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1、Annual Report and Accounts 2022Phoenix Group Holdings plcWe are proud to be the UKs largest long-term savings and retirement business.With approximately 260 billion of assets under administration,we offer our c.12 million customers a comprehensive range of products across our market-leading pensions

2、,savings and life insurance brands.Together,were helping people secure a life of possibilities.Access the full reporting suite at Find out more on our website Our 2022 reporting suiteYou can find out more about our activities,financial performance,sustainability strategy and our progress to becoming

3、 a net-zero business by 2050 on our website and in our reporting suite.Topics coveredAnnual ReportSustainability ReportClimate ReportBusiness strategy&performanceRisk management Board governanceFinancial performanceSustainability strategySustainability governanceESG materialitySocial issuesClimate-r

4、elated risksClimate-related opportunitiesPerformanceIn this reportKey performance indicatorsOther performance indicatorsOperating companies cash generation1,504m(2021:1,717m)REM APMTotal ordinary dividend per share50.8p(2021:48.9p)Group Solvency II surplus(estimated)4.4bn(2021:5.3bn)REM Adjusted ope

5、rating profit1,245m(2021:1,230m)APMGroup Solvency II shareholder capital coverage ratio(estimated)189%(2021:180%)REM APMIFRS loss after tax(1,762)m(2021:(709)m)Incremental new business long-term cash generation1,233m(2021:1,184m)REM APMFitch financial leverage ratio30%(2021:28%)REM APMStrategic repo

6、rtAbout Phoenix Group 4Our investment case 6Chairs statement 8Group Chief Executive Officers report 10Our business model 14Our strategic priorities and KPIs 18Business review 28Stakeholder engagement 42Non-financial information statement 44Streamlined Energy and Carbon Reporting(SECR)statement 46Tas

7、k Force on Climate-Related Financial Disclosures 48Risk management 52Viability statement 68Corporate governanceChairs introduction to governance 72Board leadership and Company purpose 74Division of responsibilities 82Stakeholder engagement 84Composition,succession and evaluation 88Audit,risk and int

8、ernal controls 96Sustainability governance 105Workforce engagement 108Directors remuneration report 110Directors report 147Statement of Directors responsibilities 153FinancialsIndependent auditors report 156IFRS consolidated financial statements 168Notes to the consolidated financial statements 175P

9、arent company financial statements 290Notes to the parent company financial statements 293Additional Life Company asset disclosures 307Additional capital disclosures 312Alternative performance measures 314Additional informationShareholder information 318Glossary 320Online resources 325Forward-lookin

10、g statements 326The Strategic report was approved by the Board of Directors on 10 March 2023 and signed on its behalf by Andy BriggsGroup Chief Executive OfficerAssets under administration259bn(2021:310bn)APMAll amounts throughout the report marked with REM are KPIs linked to Executive remuneration.

11、See Directors remuneration report on page 110.All amounts throughout the report marked with APM are alternative performance measures.Read more on page 314.Phoenix Group Holdings plc Annual Report and Accounts 20221Strategic reportStrategic report2Phoenix Group Holdings plc Annual Report and Accounts

12、 2022About Phoenix Group 4 Our investment case 6Chairs statement 8Group Chief Executive Officers report 10Our business model 14Our strategic priorities and KPIs 18Business review 28Stakeholder engagement 42Non-financial information statement 44Streamlined Energy and Carbon Reporting(SECR)statement 4

13、6Task Force on Climate-Related Financial Disclosures 48Risk management 52Viability statement 683Phoenix Group Holdings plc Annual Report and Accounts 2022Strategic reportAbout Phoenix GroupAt a glance259bnc.12mtotal assets underadministrationcustomersc.6,800FTSE 100colleaguesas at 1 March 2023and FT

14、SE All Worldc.6.4bn12.1bnmarket capitalisationas at 1 March 2023of Group in-force long-term free cash to emerge over timePhoenix Group is the UKs largest long-term savings and retirement business.We offer a broad range of pensions and savings products to support people across all stages of the savin

15、gs life cycle.Our vision To grow a strong and sustainable business to help more people on their journey to and through retirement.Our purpose drives everything we do:Helping people secure a life of possibilitiesOur businessOur family of brandsWho we areOur valuesGrowthWe grow our business through fi

16、nding new ways to develop our expertise and innovate.PassionWe are passionate about understanding and acting on whats important to our customers,colleagues and society.ResponsibilityWe build trust by taking accountability and empowering others to do the right thing.CourageWere ambitious in the chall

17、enges we solve and we always speak up.DifferenceWe collaborate across boundaries and embrace difference to deliver the best customer and colleague outcomes.Phoenix Group Holdings plc Annual Report and Accounts 20224Home equity releaseRetail savings for retirementIncome drawdown and individual annuit

18、iesLegacy pensions and savings productsPension consolidationLong-term savingsRetirementWe offer a range of customer solutions across our businessesHeritagePensions and savingsRetirement solutionsEurope and SunLifeWe are the market leader in the safe and efficient management of legacy pensions and sa

19、vings policies to deliver better customer outcomes,and in realising significant cost and capital synergies through Heritage backbook M&A.We help customers journey “to and through”retirement.Our Workplace business supports people who save through their workplace pension,and our Retail business suppor

20、ts individual customers to save for,transition to,and earn income in retirement.We participate across the key retirement markets,as we seek to help customers secure income certainty in retirement,including Defined Benefit pensions(including Bulk Purchase Annuities),individual annuities,and home equi

21、ty release.Standard Life International,which operates in Ireland and Germany,offers a range of pensions and savings products,including international bonds.SunLife offers protection solutions and funeral plans direct to the over 50s market in the UK.c.5.5mc.3mc.1.5mc.2mcustomerscustomerscustomerscust

22、omersOur in-force business has c.12m customers,with scale businesses across the long-term savings and retirement marketsc.140bngrowth businesses259bnAUAc.25bnc.119bnc.82bnc.33bnDefined contribution workplace pensionsDefined Benefit pensionsProtection solutions and funeral plansPhoenix Group Holdings

23、 plc Annual Report and Accounts 20225Strategic reportOur investment caseHow we generate shareholder valueWe have a clear and differentiated strategy:we are growing our in-force business both organically and through M&AIn-force businessOur in-force business provides three competitive advantagesCapita

24、l efficiencyCustomer accessCost efficiencyFurtherin-forceFurtherin-forceReinvestsurplus cashReinvestsurplus cashM&A growthCapability M&A Accelerates capability buildBackbook M&A Cost and capital synergiesOrganic growthRetirement solutions DB Solutions Retirement IncomeFee-based businesses Workplace

25、Retail Other Phoenix Group Holdings plc Annual Report and Accounts 20226 Dividend per share32.2p36.5p40.8p 40.8p40.8p41.9p45.2p46.0p46.8p47.5p48.9p50.8pH1:24.8pH2:26.0p+5%201220112013201420152016201720182019 2020 20212022CashIn-force business covers our dividend over the very long termResilienceHigh

26、ly resilient capital positionGrowthGrowing organically and through M&Awhich underpins our sustainable dividend approach.to deliver on our financial framework.+4%CAGROur strong dividend track recordPhoenix Groups dividend policyThe Board intends to pay a dividend that is sustainable and grows over ti

27、mePhoenix Group Holdings plc Annual Report and Accounts 20227Strategic reportChairs statementA truly purpose-led business“Phoenix is fully embracing its purpose as we help more people on their journey to and through retirement,while delivering better outcomes for all of our stakeholders.”Alastair Ba

28、rbour,ChairI am delighted to report that 2022 has been another year in which Phoenix Group has delivered both clear strategic progress and strong financial performance.During the year,Phoenix Group has once again continued to produce the high levels of predictable cash generation it has always been

29、known for and maintained its resilient balance sheet despite the economic turbulence.The Group has also delivered strong organic growth through our Standard Life branded businesses and M&A growth with the announcement of our first ever cash-funded acquisition of SLF of Canada UK Limited(Sun Life of

30、Canada UK).All of which has enabled the Board to recommend a dividend increase of 5%for 2022.At the Groups Capital Markets Event in December 2022 the executive team detailed their clear strategy to meet more of the needs of our existing customers and to attract new customers,enabling us to continue

31、delivering cash,resilience and growth going forward.The Group also set its first ever organic growth target,which reflects both the Board and executive teams confidence in Phoenix Groups future growth prospects,despite the challenging economic outlook for 2023.I am proud to see that the journey Phoe

32、nix Group has been on during the ten years I have served on its Board is delivering such clear value to our customers,colleagues,shareholders and wider society,as we fully embrace our purpose of helping people secure a life of possibilities.Our purpose drives all that we doAs the UKs largest long-te

33、rm savings and retirement business,managing 259 billion of assets on behalf of our c.12 million customers,we have the responsibility and opportunity to make a real difference to our customers and to help drive a low carbon,fair and more secure future.That is why we are fully embedding ESG considerat

34、ions across our business.Our strategic priorities are therefore informed by,and in support of,the key ESG themes where we can make the most difference,to both the planet,and to people.If we are really going to help people secure a life of possibilities,we need to play our part in tackling the climat

35、e crisis affecting our planet.This means managing the financial risks that climate change poses to our customers,as well as maximising the opportunities it creates.We will do this by transitioning our business to net zero.And by being a leading voice,in calling for action,and driving system change.W

36、e have therefore set clear targets for our journey to net zero across our investment portfolio,supply chain and operations,and with an estimated 24 million tonnes of CO2 emissions from our investment portfolio,we really can make a difference.We are taking an active approach to protecting our custome

37、rs,by decarbonising our portfolios at scale,and through stewardship engagement.We also want to take advantage of the substantial investment opportunities,that moving to a green economy presents,such as renewable energy and sustainable transport.A great example of which is the 330m of policyholders a

38、ssets we have invested into an innovative multi-asset climate solutions mandate.I am also delighted with the progress we are making to decarbonise our supply chain and operations,with 82%of our suppliers committed to science-based or Race to Zero based targets,and an 80%reduction in the emissions in

39、tensity of our own operations since 2019.Our second key theme is focused on people,through promoting financial wellness and the role of good work and skills.We are facing a growing pension savings gap,with research from our think tank,Phoenix Insights,revealing that only 14%of defined contribution p

40、ension savers are on track for a retirement income that maintains their current standard of living.Engaging people in their financial futures,and advocating for broader societal action to tackle under-saving,is a critical part of our commitment to our purpose.Phoenix is supporting better financial f

41、utures by meeting more of our customers evolving needs on their journey to and through retirement,through our range of innovative products and services.However,for people to have better,longer lives they also need access to good work and opportunities to upskill throughout their careers,increasing t

42、heir incomes and ability to save for retirement.Phoenix Scan the code to watch the video from our Chair Phoenix Group Holdings plc Annual Report and Accounts 20228Insights advocates for change in working practices,careers advice and lifelong learning,as explained in more detail on pages 2425.And as

43、an employer,Phoenix is committed to being an exemplar inclusive,age-friendly workplace.Supporting our colleaguesWe also have a broader role to play in society and against the backdrop of economic uncertainty,a key issue over the past year has been the Cost of Living Crisis.The Board has therefore be

44、en focused on ensuring our colleagues are supported throughout.Central to this has been a wide-ranging support package to help colleagues navigate the cost of living challenges,which included giving all colleagues,except our most senior staff,a net 1,000 payment in August 2022.Shareholder dividend i

45、ncreaseThe Group has a clear dividend policy which is to pay a dividend that is sustainable and grows over time,with the Board prioritising the Groups long-term dividend sustainability at all times.I am delighted to announce that the Board is recommending a 5%increase in the Groups 2022 Final divide

46、nd to 26.0 pence per share,meaning the Groups Total dividend for 2022 will be 50.8 pence per share.This reflects the Groups strong performance across a range of strategic and financial performance measures.It comprises a 2.5%organic dividend increase,and a 2.5%inorganic increase,reflecting the value

47、 from the acquisition of Sun Life of Canada UK.Going forward,we expect the business to continue growing organically and we also remain committed to M&A.This in turn is expected to support a dividend that is sustainable and grows over time.Board changesI am delighted to be fulfilling the role of Chai

48、r while Nicholas Lyons is on a 14-month sabbatical,which is enabling him to undertake the role of Lord Mayor of the City of London.Nicholas has resigned from the Board on a temporary basis for his sabbatical,but remains in contact with myself and our CEO,Andy Briggs,so that he can seamlessly resume

49、his role as Chair from November 2023.In line with good corporate governance as it relates to the independence of Non-Executive Directors,having served ten years on the Phoenix Group Board,I will sadly be leaving the Board when Nicholas returns in November.Elsewhere,during 2022 the Board was delighte

50、d to welcome Katie Murray as an independent Non-Executive Director and Chair of the Board Audit Committee,and The success of our “Lets Get Ready”campaignWere living longer than our parents and grandparents generations,which presents huge opportunities for us all.To make the most of these opportuniti

51、es,we need to think differently about how we work,learn,save and care for our families,and retire.We need to reshape the systems that support and enable people to live better,longer lives.As the UKs largest long-term savings and retirement business,we believe we have a critical role to play in helpi

52、ng to achieve this and are committed to advocating on behalf of our customers to deliver it.That is why we launched a multi-media campaign during 2022 on stereotypes and perceptions of retirement to kickstart a national conversation on retirement and the impact of people living longer lives,with pos

53、itive feedback across a variety of stakeholders.Scan the code to watch the video Maggie Semple as an independent Non-Executive Director and the Groups Designated Non-Executive Director for Workforce Engagement.Katie and Maggie have brought a diversity of experience and new perspectives,and both are

54、already making valuable contributions.We also wished Wendy Mayall a fond farewell,as she retired from the Board in 2022,after diligently serving two three year terms and supporting us in navigating a number of key strategic initiatives during her time.OutlookAs we enter a challenging economic enviro

55、nment in 2023,the Board and I are confident that Phoenixs business model and risk management approach will ensure that we remain highly resilient to any economic volatility.While our strategy will support us in delivering future growth,as we meet more of the needs of our existing customers and acqui

56、re new customers.Thank youFinally,I would like to take the opportunity to thank the Board,our colleagues,our partners and all of our wider stakeholders for their hard work and dedication in delivering what has been another successful year for Phoenix Group.Alastair BarbourPhoenix Group ChairPhoenix

57、Group Holdings plc Annual Report and Accounts 20229Strategic reportGroup Chief Executive Officers reportPhoenix is delivering sustainable growth“2022 has seen us execute against all of our strategic priorities as we delivered both organic and M&A growth,which demonstrates that Phoenix is truly a gro

58、wing business.”Andy Briggs,Group Chief Executive OfficerScan the code to watch the video from our Group CEO 2022 has been a strong year of delivery for Phoenix Group,despite the challenging economic environment.As we have made significant progress against our strategic priorities during the year by

59、continuing to embrace our purpose.This has supported us in delivering a strong set of financial results,in line with our financial framework of Cash,Resilience and Growth.Delivering Cash,Resilience and Growth supports an increased dividendDuring 2022,our in-force business delivered cash generation o

60、f 1.5 billion,exceeding our 2021 target range of 1.3-to-1.4billion.Our resilient Solvency II(SII)capital position was maintained with a SII Surplus of 4.4billion(2021:5.3billion)and an increased Shareholder Capital Coverage Ratio(SCCR)of 189%(2021:180%),which is currently above our target range of 1

61、40180%,providing capacity for us to invest into growth.I am delighted we have delivered a second consecutive year of organic growth with record incremental new business long-term cash generation of 1,233million(2021:1,184million).This means that we have once again more than offset the run-off of our

62、 in-force business and firmly established Phoenix as a business that is growing and sustainable.We are now confident of growing our incremental new business long-term cash generation going forward and have set a target of c.1.5 billion per annum by 2025,which is the first organic growth target we ha

63、ve ever set,which is a clear signal of our ambition.We have also delivered M&A growth in 2022,with the announcement of our cash funded acquisition of Sun Life of Canada UK.This is expected to complete in April 2023,with the key regulatory approvals now received.The significant value that will be gen

64、erated by this transaction has enabled the Board to recommend a 2.5%inorganic dividend increase this year,which demonstrates the significant value to shareholders of smaller,cash funded M&A.As a result of our strong overall performance,I am pleased that the Board is recommending a dividend increase

65、of 5%,in line with our dividend policy.This reflects the Boards determination to reward our shareholders when our business performs well.The sustainability of this increased level of dividend is underpinned by the 0.3 billion increase in our Group in-force long-term free cash to 12.1 billion(2021:11

66、.8 billion).This is the cash that will emerge from our in-force business and will be available to our shareholders over time.It ensures our increased level of dividend remains just as sustainable over the very long term.In terms of our IFRS reporting,we have reported an increased adjusted operating

67、profit of 1,245m for the year(2021:1,230m),but the impact of our hedging approach results in an IFRS loss after tax of(1,762)m(2021:(709)m).As a reminder,we hedge our Solvency balance sheet with the aim of delivering resilient cash generation over the long term,but this does create IFRS accounting v

68、olatility.This impact has been accentuated by the significant increase in yields last year,driving the large accounting loss,but this does not impact our cash generation or dividend capacity in any way.Executing on our clear strategyPhoenixs role in society is to help our customers journey to and th

69、rough retirement by meeting their evolving needs.Phoenix has a clear and differentiated strategy as outlined on pages 1415,which is in support of our purpose of helping people secure a life of possibilities.Our strategy is simple.We are the experts in optimising a scale in-force business for cash an

70、d resilience,and we grow this both organically and through M&A.Our in-force business is the 259 billion of assets we look after for our c.12 million existing customers.It is highly cash generative,and provides surplus cash,that we can reinvest into growth.Organic growth comes from meeting more of ou

71、r existing customers needs as they save for,transition to,and secure an income in retirement.We also acquire new customers,who we can then help through their life cycles.In addition,we have attractive M&A growth opportunities,where we acquire new customers at scale and deliver better Phoenix Group H

72、oldings plc Annual Report and Accounts 202210outcomes for customers with legacy products.In the process,we transform the acquired businesses,to deliver significant cost and capital synergies.But whats particularly attractive about our business model,is that the whole really is more than the sum of t

73、he parts.With our organic and M&A growth generating more in-force business,that we then optimise.We are confident of delivering our strategy because our scale in-force gives us three unique competitive advantages.The first is capital efficiency,where we get greater diversification from the breadth o

74、f in-force products across our 259 billion of customer assets.We are also highly resilient,through our core capabilities in risk management and capital optimisation.Secondly,with c.12 million customers we have an unrivalled level of customer access,with around 1-in-5 UK adults being a Phoenix Group

75、customer.This provides us with deep customer insights and clear growth opportunities as we look to meet more of their evolving needs over time.And thirdly,we have a significant cost efficiency advantage.This is enabled through our customer administration and IT partnership with Tata Consultancy Serv

76、ices(TCS),and our focus on delivering a simplified operating model.Our in-force business therefore gives us real competitive advantages,that are very hard to replicate.Which means we are confident that we can,and will,win in our chosen markets.All of which provides us with the opportunity to drive b

77、oth organic and M&A growth through meeting our customers needs,as outlined in the spotlight box to the left.Delivering our strategic prioritiesOur strategy is delivered on a day-to-day basis through our three strategic priorities,which cover the investments and the programmes of work,that will furth

78、er enhance our competitive advantages,and enable us to help people secure a life of possibilities.Our progress this year against each of these priorities is outlined below.Optimise our in-force businessOur first strategic priority is all about leveraging our scale in-force business to deliver capita

79、l efficiency and better returns on our capital,with a strong 2022 performance across our key areas of focus.Delivering cost and capital synergies,which we refer to as management actions,Significant growth opportunities are available by meeting more of the evolving needs of our existing customers and

80、 acquiring new customers:Supporting corporates to de-risk through BPAsCorporates are de-risking their defined benefit pension scheme liabilities through Bulk Purchase Annuity(BPA)transactions in order to focus on their core businesses.This is fuelling increased demand for BPAs.c.1.4 trillion stockPh

81、oenix responseWe are now an established player in the BPA market reflecting the investment we have made to build a comprehensive market proposition.This is enabled by the strong asset management and other supporting capabilities we have built.3060 billionMarket flows per annumPhoenix responseWe have

82、 re-established ourselves as a significant player in the Workplace market.We are investing in this business and will leverage the Standard Life brand and our improved capabilities to retain and grow our customer assets over time.4050 billionMarket flows per annumPhoenix responseBy engaging our c.12

83、million customers to better understand their needs and delivering the solutions they require,we have the opportunity to encourage customers to save with us,consolidate their pensions with us,and to decumulate through retirement with us.80100 billionMarket flows per annumPhoenix responseAs the market

84、 leader in Heritage M&A we have the capability and scale to integrate businesses onto our modern platform to deliver better outcomes for customers with legacy products.We also unlock significant cost and capital synergies to create shareholder value.Further M&AMarket activity to continue over timeEn

85、abling customers to save for retirement in Workplace schemesThe Workplace pension scheme market is growing rapidly,driven by auto-enrolment,an ageing population and the move from defined benefit pension schemes to defined contribution pension schemes.c.0.5 trillion stockEnabling individuals to save

86、for,transition to,and secure income,in retirementPeople are seeking guidance on their journey to and through retirement,as responsibility for retirement planning has now shifted towards individuals.c.1.0 trillion stockSupporting customers with legacy pensions and savings productsPressure on insuranc

87、e companies to focus their strategies,free-up capital trapped in Heritage books,and to deal with cost inefficient legacy products and platforms,makes further consolidation in the UK market likely.c.470 billion marketPhoenix Group Holdings plc Annual Report and Accounts 202211Strategic reportGroup Ch

88、ief Executive Officers report continuedremains a core capability of Phoenix.In 2022,we have once again delivered a significant level of management actions,with 739 million of actions achieved.This was primarily from business-as-usual management actions,which are not reliant on cost and capital syner

89、gies from M&A transactions,and are therefore sustainable over the long term.This included the ongoing delivery of a range of balance sheet efficiencies,which remains a differentiating capability for us,as well as further illiquid asset origination and optimisation of our liquid credit portfolio.Our

90、comprehensive risk management framework includes our hedging approach,which differentiates us from other insurance companies.We hedge the vast majority of the market risks we are exposed to including equities,interest rates,inflation and currency,to minimise volatility in our capital position during

91、 volatile economic periods.We also operate a conservative credit portfolio to manage our exposure to credit risk.This approach enabled us to limit our SII surplus economic variance to(0.4)billion during a volatile economic environment.We have also continued to enhance our asset management capabiliti

92、es,to support our growth ambitions and efficiently oversee the management of our customer assets,and continued to expand our range of asset management partners to 21,as we seek to diversify our portfolio globally.Investing in a sustainable future is the first key pillar of our sustainability strateg

93、y and we have continued our investment into sustainable assets with c.1 billion invested to support affordable housing,access to healthcare,and projects with a positive environmental or social impact.Last year we also started to integrate decarbonisation strategies into our listed equity portfolios

94、and we are now in the process of designing decarbonising equity benchmarks for UK and US listed equity exposures.This will help manage our customers exposure to climate risk and reduce the carbon intensity of our investment portfolio.I am also delighted that the work Phoenix and our peers have done

95、to influence the SII reform proposals means the insurance industry should be better placed to help accelerate the path to net zero by investing to develop a low carbon economy.Grow organically and through M&AOur second strategic priority is focused on meeting more of our existing customer needs and

96、acquiring new customers,with a significant year of achievements in 2022.Our Retirement Solutions business had another strong year.Our focus on improving our capital efficiency in the Bulk Purchase Annuity(BPA)business enabled us to generate a broadly similar amount of incremental new business long-t

97、erm cash generation with less capital invested.This in turn enabled us to deliver an improved mid-teens IRR.It was also great to see the success of our launch of the Standard Life Home Finance products and the ongoing development of our open market annuity product,supporting a launch in 2023.I am al

98、so delighted that the significant progress we have made in developing our Workplace proposition and the investment we have made into the Standard Life brand is delivering improved performance.We achieved net flows of 2.4 billion,as we retained our existing schemes and saw new members join our existi

99、ng schemes.This supported us in delivering a c.50%annual increase in new business long-term cash generation.We also won 76 new schemes across all parts of the market including small,medium and large schemes.Elsewhere,our other fee-based businesses(Retail,Europe and SunLife)remained resilient during

100、the year.We are also growing through M&A,having announced our first ever cash-funded acquisition,of Sun Life of Canada UK for consideration of 248 million.This transaction,which is due to complete in April 2023,is expected to deliver c.0.5 billion of incremental long-term cash generation.This transa

101、ction also benefits from a simplified operational integration programme,as the majority of their policy administration is already being outsourced to our strategic partner(TCS Diligenta).Engaging people in better financial futures is the second key pillar of our sustainability strategy and we have c

102、ontinued to make great progress here.In 2022,we transitioned c.1.5 million customers and c.15 billion of assets from our existing default funds to our flagship Sustainable Multi-Asset default fund,as we seek to support our customers in investing their pension assets sustainably.We also continued to

103、use our influence on behalf of our customers and colleagues.As the UK Governments Business Champion for Ageing Society,I am passionate about encouraging older workers to stay in work or come back to work.Good examples of Phoenix leading in this area were our high-profile initiative to make our job a

104、dverts age neutral and the Phoenix Scan the code to watch the Capital Markets Event presentation replay Capital Markets Event:delivering sustainable organic growthAt the event,Phoenix announced its first ever organic growth target of c.1.5 billion p.a.of incremental new business long-term cash gener

105、ation by 2025,comprising c.1.0 billion from Retirement Solutions and c.0.5 billion from Pensions&Savings.In Retirement Solutions,our strategy is to deliver a market-leading customer proposition and to optimise our capital to drive strong returns for our shareholders.We will remain disciplined in all

106、ocating c.300 million p.a.of capital into BPA,which will support us in meeting the growing demand for BPAs from corporates.In Pensions and Savings,our strategy is to deliver market-leading,comprehensive and convenient propositions across our Workplace and Retail businesses,which leverage the Standar

107、d Life brand.This will support us in delivering annual net fund flows of c.5 billion in Workplace and c.2 billion in Retail,by 2025.Phoenix Group Holdings plc Annual Report and Accounts 202212Insights The Great Retirement report which identified some of the key factors driving rising levels of econo

108、mic inactivity among the over 50s in the UK.Enhance our operating model and cultureOur third strategic priority is focused on delivering leading cost efficiency and a modern organisation.We continued to make great progress with our integration work,with the migration of c.400,000 Standard Life annui

109、ties to the TCS BaNCS platform and we transferred the custody and fund accounting services for 90 billion of assets to HSBC.We have also recently announced the extension of our partnership with TCS,as we plan to move all c.3 million ReAssure policies from our Alpha platform to the TCS BaNCS platform

110、 by 2026.This will enable our customers to benefit from the clear digital focus,consistent customer journeys and proposition provided by the BaNCS platform.It is also fully aligned with our model of enhancing long-term cost efficiency,with a further c.180 million of ReAssure net cost synergies expec

111、ted.As ever,we remain focused on attracting,developing and retaining the best talent to drive our business forward.With a range of initiatives in the year that has supported an increase in our colleague engagement eNPS score to+30(2021:+23).It is also pleasing to see that we have balanced female rep

112、resentation on our Group Board and Executive Committee,in line with our diversity and inclusion goals.Leading as a responsible business is the third key pillar of our sustainability strategy.Here we are committed to adopting the highest sustainability standards across our business and will lead by e

113、xample for the stakeholders we engage with to drive real world change and deliver positive impact We are committed to being net zero in our own operations by 2025,which we remain on track to achieve,with an 80%reduction in emissions intensity across our own operations since 2019.We are also leading

114、the industry with our approach to our supply chain,where we have set our pathway to decarbonisation and launched stretching new ESG supply chain standards for our partners.OutlookLooking forward,it is clear that 2023 will present a challenging economic backdrop.However,our business model is designed

115、 to be resilient throughout the economic cycle.Our comprehensive hedging approach is designed to protect our Solvency capital position from the majority of the market risks we are exposed,while the key areas of structural market growth we are focused on remain attractive.In particular,we expect to s

116、ee a strong year of volumes in the BPA market during 2023,with the recent yields increase having improved the funding positions of many schemes,driving increased demand.Workplace is also a very resilient business during an economic downturn,with pension contributions being deducted direct from salar

117、ies by employers,leading to stable flows through economic cycles.Finally,there remains c.470 billion of UK Heritage assets that we believe could come to market over time and we expect further opportunities for M&A consolidation due to the impact of cost inflation on backbook portfolios.All of which

118、means we expect to see continued organic and M&A growth,to support us in delivering Cash,Resilience and Growth,enabling us to pay a dividend that is sustainable and grows over time.We are confident in our future growth as demonstrated by setting our first ever organic growth target of c.1.5 billion

119、of incremental new business long-term cash generation by 2025.Thank youThe progress we have made this year is all down to our exceptional people and I would like to thank my colleagues throughout the Group for their continued contribution and dedication in 2022.Andy Briggs Group Chief Executive Offi

120、cerLeveraging the Standard Life brandA key part of our growth strategy is leveraging the power of the Standard Life brand that we acquired in 2021.We now utilise the brand across the majority of our growth businesses,including our Retirement Solutions,Pensions&Savings and European businesses.The Sta

121、ndard Life brand has a deep history and heritage,and is well known and trusted by both advisers and customers.It has been a key factor in supporting our strong organic growth over the past few years and will support us in our future growth ambitions.We are committed to investing into the brand to su

122、pport us in delivering on our future ambitions and growth targets.Phoenix Group Holdings plc Annual Report and Accounts 202213Strategic reportOur strategy drives growth by meeting more of the evolving needs of our existing customers and through acquiring new customersDefined contributionworkplace pe

123、nsionsLegacypensionsand savingsproductsLifetimeWealthRetail savingsfor retirementIncome drawdown and individual annuitiesDefined benefitpension incomeHomeequityreleasePension consolidationSaving for retirementSecuring income in retirementTransitioning to retirementGuidance and adviceFinancial wellne

124、ssOur business modelBuilding a growing,sustainable businessOrganic growthMeet more of our existing customers needs and acquire new customers by helping them to:Save for retirement Transition to retirement Secure income in retirementM&A growthWe will undertake M&A to:Acquire new customers and transfo

125、rm businesses to deliver cost and capital synergies Accelerate our capability buildFurtherin-forceFurtherin-forceReinvestsurplus cashReinvestsurplus cashIn-force businessSupporting our existing in-force customers journey to and through retirementc.12mexisting in-forcecustomers259bncustomer assetsund

126、er administration12.1bnof Group in-force long-term free cash to emerge over timePhoenix Group Holdings plc Annual Report and Accounts 202214123Find out about our strategic priorities on pages 1827 Our scale in-force business provides us with three competitive advantages which enable us to deliver ou

127、r strategic prioritiesCapital efficiency Diversification of risk Highly resilient Single internal capital modelAs a genuinely diversified long-term savings and retirement business,we get greater diversification from our breadth of in-force products.Our capital position is also highly resilient,throu

128、gh our core capabilities in risk management,and capital optimisation,underpinned by a single internal model.Customer access c.12 million existing customers Deep customer insight Excellent customer serviceWith c.12 million customers,we have an unrivalled level of customer access,with around 1-in-5 UK

129、 adults being a Phoenix Group customer.This give us deep customer insights that underpin our developing propositions,enabling us to better meet their evolving needs on their journey to and through retirement.Cost efficiency Market leading administration&IT Simple operating model Market-leading opera

130、ting costsWe have a significant cost efficiency advantage,which is enabled through our customer administration and IT partnership with TCS,and our focus on delivering a simplified operating model.This cost efficiency is demonstrated in the significant cost per policy savings we are delivering across

131、 our recent acquisitions.Phoenix Group Holdings plc Annual Report and Accounts 202215Strategic reportHow we generate cashOur business model continuedOpening free surplusCash generation within our Life CompaniesSources of Life Company cash generationOpeningfreesurplusOrganicsurplusemergenceManagement

132、actionsCash remitted to the holdingcompaniesClosingfreesurplusAny assets which the Life Companies hold in excess of overall internal capital buffers required are known as free surplus What is the opening free surplus?Life Company Own Funds Life Companies hold capital in accordance with Solvency II r

133、egulations,providing appropriate security for policyholders.This capital is known as Solvency II Own Funds.Less Solvency Capital RequirementThe level of regulatory capital required is known as the Solvency Capital Requirement.Less Capital Management PolicyThe Life Companies hold internal capital buf

134、fers above the regulatory capital requirement for prudence.How is free surplus generated?Organic surplus emergenceLife Companies earn margins on different types of life and pensions products increasing Own Funds.In addition,as our in-force business runs off the Solvency Capital Requirements reduce a

135、s they are released.Management actions These can either increase Own Funds or reduce Solvency Capital Requirements.Phoenix Group Holdings plc Annual Report and Accounts 202216Cash utilisation at holding company levelUses of holding company cash generationUses of remaining cash growth opportunitiesOp

136、eningcash atholdingcompanylevelCash remitted from the Life CompaniesHead officecostsDebtinterestDividendsRemainingcash atholdingcompanylevelCash at the holding company level provides resources for future growth and resilience for the GroupWhat is the cash remitted from the life companies used for?He

137、ad office costs Including salaries and other administration costs.Debt interestOn outstanding Group shareholder debt.DividendsThe Group operates a dividend policy which is to pay a dividend that is sustainable and grows over time.What is the remaining cash used for?M&AAs well as providing a clear st

138、rategic fit,M&A transactions must meet our key criteria of being value accretive,supporting the dividend level and maintaining our investment grade rating.BPA transactionsWe have a disciplined approach to investing capital into BPA transactions that generate increased long-term cash flows and we tar

139、get a mid-teens Internal Rate of Return(IRR).Investment into our growth capabilitiesInvestment into our propositions and capabilities that will support us in growing our business over time.Phoenix Group Holdings plc Annual Report and Accounts 202217Strategic report Our strategic priorities and KPIsO

140、ptimise our in-force businessLeveraging our scale in-force business todeliver capital efficiency and better returnsPhoenix is the market leader in managing in-force business for cash and ensuring a resilient capital position,which in turn underpins our sustainable dividend over the long term.The Gro

141、ups cash generation stems from the run-off of our in-force business,which we further enhance by delivering management actions and through realising integration synergies from completing value-accretive M&A.In parallel,we deploy our comprehensive approach to risk management across our in-force busine

142、ss and we hedge the majority of our market risks.This brings resilience to our Solvency II capital position,and in turn helps us deliver dependable cash generation.We are also focused on optimising our capital to ensure we deliver enhanced returns for our shareholders.Sustainability is embedded thro

143、ughout our business and across our strategic priorities.As a result,investing in a sustainable future is a key part of optimising our in-force business,as we are seek to invest our 259bn of customer assets responsibly.Strong cash generation in 2022Phoenix delivered strong cash generation in 2022 of

144、1,504m(2021:1,717m),which exceeded the Groups 2022 target range of 1.3bn to 1.4bn.This reflects our continued focus on optimising our in-force business to deliver dependable cash.Group in-force long-term free cash underpins our dividend sustainabilityThe Group increased its in-force long-term free c

145、ash by c.0.3bn during 2022,driven by our increased new business long-term cash generation and management actions,which more than offset our annual uses of cash.With 12.1bn of Group in-force long-term free cash available to our shareholders over time,our increased dividend is every bit as sustainable

146、 over the very long term.Maintaining our comprehensive risk management approachThe Group maintained a resilient Solvency II surplus of 4.4bn during the year(2021:5.3bn).The reduction in the year primarily reflects the pro-active management of our leverage with a 450m debt repayment and our continued

147、 investment into growth.There was also a small impact from the significant rise in interest rates during the second half of the year.However,our hedging approach mitigated the majority of the impact,with only a c.0.4bn adverse economic variance that was in line with our expectations,despite a 1-in-1

148、,000 economic shock being experienced.Our increased Solvency II Shareholder Capital Coverage Ratio(SCCR)of 189%(2021:180%)is above our target range of 140%to 180%,providing capacity to invest into growth both organically and through M&A.Delivering ongoing management actionsWe enhance cash generation

149、 from our in-force business by delivering value-accretive management actions,and in 2022 we delivered total management actions of 739m.This included 570m of actions from BAU activities including the ongoing delivery of balance sheet efficiencies,further illiquid asset origination and the optimisatio

150、n of our liquid credit portfolio.This demonstrates the sustainability of BAU management actions over the long term,in the absence of further M&A.We also realised a further 169m of M&A synergies from the ReAssure acquisition,as we delivered the integration programme across the ReAssure Group Function

151、s and Finance&Actuarial teams,to deliver further synergies in line with our plan.Enhancing our differentiated asset management modelWe continued to invest into developing a leading in-house asset management function,which sets the Groups strategic asset allocation approach and centrally oversees the

152、 performance of our third party asset managers.During 2022,our team helped to originate c.3.5 billion of illiquid assets,an increase of 17%compared to 2021(c.3.0 billion).We also maintained a strong illiquidity premium(the spread over corporate bonds)of c.70bps on private debt,despite the increase i

153、n interest rates.This was enabled by the strong asset management capability we are building.Investing in a sustainable futureWe are committed to integrating decarbonisation strategies into both our listed equity and listed credit portfolios.We see this as essential to managing the risk that climate

154、change poses to our customers and a key step in meeting our interim 2025 and 2030 decarbonisation targets on our journey to net-zero.We have also continued our investment into sustainable assets within our shareholder credit portfolio during the year,with c.1.0bn invested.This included 483m into pro

155、jects with a positive environmental impact,228m into affordable housing,75m into healthcare/education,and 207m into social impact investments and sustainability-linked loans.We are also investing to scale the required decarbonisation technology and support low carbon businesses,such as our recent 33

156、8 million investment into a new multi asset climate solutions mandate.And we have also implemented a new stewardship programme to encourage net zero aligned strategies across the companies we invest in,with a priority focus on 25 high emitting companies that account for c.32%of our total financed em

157、issions.Phoenix Group Holdings plc Annual Report and Accounts 202218 Priorities for 2023 Continue to deliver value-accretive management actions.Diversify our asset portfolio into North America and directly source illiquid assets.Continue to deliver balance sheet resilience through our comprehensive

158、risk management approach.Publish and implement the Phoenix Group Net Zero Transition Plan.Optimise our in-force business how we measure our deliveryCash generationSolvency II surplusSolvency II Shareholder Capital Coverage Ratio(SCCR)Group in-force long-term free cash1,504m4.4bn189%12.1bn2022 target

159、:1.3bn to 1.4bn2022 target:No target2022 target:140%to 180%2022 target:No target1,713m 1,717m 1,504m 2022202120205.3bn 5.3bn 4.4bn 202220212020164%180%189%202220212020N/A 11.8bn 12.1bn 202220212020Definition Cash generation represents cash remitted by the Groups operating companies to the Group hold

160、ing company in the current period.Cash remitted principally reflects the generation of Free Surplus within the life companies and the benefit of value-accretive management remitted in the period.Definition The Solvency II surplus is calculated as the excess of eligible Solvency II Own Funds over the

161、 Groups Solvency Capital Requirements.Definition The Solvency II SCCR is defined as the ratio of the Group Own Funds to Group Solvency Capital Requirements,after adjusting to exclude amounts relating to unsupported with-profit funds and unsupported Group Pension Schemes.Definition Group in-force lon

162、g-term free cash is the cash available to shareholders over time.It is defined as the estimated lifetime cash generation from our in-force business,plus Group cash held in the HoldCo,less outstanding shareholder debt,committed M&A and transition costs,and interest on debt until maturity.Why it matte

163、rs?Cash at the Group holding company is used to pay dividends,interest and various corporate costs,with surplus cash reinvested into a range of organic and M&A growth opportunities.Why it matters?The Solvency II surplus is the regulatory assessment of capital adequacy of the Group.We pay our dividen

164、ds from our surplus and so retaining a significant surplus ensures the sustainability of our dividend over the long term.Why it matters?The SCCR demonstrates the extent to which shareholders Eligible Own Funds cover the Solvency Capital Requirements.It therefore measures the capital adequacy of the

165、Group from a shareholder perspective.Why it matters?Group in-force long-term free cash is a measure to demonstrate the sustainability of our dividend over the very long term.Future target 2023 cash generation of 1.3bn to 1.4bn.Three-year 20232025 cash generation of 4.1bn.Future target Maintain a Sol

166、vency II surplus that enables us to operate within or above our SCCR target range.Future target Maintain a SCCR within or above our target range of 140%to 180%.Future target Grow our Group in-force long-term free cash over time,to support a dividend that is sustainable and grows over time.LinksREM A

167、PMLinksREM LinksREM APMLinksREM APMPhoenix Group Holdings plc Annual Report and Accounts 202219Strategic reportPlanet:Addressing climate change and supporting nature and bio-diversityJames Wilde,Chief Sustainability OfficerOur strategic priorities and KPIs continuedCan you introduce your role and ho

168、w Sustainability is embedded across the company?My role is to set the direction of our sustainability strategy and ensure we are challenging ourselves to drive forward meaningful action that enables us to deliver on our purpose.It is incredibly exciting to be part of Phoenix,with our scale and ambit

169、ion,meaning we can truly make an impact and drive up sustainability standards across the whole market.I head up a central sustainability strategy team and the delivery of our ambitious programme is carried out across the business by experts in our functions embedding our approach business-wide from

170、our sustainable investments team to our sustainable procurement team.What are the key sustainability themes that we have the ability to make the biggest impact on?Sustainability is now embedded into the core fabric of our business,and in 2022 we reviewed our areas of focus to ensure we are directing

171、 our attention to the most material ESG issues that we impact on and that can impact us.The top environmental issues for us to take action on are climate change and nature loss.The most material social issues are financial wellness and longevity which together create the need to tackle the pensions

172、savings gap and support people to have better financial futures.These material issues are all clearly aligned with,and enable us,to deliver on our purpose of helping people secure a life of possibilities.Through having a focus on the risks and opportunities related to climate change and nature loss,

173、we can also make a difference to our customers as we manage the risk that they are exposed to by climate change and nature,while creating a better,more sustainable future for them.We have set ourselves a number of stretching targets to achieve these aims which are outlined in our 2022 Sustainability

174、 Report.Im really pleased that our approach has been recognised by independent organisations.We have been awarded the Terra Carta Seal for our commitment to sustainability and the Tortoise Responsibility 100 index have placed us at 12th in the FTSE100 for our approach.Phoenix manages 259bn of custom

175、er assets how are you considering the risks and opportunities of climate change and the transition to net zero?Our core role is to invest and manage assets on behalf of our customers and shareholders.In doing so,we must balance the need for returns with the right level of risk.Both of those elements

176、 risk and return point towards decarbonising our investments in a way that manages our customers exposure to climate-related risk;unlocking the financial opportunities the transition presents and ensures continued stable financial returns.We have put addressing climate change at the heart of our inv

177、estment strategy and are committed to transitioning our investment portfolio to net zero by 2050,as well as hitting ambitious targets to cut emissions in the next decade.Our investment portfolio constitutes the vast majority of our carbon footprint around 99%so we are firmly focusing on our investme

178、nts as a priority.We look at this in three ways:how we decarbonise our portfolios,active stewardship of our assets,and investing in climate solutions.But we cant do this alone.We need to accelerate change to transform economies to combat the climate crisis and so work with peers and policymakers wit

179、h the aim of removing barriers to net zero investment and defining best practice.We are an active member of a number of collaborations and groups including Climate Action 100+and the Sustainable Markets Initiative,and have published research articles raising awareness of challenges faced by us and p

180、eers and proposing solutions to overcome these.It is important we practice what we preach so we are also very focused on reducing emissions in our operations and working with our supply chain.We have set the goal of being net zero in our operations by 2025.Phoenix Group Holdings plc Annual Report an

181、d Accounts 202220Transitioning our customers to a Sustainability Multi-Asset Default FundThe vast majority of our customers keep their money in a default pension option.In 2022 we transitioned c.1.5m customers and c.15bn of assets from our existing default funds to our default Sustainable Multi Asse

182、t Universal Strategic Lifestyle Profile.We aim to give customers the income they need in retirement and focus on ESG factors that can positively or negatively affect returns.We have also set clear targets that aim to:1.Reduce the carbon intensity(a measure of the carbon emissions of all companies in

183、vested in)by 50%compared to the parent index;2.Increase green technology revenues by 50%compared to the parent index;and 3.Enhance ESG scores by 10%20%.Our strategy to change members to our sustainable default solution won ESG initiative of the year(for corporates)at Environmental Finances Sustainab

184、le Investment Awards 2022.Our work has been recognised,with a move from B to A-for the CDP Climate Change Questionnaire,putting us in the“leadership category on climate”.What progress has Phoenix made in 2022?We are committed to integrating decarbonisation strategies into both our listed equity and

185、listed credit portfolios.We see this as essential to managing the risk that climate change poses to our customers and a key step in meeting our interim 2025 and 2030 decarbonisation targets on our journey to net-zero.We started this journey in 2022 with the move of 15bn AUA to our Sustainable Multi-

186、Asset fund and the development of a climate transition strategy for liquid credit assets in our shareholder portfolio(c13bn AUA).We expect to expand our scope by applying customised decarbonising equity benchmarks to all our equity funds in our control where this is in the best interest of our custo

187、mers,beginning with UK and US-listed equities.It is critical that all such changes to listed equity benchmarks are well tested and managed so that we can continue to protect customers financial outcomes.During COP15 we also published a nature statement,confirming our commitment to act,and we have be

188、en piloting the Taskforce for Nature-related Financial Disclosures(TNFD)in collaboration with stakeholders across the industry,with the aim of producing our first TNFD report.What should we expect from Phoenix Group in 2023 in relation to its Sustainability strategy?Industry wide,we need to move fro

189、m a focus on setting targets,to defining clear plans of action and delivering impact at scale.We have already defined our net zero targets,and in 2023 we will be publishing our first Net Zero Transition Plan.This will set out our science-based decarbonisation trajectory consistent with our interim t

190、argets and how we will track this using a robust framework.Using a central lens on customer interest,it will highlight how we will build on the actions we have taken to date,to deliver change at the scale and pace required by the net zero transition both through our own direct actions and by helping

191、 to inform the system-wide change required to unlock investment.We will pull the key levers we have at our disposal to both drive real economy change and optimise financial outcomes for our customers including stewardship and we will work with peers and policymakers to drive stable policy that enabl

192、es us to invest at scale in the sectors and companies of the future in the best financial interest of our customers.For example,we have committed to c.10bn of sustainable asset investment between 2022 and 2026.We are also expanding our work on nature,setting out our priority areas of 2023 key target

193、s 5070%of illiquid asset origination in the shareholder portfolio to be sustainable and transition assets Implement decarbonisation for shareholder liquid credit portfolio c.13bn to meet our carbon reduction targets 90%of key suppliers commit to SBTi or Race to Zero Develop our nature strategy long-

194、term targets.focus to drive our nature investment opportunities and our activity in our offices and communities.From an investment perspective,we are continuing to enhance our stewardship capabilities to hold companies to account,with defined expectations.In 2023 we are publishing our first Stewards

195、hip Report with the aim of being a signatory to the UK Stewardship Code.Im looking forward to 2023 and beyond,and all that we can achieve together.Phoenix Group Holdings plc Annual Report and Accounts 202221Strategic report Our strategic priorities and KPIs continuedGrow organically and through M&AM

196、eeting more of our existing customersneeds and acquiring new customersPhoenix has significant growth opportunities available,both through meeting more of the evolving needs of our existing customers,on their journey to and through retirement,and by acquiring new customers,both organically,and throug

197、h M&A.We are also engaging people in their financial futures,and advocating for broader societal action to tackle under-saving,which is a critical part of our commitment to our purpose.Record new business growth in 2022We delivered record new business long-term cash generation(LTCG)of 1,233m in 2022

198、(2021:1,184m).This strong performance means the Group has,once again,more than offset the run-off of our in-force business and demonstrates that Phoenix is a growing,sustainable business.Developing innovative retirement income solutionsRetirement Solutions,which includes our BPA business,was the lar

199、gest contributor to our 2022 new business LTCG with 934m written in 2022.This was broadly similar to 2021(950m),but was achieved with investing 20%less capital and reflects our progress in optimising our capital efficiency in BPA.This enabled us to deliver an improved mid-teens IRR for the year.We a

200、lso continued to develop our proposition,with the launch of our Standard Life Home Finance offering,and development of an open market annuity product that will be launched in 2023.Enhancing our Workplace proposition and developing our Retail channelsOur Pensions and Savings business comprises our Wo

201、rkplace and Retail businesses,both of which are capital-light fee-based businesses that we are looking to grow over time.In Workplace,the investment we have made into developing our proposition and the impact of the reinvigorated Standard Life brand has driven a strong year of performance.Workplace

202、has contributed 212m of new business LTCG in 2022,up 53%on 2021(139m),with positive net fund flows of 2.4bn in the year,which is an elevenfold increase on the 0.2bn seen in 2021.This reflects the strength of our customer proposition that is enabling us to retain our existing schemes.Which in turn en

203、ables us to benefit from the natural compounding growth of the Workplace business model,with new joiners to existing schemes and salary inflation increases on contributions.We are also now consistently winning new schemes in the market across small,medium and large-sized schemes,with 76 new schemes

204、won in 2022 covering c.2bn of assets(2021:0.2bn).In our Retail business,we have now firmly established our team with our key leadership hires made and we outlined our strategy to drive net flows across both the Retail Direct and Retail intermediated markets at the Capital Markets Event in December 2

205、022.The Retail business remains in net fund outflow at present(1.4)bn),but contributed an increased new business LTCG of 37m in 2022(2021:29m).As we fully develop our Retail channels and deliver our strategy this is expected to grow over the coming years.Finally,both our European business,Standard L

206、ife International,and SunLife,continued to deliver for their customers and contributed LTCG of 29m and 21m respectively(2021:31m and 35m).Executing M&AWe were delighted to announce our first ever cash funded acquisition,of Sun Life of Canada UK,for consideration of 248m during 2022.This transaction,

207、which is expected to complete in April 2023,adds c.10bn of assets under administration and c.480k policies to Phoenix.It is expected to deliver c.0.5bn of incremental long-term cash generation,which includes c.0.1bn of integration synergies,net of costs.The transaction also benefits from a simplifie

208、d operational integration programme,with the majority of their policy administration already being outsourced to our strategic partner TCS Diligenta.In addition,as part of the transaction we have agreed a new strategic asset management partnership with the Sun Life Financial Inc.Group,which will sup

209、port further diversification of our credit portfolio in North America.Engaging people in better financial futuresWe are focused on meeting more of our customers evolving needs on their journey to and through retirement to support them in achieving financial wellness.We offered 1.2 million customers

210、the chance to review our digital literacy material:Digital Essentials.Here we targeted customers of all ages to offer help to those who need digital assistance and aid the more digitally savvy who might want to use these materials to help someone they know.We also continued to advocate on behalf of

211、our customers through the work of our think tank,Phoenix Insights,with more detail on pages 2425.Maintaining strong customer satisfactionOur focus on delivering better customer outcomes is reflected in our continued strong customer satisfaction scores.Our Combined Group customer satisfaction telepho

212、ny score was 92%and our Standard Life digital journeys score was 94%,both of which exceeded their respective targets.This is due to the investment we are making to deliver a market-leading customer service offering and strong product propositions.Phoenix Group Holdings plc Annual Report and Accounts

213、 202222 Priorities for 2023 Grow Retirement Solutions with BPA capital investment of c.300m in 2023 and launch an open market annuity.Deliver increased net fund flows in Pensions&Savings to drive our fee-based growth.Complete the Sun Life of Canada UK acquisition and assess further M&A opportunities

214、.Launch an awareness campaign to reach 4m people on longer lives and under-savingGrow organically and through M&A how we measure deliveryNew business long-term cash generation(LTCG)Pensions and Savings net fund flowsCombined Group customer satisfaction telephonyCustomer satisfaction Standard Life di

215、gital journeys1,233m1.0bn92%94%2022 target:800m2022 target:No target2022 target:90%2022 target:92%766m 1,184m 1,233m 202220212020N/A(1.4)bn1.0bn202220212020N/A 92%92%20222021202094%95%94%202220212020Definition New business LTCG represents the operating companies cash generation that is expected to a

216、rise in future years as a result of new business transacted in the current period.Definition Net fund flows are the gross inflow less gross outflow of customers assets across our capital-light fee-based businesses.Definition Customer satisfaction as reported through a survey following a telephony ca

217、ll,where customers can rate us between 1 and 5.Definition Customer satisfaction as reported through a survey following an online interaction,where customers can rate us between 1 and 5.Why it matters?Our strategy seeks to leverage the significant growth opportunities from meeting more of the evolvin

218、g needs of our existing customers across their life cycle and through acquiring new customers.This will enable Phoenix to be a growing,sustainable business.Why it matters?This measure quantifies the annual level of growth in customer assets within our Pensions and Savings business,with increased net

219、 fund flows driving increased fee income from the businesses.Why it matters?This measure highlights how satisfied our customers are with Phoenix Groups telephony servicing propositions across our various brands.Why it matters?This measure highlights how satisfied our customers are with Standard Life

220、s digital service proposition.Future targetGrow our new business long-term cash generation from c.1.2bn in 2022 to c.1.5bn per annum by 2025.Future target Grow our Pensions and Savings annual net fund flows with a target for c.5bn in Workplace by 2025 and c.2bn in Retail by 2025.Future target To del

221、iver a customer satisfaction score of 88%or above in 2023.Future target To deliver a customer satisfaction score of 94%or above in 2023.LinksREM APMLinksREM APMLinksREM APMLinksREM APMPhoenix Group Holdings plc Annual Report and Accounts 202223Strategic reportPeople:Promoting financial wellness and

222、the role of good work and skillsCatherine Foot,Director of Phoenix Insights Our strategic priorities and KPIs continuedCan you introduce yourself and explain what Phoenix Insights is?Im Catherine Foot,Director of Phoenix Insights,our in-house longevity think tank set up to help catalyse the changes

223、necessary across society to enable more of us to live better,longer lives.Why did Phoenix Group choose to set up Phoenix Insights?Phoenix Insights is a cornerstone in our commitment to delivering on our purpose,of helping people secure a life of possibilities.As a country,we need to close the pensio

224、ns saving gap,with as many as 18 million UK adults not saving enough for the retirements they want.Phoenix Group is uniquely placed to make a difference here,by innovating for customers and supporting people to save and make the most of their retirement income.But to help many millions more to be ab

225、le to save enough for their future,we also need action in areas like employment,skills and social security.Phoenix Insights has been set up to explore these broader solutions to the under-saving issue,and to advocate for change.We use impactful research to drive forward ideas and greater public enga

226、gement with the need for action,not just from government,industry or civil society,but from everyone.Why is Phoenix Insights interested in employment and skills?In a major piece of research we published last year in partnership with Frontier Economics,we established that only 14%of defined contribut

227、ion pension savers over 25 are currently on track for the retirement incomes they expect.We also found that millions of savers simply cannot afford to save at the sorts of rates that would bring them on track for a decent retirement.If we are to tackle the under-saving issue,its therefore critical t

228、hat we support people to get and remain in good quality work and provide more opportunities for people to upskill,switch careers,and grow their incomes over their working lives.You simply cant improve the adequacy of retirement incomes for people without focusing on jobs and skills.However,we have a

229、 situation at the moment in this country where many people in their 50s and 60s fall out of work before they are ready to retire,and rates of participation in adult education and retraining programmes are much too low.Part of our work this year is therefore looking at the actions that government,emp

230、loyers and others need to take to enable people to remain in decent work,return to work when they need and want to,and get access to opportunities to re-skill.What have you learnt from your research in the first year since Phoenix Insights was set up?One of the things we were keen to do in setting u

231、p Phoenix Insights was to ground our work in real understanding of how people feel about retirement and living longer,and what really matters to them.In partnership with the National Centre for Social Research and the Policy Institute at Kings College London,we spent six months working with people f

232、rom all walks of life across the UK to understand their experiences and attitudes,and work directly with them to identify the key actions needed in society to respond to longer lives.Part of what drives our work now is these priorities that people identified for themselves,which is better access to

233、careers advice,financial advice,and retraining.What are the potential solutions to help solve some of the issues you have identified?I think that good information and guidance for people is absolutely critical.Whether its our finances and pensions,our careers and working life,or our wider well-being

234、,navigating through and actively planning and preparing for longer lives is not easy.We need a step change in the accessibility of good information and guidance about key decisions during adult life.We also need to get serious about skills and adult education in this country.A 40 Phoenix Group Holdi

235、ngs plc Annual Report and Accounts 202224or 50 year working life in a world of rapid technological,economic and ecological change requires us to re-skill and retrain throughout life.And we need to make some changes to our social security safety net.With a state pension age rising in line with averag

236、e life expectancy,we must do more to provide sufficient state support to those people who have faced multiple disadvantages throughout life and who simply cannot work up until their late sixties.What can we expect to see from Phoenix Insights in 2023?Weve got a lot of exciting work underway.Were wor

237、king with the Policy Institute at Kings College London to take a closer look at the future of the State Pension,using deliberative work with the public to explore how this critical element of our intergenerational social contract can adapt to the situation we find ourselves in where healthy life exp

238、ectancy varies by almost 20 years between the richest and poorest.In partnership with the Learning and Work Institute well be setting out the economic case for investment in lifelong learning and skills,for individuals,for employers,and for government,and working with the International Longevity Cen

239、tre,Business in the Community and others to explore how we can achieve a much-needed radical increase in adult participation in learning and retraining in this country.What is Phoenix Group doing to help close the pensions saving gap?I think Phoenix Group,as the UKs largest long-term savings and ret

240、irement business,has a critical role to play in tackling the pension savings gap,with four key levers we believe can help to drive real change.Firstly,we need to raise awareness of the under-saving issue,which Phoenix Insights is doing through its ongoing research programme which is designed to cont

241、ribute to the public debate.Secondly,Phoenix Group is uniquely placed to help its customers journey to and through retirement.Here we can support millions of customers with their financial wellness throughout their working lives,engage them in planning for their future,and ensure they make the most

242、of their retirement income.We will do this by developing innovative products and services,that support their evolving needs.Which we can distribute through our well known and trusted consumer brands such as Standard Life and SunLife.Thirdly,we need to promote the role of good work and skills,as to h

243、elp people save more,we need to support them to stay in good work for longer.As an employer,we can ensure that Phoenix Group is a fantastic place to work for people of all ages,and take active steps to attract,retain and retrain older workers.For instance,we are working to trial new ways to support

244、our colleagues to have career conversations and consider career switching,advocating for the importance of increasing access to good quality flexible and part-time work,and working with our Behavioural Insights Team on how holistic advice and support interventions at mid-life can help people take ac

245、tion on their finances,work and well-being.And finally,we need to advocate for and support societal change for those who cannot afford to save,or save enough,We can do this through the work of Phoenix Insights,and through our work supporting financial inclusion.Great Expectations:Are peoples retirem

246、ent income expectations adequate and achievable?We explored the adequacy and achievability of peoples retirement income expectations.And we found causes for concern,for different reasons,about most savers in defined contribution pension schemes.To bring people on track for their retirement income ta

247、rgets,we explored whether working longer(to 68)or saving more(12%of salary pension contributions)could be sufficient,or whether other actions or policies may be needed.We found that whilst this would bring many more in line with their expectations it mainly benefits middle and higher earners,and may

248、 not be realistic for many.Nearly four in ten people worry about working for longer because of the impact on their physical health.We identified that industry and Government must do more to address this mismatch between expectation and likely reality,including engaging people much more effectively i

249、n their future finances;making working for longer more feasible,attractive and rewarding;and creating a safety net of support for those unable to work longer or save more.2023 key targets Provide access for 1.5 million Standard Life customers to an integrated financial wellness hub,Money Mindset All

250、 customers supported by digital literacy hubs.Reach 1.5 million customers to raise awareness about the impact of their investments.40%of senior leaders will be women and 13%ethnic minority representation in our workforcePhoenix Group Holdings plc Annual Report and Accounts 202225Strategic report Enh

251、ance our operating model and cultureDelivering leading cost efficiency and amodern organisationEnhancing our operating model and culture are key to our success.We will do this firstly by completing our planned migrations,and through driving simplification to a“single best way of doing things”.This w

252、ill support us in maintaining and enhancing our cost efficiency.We are also committed to being a leading responsible business,which attracts and retains the best talent,through a diverse and inclusive,high-performance culture.We are also committed to adopting the highest sustainability standards acr

253、oss our business and will lead by example for the stakeholders we engage with to drive real world change and deliver positive impact.Completing our migrationsWe have made good progress in delivering our Customer&IT integration in Standard Life.For instance,during 2022 we have successfully migrated c

254、.400k annuity policies onto the TCS BaNCS platform.We also transferred c.1,200 colleagues to TCS Diligenta in February 2023 as we simplify our operational structure,improve the customer experience and realise cost synergies.TCS are also now developing new capabilities for us that will significantly

255、enhance our Workplace proposition and help drive our future Workplace growth.On the ReAssure integration,we have completed the Group Functions integration and are making strong progress with the integration of the Finance&Actuarial functions.This helped realise 331m of further cost and capital syner

256、gies in the year,with total synergies delivered to date of 1,262m(103%of our revised target).We have also recently announced our decision to transfer all c.3 million ReAssure policies from our in-house Alpha platform to the outsourced TCS BaNCS platform by 2026.Consolidating all policies onto TCS Ba

257、NCS will allow the business to benefit from TCSs significant ongoing investment in the platform,with Phoenix customers benefiting from the clear digital focus,consistent customer journeys and customer proposition provided by one platform.This decision is also fully aligned with our model of enhancin

258、g long-term cost efficiency,with a further c.180 million of ReAssure net cost synergies now expected.This increased our target M&A integration synergies from ReAssure to 1,230m.Driving simplification in our businessA key aspect of enhancing our operating model is driving simplification across our bu

259、siness,by migrating to a single best way of doing things.For instance,during 2022 we have progressed towards a single unified employee experience for our colleagues with a single payroll system and a single,enhanced Phoenix Group intranet.We have also transferred the custody and fund accounting for

260、c.90bn of assets to HSBC,as we simplify and centralise our asset custody model.Attracting,developing and retaining the best talent,and building our cultureA crucial component for delivering on our purpose and strategy is attracting and retaining the best talent.That is why we are committed to our am

261、bition of making Phoenix the best place our colleagues have ever worked.In 2022 we continued to deliver against our people strategy which is structured around driving organisational effectiveness,evolving our culture,and building talent.We have continued to build our people capabilities and have evo

262、lved our talent acquisition model to better enable that.In 2022 we also launched our leadership capabilities framework,which articulates eight core capabilities we need our leaders to demonstrate.Weve made good progress against our targets for female and ethnic minorities,which are based on the deep

263、 insight gathered from our Group-wide Who We Are survey,which provides us with a clear understanding of our colleague demographic and will support us in better targeting our diversity and inclusion initiatives.The overall progress we are making is also reflected in our increased employee engagement

264、eNPS score of+30 in 2022(2021:+23),and which was significantly ahead of our target of+24 for the year.Leading as a responsible businessOur objective is for our operations to be net zero carbon by 2025.This target covers Scope 1 and 2 emissions from our occupied premises and Scope 3 emissions from ou

265、r business travel.We remain on track to achieve it with an 80%reduction in the emissions intensity of our own operations since 2019.We also want to work with our supply chain to generate value for all of our partners and stakeholders.Central to this is the transition to a net zero supply chain by 20

266、50 with an interim objective to halve supply chain emissions by 2030.We have therefore developed our ESG Supply Chain Standards to reflect our expectations for partners around net zero and ongoing commitments.During 2022 we have engaged with our key suppliers to ensure they set out a climate change

267、plan and targets for their business,with 82%of our suppliers now committed to either a Science Based Target Initiative(SBTi)target,or a target based on the UNs Race to Zero initiative.Our strategic priorities and KPIs continuedPhoenix Group Holdings plc Annual Report and Accounts 202226 Priorities f

268、or 2023 Progress our ongoing migrations to TCS BaNCS and realise further cost synergies.Further develop our internal talent pool and improve our colleague engagement.Execute on our regulatory change agenda including the IFRS 17 accounting change and the Solvency II reforms.Deliver our ambitious sust

269、ainability targets including for Diversity,Equity and Inclusion.Enhance our operating model and culture how we measure deliveryTotal ReAssureintegration synergiesColleague engagementeNPS scoreFemale senior leaders(%)Ethnic minorities representation(%)1,262m+3039%12%Total target:1,230m(103%delivered

270、to date)2022 target:+242022 target:none2022 target:none696m930m1,262m202220212020N/A+23+30202220212020N/A38%39%202220212020N/A9%12%202220212020Definition The total cost and capital integration synergies realised from the acquisition of ReAssure which completed in 2020.Definition Colleague engagement

271、 is a holistic measure of how our colleagues feel about working at Phoenix Group which is assessed monthly.Definition The proportion of females represented in leadership roles.Definition The proportion of people from an ethnic minority background in our total colleague population.Why it matters?We a

272、cquire companies which we then integrate onto our operating platform in order to realise significant cost and capital synergies,which in turn deliver incremental cash and capital to increase shareholder value.Why it matters?We are seeking to make Phoenix the best place our colleagues have ever worke

273、d and so getting regular colleague feedback is important to enable us to track progress and respond to feedback as we deliver on our ambition.Why it matters?At Phoenix Group we want to ensure our colleagues represent our wider community and so we are committed to promoting diversity and inclusion ac

274、ross the business,which enables colleagues to bring their whole self to work.Why it matters?At Phoenix Group we want to ensure our colleagues represent our wider community and so we are committed to promoting diversity and inclusion across the business,which enables colleagues to bring their whole s

275、elf to work.Future target We have a target to realise total cost and capital integration synergies of 1,230m from the ReAssure acquisition,which we have already exceeded with 103%delivered to date.Future target Our colleague engagement eNPS score target for 2023 is+13,which is lower than 2022 due to

276、 the expected impact of the recent ReAssure integration organisational changes.Future targets40%of women in leadership roles by the end of 2023.Future targetsIncrease our ethnic minorities representation to 13%by the end of 2023.LinksREM APMLinksREM APMLinksREM APMLinksREM APMPhoenix Group Holdings

277、plc Annual Report and Accounts 202227Strategic report Delivering cash,resilience and growth“The strong strategic progress we have made during 2022 has enabled us to continue delivering on our financial framework and to recommend a 5%dividend increase for the year.”Rakesh Thakrar,Group Chief Financia

278、l OfficerBusiness reviewI am delighted that we have once again delivered a year of strong financial performance,as we execute on our strategy and fulfil our purpose.We have delivered another year of resilient cash generation,with 1.5 billion generated in 2022,exceeding our target range of 1.3-to-1.4

279、 billion for the year.We have also maintained our resilient capital position with a Solvency II(SII)surplus of 4.4 billion and a SCCR of 189%,which is above our target ratio range of 140%to 180%.In terms of new business growth,we have delivered record incremental new business long-term cash generati

280、on of 1,233 million.This means that for the second consecutive year we have more than offset the run-off of our in-force business.We have also grown inorganically through M&A,having announced our first ever cash funded acquisition of Sun Life of Canada UK,which we expect to complete in April.Our str

281、ong strategic and financial performance this year has therefore enabled the Board to recommend a dividend increase of 5%for the year.With 0.3 billion growth in our Group in-force long-term free cash to 12.1 billion,our increased level of dividend remains every bit as sustainable over the very long t

282、erm.With this increased long-term free cash,which will be available to shareholders over time,proof that Phoenix is a sustainable,growing business.In terms of our IFRS reporting,the Groups adjusted operating profit remained strong at 1,245 million,but we have reported an IFRS loss after tax of(1,762

283、)million.This primarily reflects(2,673)million of adverse investment return variances from accounting volatility in relation to our hedging instruments and includes economic movements on assets within our corporate pension schemes that have been subject to a buy-in.Taking into account the correspond

284、ing decrease in A strong financial performance in 2022Financial performance metrics:20222021YOY changeCashCash generation1,504m1,717m-12%New BusinessIncremental long-term cash generation1,233m1,184m+4%DividendsTotal dividend per share50.8p48.9p+4%Final dividend per share26.0p24.8p+5%IFRSAdjusted ope

285、rating profit before tax1,245m1,230m+1%Loss after tax(1,762)m(709)m-149%Other financial metrics:20222021YOY changeSolvency II CapitalPGH Solvency II surplus4.4bn5.3bn-17%PGH Shareholder Capital Coverage Ratio(SCCR)189%180%+9%ptsIn-force cashGroup in-force long-term free cash12.1bn11.8bn+3%AssetsAsse

286、ts under administration259bn310bn-16%LeverageFitch leverage ratio30%28%+2%ptsScan the code to watch the video Phoenix Group Holdings plc Annual Report and Accounts 202228our pension scheme liabilities of 940 million,Total Comprehensive Expense for the year was(1,076)million.This impact has,in turn,i

287、ncreased our Fitch leverage ratio to 30%,which remains within our target operating range of 2530%.As a reminder,our hedging approach is designed to stabilise our SII Surplus and Group in-force long-term free cash,which in turn protects our dividend paying capacity.However,this does cause significant

288、 IFRS volatility due to a mismatch between our IFRS balance sheet,and the Solvency balance sheet that we are hedging(see page 31 for more detail).However,we accept this as the trade-off to deliver the resilient cash generation and dividend we are known for.I am proud of the strategic progress we hav

289、e made this year,particularly in driving forward our organic growth strategy.At our Capital Markets Event in December we outlined the journey we have been on and our future ambitions.In Retirement Solutions,we have now firmly established ourself as a key player in the BPA market,with another really

290、successful year of growing our BPA business.We have also been focused on cultivating our fee-based businesses,to develop more balanced organic growth,in particular in our Pensions and Savings business.I am therefore delighted to see the progress we are making in our Workplace business,where we have

291、seen a renewed trust in our proposition,enabling us to both retain our existing schemes and attract new clients.Our confidence in our future organic growth strategy has enabled us to set our first ever incremental new business long-term cash generation target,of c.1.5 billion per annum by 2025.So lo

292、oking back on 2022,it has been a year of clear strategic progress,that supported us to deliver a strong set of financial results.Importantly,our business is growing,as demonstrated by the growth in our Group in-force long-term free cash to 12.1 billion,which sustains our increased dividend over the

293、very long term.Our Solvency capital position also remains highly resilient,despite the unprecedented economic volatility last year,with our SCCR of 189%.This supports provides us with significant capacity to invest into growth.This is Phoenixs financial framework in action,as we deliver resilient an

294、d predictable cash generation,which underpins a dividend that is sustainable and grows over time.Our key performance indicatorsWith our financial framework designed to deliver cash,resilience and growth,we recognise the need to use a broad range of metrics to measure and report the performance of ou

295、r company,some of which are not defined or specified in accordance with Generally Accepted Accounting Principles(GAAP)or the statutory reporting framework.The IFRS results are discussed on pages 3839 and the IFRS financial statements are set out from page 168 onwards.Alternative performance measures

296、In prioritising the generation of sustainable cash flows from our operating companies,performance metrics are monitored where they support this strategic purpose,which includes ensuring that the Solvency II capital strength of the Group is maintained.We use a range of alternative performance measure

297、s(APMs)to evaluate our business,which are summarised below.Cash generationCash generation remains our key performance metric.It represents the net cash remitted from the operating entities to the Group,supported by the free surplus above capital requirements in the life companies,which is generated

298、through margins earned on life and pension products and the release of capital requirements,and group tax relief.This cash generation is used by the Group to fund expenses,interest costs and shareholder dividends,with any surplus then available to reinvest into organic and inorganic growth opportuni

299、ties.Solvency IISolvency II is a key metric by which the Group makes business decisions and measures capital resilience.It is a regulatory measure that prescribes the measurement of value on a Solvency II basis and the calculation of the solvency capital requirement(SCR).The excess value above the S

300、CR is reported as both a financial amount,“Solvency II surplus”,and as a ratio“Solvency II Shareholder Capital Coverage Ratio(SCCR)”.Fitch leverageThe Group seeks to manage the level of debt on its balance sheet by monitoring its financial leverage ratio.This is to ensure we maintain our investment

301、grade rating issued by Fitch Ratings and optimise our financial flexibility to support future acquisitions.Our financial leverage is calculated(using Fitch Ratings stated methodology)as debt as a percentage of the sum of debt and equity.Incremental new business long-term cash generationIncremental n

302、ew business long-term cash generation is a key metric for measuring growth.It represents the operating companies cash generation that is expected to arise in future years as a result of new business transacted in the period.By generating sufficient incremental long-term cash generation to offset the

303、 run-off of our in-force business cash flows,we can bring long-term sustainability to future cash generation to grow the value of our in-force business.Group in-force long-term free cashThis represents the cash expected to be available over time to fund future dividends from existing business and su

304、pports the sustainability of our dividend over the very long term.It comprises the cash expected to emerge from our in-force business over its lifetime,plus existing Group holding company cash,less committed costs associated with our M&A integration activity,the repayment of all shareholder debt and

305、 servicing of interest costs to maturity.Assets under AdministrationThe Groups Assets under Administration(AUA)represents our assets administered by or on behalf of the Group,covering both shareholder and policyholder,and indicates the potential long-term earnings capability of the Group arising fro

306、m its insurance and investment business.Positive net flows in AUA is another indicator of growth for the Group.Adjusted operating profitThe Group uses adjusted operating profit as a measure of IFRS performance based on long-term assumptions.Adjusted operating profit is less affected by the short-ter

307、m market volatility driven by Solvency II hedging(as illustrated on page 31)and non-recurring items than IFRS profit.A more detailed definition of adjusted operating profit is set out on page 314.Phoenix Group Holdings plc Annual Report and Accounts 202229Strategic reportShareholder capital availabl

308、eOwn funds=SII assets less liabilitiesGroup Shareholder SII Own FundsGroup SII surplus Group SCRSolvency Capital Requirement(SCR)Business review continuedWhy is Solvency II important to us in measuring performance?Solvency II Own Funds represent the Groups net assets on a regulatory basis.Assets and

309、 non-technical liabilities are valued on a fair value basis,and technical provisions(policyholder liabilities)are calculated on a best estimate basis(weighted average of future cash flows),with an adjustment for risk known as the risk margin.Own Funds also include a value for future profits expected

310、 to arise from in-force policies,and any debt that meets the definition of capital under Solvency II rules.Shareholder Own Funds reflects a restriction for any excess over SCR in the Groups with-profit funds and pension schemes as this excess doesnt belong to shareholders and so cannot be included.T

311、he SCR is a capital buffer held to ensure that the Group can meet its obligations over the next 12 months with a probability of at least 99.5%.The calculation stresses both assets and liabilities in line with 1-in-200 year risk events to establish how much additional capital we would require to rema

312、in solvent.It is a risk-based approach,requiring Phoenix to hold capital against a range of risks,not just insurance risks.The SCR can be calculated using a standard formula or internal model.We use an approved internal model for Phoenix Life and Standard Life,with Standard Life International DAC on

313、 a partial internal model and ReAssure currently on standard formula.The excess of Group Own Funds above the Group SCR is the Solvency II surplus.It indicates how much shareholder capital we have available to deliver shareholder returns in the form of dividends,and to reinvest to grow the business o

314、rganically and inorganically.In order to maintain a resilient Solvency II balance sheet to protect our sustainable dividend,Phoenix operates a dynamic risk management framework which seeks to manage our exposure to each of the risks that the Group faces within its risk appetite.What are Own Funds?Wh

315、at is the Solvency Capital Requirement(SCR)?Why is Solvency II surplus a key measure for Phoenix?The SCCR represents Group Own Funds divided by the SCR,adjusted to a shareholder view through the exclusion of amounts relating to ring-fenced with-profit funds and Group pension schemes whose Own Funds

316、exceed their SCR.This is because these Own Funds do not belong to the shareholder and the corresponding SCR is not in respect of shareholder risk.We articulate our risk appetite through an SCCR target operating range of 140%180%.This allows us to focus on a shareholder view of the capital coverage r

317、atio that provides a more accurate reflection of the capital strength of the Group.Shareholder Capital Coverage Ratio(SCCR)SCR is impacted by both market risk and demographic risk in roughly equal proportions(see page 313 for a breakdown).Markets will cause changes in SCR as our investment mix chang

318、es(some assets are more risky than others)or asset values change(increased assets can mean increased risk).Demographic risks,such as longevity or persistency,can change the SCR depending on experience,assumption changes or any change in business mix.What causes the SCR to change?Own Funds can grow t

319、hrough writing profitable new business and through the delivery of value accretive management actions and synergies.Group expenses,financing costs,and dividends cause own funds to fall.Changes in demographic assumptions and experience will also impact own funds.Own Funds are also sensitive to market

320、 movements.Our hedging strategy seeks to stabilise the Solvency II surplus,but this means hedge values can move Own Funds up or down,to offset the market movements impact on surplus,which can also arise from movements in the SCR.What causes Own Funds to change?Phoenix Group Holdings plc Annual Repor

321、t and Accounts 202230Solvency II balance sheetIllustrative hedge offset to mitigate market risk volatilityIFRS balance sheet is,in effect,over-hedged as the additional SII balance sheet items are not valued on the IFRS balance sheet.IFRS balance sheet Assets Liabilities Assets Liabilities SII future

322、 profits SII Solvency Capital RequirementsOur risk management in actionOur comprehensive risk management approach ensures we remain resilient through the economic cycle.During 2022,we have seen unprecedented economic volatility,with UK political instability leading to government bond yield increases

323、 that were equivalent to a 1-in-1,000 year economic shock event.However,our comprehensive hedging approach resulted in only a limited impact on our capital position,with a(0.4)billion SII surplus adverse economic variance.By protecting the SII capital position in our life companies,we are able to de

324、liver resilient cash generation and ensure the long-term sustainability of our dividend.We also continue to maintain surplus liquidity in line with our conservative liquidity framework,which enabled us to meet all collateral calls on our hedging instruments during the turbulent markets in the second

325、 half of 2022,with no forced selling of assets required at any point.Phoenix also has a focused business strategy and does not participate in the Liability Driven Investment(LDI)in any way,meaning we were not directly impacted by the LDI crisis during 2022.Phoenix Groups comprehensive hedging approa

326、ch We hedge what we deem to be the unrewarded market risks from equities,currency,inflation and interest rates.This is designed to protect our Solvency II capital position to deliver dependable cash generation and balance sheet resilience,which underpins our sustainable dividend over the long-term.W

327、e see this as a key differentiator for Phoenix compared to other insurance companies and this is evidenced by our significantly lower sensitivities to these market risks than our UK peers.However,as a result of our hedging approach,we do see significant accounting volatility(as illustrated below)whi

328、ch distort most of the Groups IFRS metrics.Importantly though this does not impact our cash generation delivery or dividend paying capacity,which is funded from our Solvency capital position.Impact of market rise Solvency II loss on hedge provides an offset to the positive market risk impact to stab

329、ilise our Solvency II capital position.IFRS loss on the hedging instrument is recognised but the gain on revaluation of the additional Solvency II balance sheet items is not.Impact of market fall Solvency II gain on hedge provides an offset to the adverse market risk impact to stabilise our Solvency

330、 II capital position.IFRS gain on the hedging instrument is recognised but the loss on revaluation of the additional Solvency II balance sheet items is not.Phoenix Group Holdings plc Annual Report and Accounts 202231Strategic report Business review continuedCashOperating companiescash generation1.5b

331、nGroup in-force long-term free cash12.1bnGroup cash flow analysism20222021Cash and cash equivalents at 1 January9631,055Operating companies cash generation:Cash receipts from life companies11,5041,717Uses of cash:Operating expenses(78)(80)Pension scheme contributions(16)(11)Debt interest(244)(250)No

332、n-operating cash outflows(395)(305)Debt repayments(450)(322)Shareholder dividend(496)(482)Total uses of cash(1,679)(1,450)Support of BPA activity(285)(359)Closing cash and cash equivalents at 31 December5039631 Total cash receipts include 55 million received by the holding companies in respect of ta

333、x losses surrendered(2021:95 million).Cash generation Operating companies cash generation represents cash remitted by the Groups operating companies to the holding companies.Please see the APM section on page 314 for further details of this measure.Cash generation from the operating companies is principally used to fund the Groups shareholder dividends,debt interest and repayments,and its various