices.

Strategic progress: “Grow, Optimize, Enhance”

Group Chief Executive Officer Andy Briggs said the company is “firmly on track” to deliver its 2026 targets, pointing to momentum across three strategic priorities.

Under Grow, Briggs said Standard Life now has a “full product suite” following product launches in 2025, spanning customers’ retirement journeys. He highlighted the launch of an advice proposition and a range of digital offerings, including the Family Finance Hub and a Mixed Income Builder tool, which he said are intended to improve engagement and planning outcomes.

Under Optimize, he pointed to continued progress on deleveraging, including an additional GBP 200 million of debt paid down in December, improving the solvency leverage ratio to 33%. He also said in-house asset management capabilities are supporting returns and customer outcomes.

Under Enhance, the company delivered GBP 180 million of run-rate cost savings “ahead of expectations,” and platform migrations progressed, with 75% of customers now on end-state platforms, up from 45% in 2024.

2025 financial headlines: cash, capital, and earnings

Chief Financial Officer Nick described 2025 as a “strong set of results,” citing:

• Operating cash generation (OCG) up 5% to GBP 1,474 million, with total cash generation of GBP 1,711 million, in line with guidance.
• Solvency cover increased to 176%, remaining in the upper half of the company’s operating range.
• Solvency leverage ratio improved to 33%.
• IFRS operating profit up 15% to GBP 945 million.
• Adjusted IFRS shareholders’ equity of GBP 3.1 billion, supported by an increase in the CSM, which partly offset hedge-related market impacts.
• A recommended final dividend of 28.05 pence per share, up 2.6% year-on-year, bringing the total dividend to 55.4 pence per share.

Management reiterated its aim to reach a circa GBP 1.1 billion operating profit target in 2026 and said dividends remain supported by cash generation.

Business performance: pensions and savings, retirement solutions

In pensions and savings, Nick said workplace inflows were GBP 10 billion in 2025, including GBP 1.5 billion from new scheme wins. He added that momentum carried into 2026 with around GBP 1 billion of wins secured so far. Scheme retentions were described as high, with GBP 200 million of scheme losses for the second year running.

In retail, gross inflows rose 16% to GBP 7.1 billion, which management attributed to greater drawdown take-up and a 60% rise in International Bond sales. Outflows included GBP 5 billion of withdrawals as customers accessed retirement savings (including annuity income, drawdown payments, or tax-free cash) and GBP 2 billion of internal transfers to more modern retail products. Nick said remaining outflows are expected to improve as a percentage of assets under administration as the company increases focus on retention.

Average pensions and savings assets under administration rose 7% to GBP 204.6 billion. Combined with a margin improvement to 19 basis points, operating profit for pensions and savings increased 23% to GBP 389 million, with further near-term margin improvement expected as cost savings benefits “come through.”

For retirement solutions (including individual annuities and pension risk transfer), management stressed that profit is primarily driven by managing a large in-force annuity book rather than new volumes. Individual annuity new premiums increased 20% to GBP 1.2 billion, while PRT premiums were lower at GBP 3.9 billion, which Nick said reflected reduced market volumes and disciplined pricing in a competitive environment. OCG for retirement solutions rose 3% to GBP 879 million, supported by sustaining a spread-based margin of 219 basis points on average assets of GBP 40.2 billion.

Capital allocation, deleveraging, and buyback framework

Nick said the company has improved its ability to generate excess cash by growing OCG and moderating recurring uses. Excess cash was GBP 296 million in 2024 and GBP 423 million in 2025, with expectations for around GBP 0.5 billion in 2026. Management reiterated that the near-term priority is deleveraging to a 30% target by the end of 2026, after which excess cash could be directed to growth investment, targeted M&A, or increased returns to shareholders.

During Q&A, Nick said constraints on dividends or buybacks should be evaluated through a Solvency II and cash lens rather than IFRS, citing 176% solvency coverage and GBP 5.8 billion of parent company distributable reserves at year-end 2025. He said decisions among capital allocation options would be “value rational” and dependent on what buybacks or other uses “compete with.”

Key Q&A themes: margins, surplus, partnerships, and market dynamics

Management addressed several investor topics, including the relationship between pensions and savings margin performance and the 2026 profit target, and the pace of cost savings earn-through. Nick said further cost benefits are expected to flow through as the program completes and earns through in the next year or two, which he linked to additional margin uplift.

On life company free surplus, management emphasized that the group manages capital in aggregate. Nick noted interaction effects across the group balance sheet, including the location of certain items such as deferred tax assets, and said the life company surplus is only “a partial picture.”

Briggs highlighted “targeted support” as a major opportunity, noting that only about 10% of UK consumers currently receive advice through retirement. He positioned targeted support and more proactive CRM-driven engagement as tools to improve customer outcomes and retention.

On annuities economics, Briggs said the company is “disciplined” and seeks “value over volume,” with a stated approach of deploying up to GBP 200 million of capital to annuities in the year if sufficiently attractive returns are available. He also said the company’s annuity lifetime IRRs of “more than 20%” reflect diversification and recurring management actions, while clarifying later in Q&A that “day one” margins are in the mid-teens with recurring management actions making up the balance.

Management also discussed exploring potential partnerships in the larger end of the PRT market, where Briggs noted that schemes above GBP 2 billion represent “just over half” of expected market volume over the next decade. He said the company is exploring whether third-party capital could be partnered with Standard Life’s origination and brand capabilities, and potentially private credit capability, while stressing there was nothing to announce yet.

Briggs also referenced the company’s customer footprint, stating that 12 million UK adults are customers of the group, and during discussion he referred to Phoenix Group (LON:PHNX) when describing customer share-of-wallet dynamics, saying that for each pound customers have with the company, they typically have three pounds elsewhere.

About Phoenix Group (LON:PHNX)

Phoenix Group is one of the UK’s largest long-term savings and retirement businesses with over £290 billion of assets under administration and c. 12 million customers. We were founded in 1782 and are based in London, UK, and our family of brands include Standard Life, SunLife and ReAssure. We are a constituent of the FTSE 100 with c. 6,600 colleagues and offer a broad range of savings and retirement income products to support people across all stages of their savings journey. We are a growing and sustainable business with a clear purpose – helping people secure a life of possibilities.