《菲尼克斯集團控股公司（PHOENIX GROUP HOLDINGS）2023年年度報告（英文版）（165頁）.pdf》由會員分享，可在線閱讀，更多相關《菲尼克斯集團控股公司（PHOENIX GROUP HOLDINGS）2023年年度報告（英文版）（165頁）.pdf（165頁珍藏版）》請在三個皮匠報告上搜索。

1、Part of Phoenix GroupPart of Phoenix GroupPart of Phoenix Group Helping people secure a life of possibilitiesAnnual Report and Accounts 2023Phoenix Group Holdings plc Online SummaryClimate ReportESG Data AppendixSustainability Report1Phoenix Group Holdings plc Annual Report and Accounts 2023Strategi

2、c reportWere the UKs largest long-term savings and retirement business.Our purpose is helping people secure a life of possibilities,making better longer lives a reality for all of us.Who we areWere here to create long-term value for all our stakeholders,including our customers,colleagues,investors a

3、nd wider society.Were achieving this in many ways including helping people engage with their financial futures and using our voice to advocate on their behalf.Were focused on managing the risks and maximising the opportunities presented by the transition to net zero by 2050 to deliver good outcomes

4、for our customers and shareholders.Our reportingYou can find out more about our activities,financial performance,sustainability strategy and our progress towards becoming a net zero business by 2050 by visiting our website:Look out for these icons in the annual report:For further reading in the Annu

5、al Report For more information read our supplementary reports Reference to further reading online See How we deliver our purpose-led business on pages 4 to 9 to find out moreIn this report2 Strategic report2 At a glance4 How we deliver our purpose-led business10 Chairs statement12 Group Chief Execut

6、ive Officers report 16 Investment case18 Our growth drivers20 Our business model24 Our strategic priorities and KPIs30 Business review40 Non-financial and sustainability information(NFSI)statement 42 Streamlined Energy and Carbon Reporting(SECR)statement44 Task Force on Climate-Related Financial Dis

7、closures(TCFD)summary report46 Risk management58 Viability statement 60 Corporate governance60 Chair of the Group Boards introduction to governance64 Board leadership and Company purpose69 Division of responsibilities74 Stakeholder engagement78 Composition,succession and evaluation 92 Audit,risk and

8、 internal controls104 Sustainability governance108 Workforce engagement111 Directors Remuneration report141 Directors report147 Statement of Directors responsibilities149 Financials316 Additional informationAll amounts throughout the report marked with REM are KPIs linked to Executive remuneration.S

9、ee Directors Remuneration report on pages 111 to 140.All amounts throughout the report marked with APM are alternative performance measures.Read more on page 312.Total cash generation 2,024m(2022:1,504m)REM APMGroup Solvency II surplus(estimated)3.9bn(2022:4.4bn)Group Solvency II shareholder capital

10、 coverage ratio(estimated)176%(2022:189%)APMIncremental new business long-term cash generation1,514m(2022:1,233m)REM APMTotal ordinary dividend per share 52.65p(2022:50.8p)IFRS adjusted operating profit 617m(2022:544m1,2)APMIFRS loss after tax(88)m(2022:(2,6571,2)m)Solvency II leverage ratio 36%(202

11、2:34%)APMNew business net fund flows6.7bn(2022:3.9bn)APM2023 PerformanceKey performance indicatorsOther performance indicatorsThe Strategic report was approved by the Board of Directors on 21 March 2024 and signed on its behalf byAndy BriggsGroup Chief Executive Officer1 2022 restated comparative to

12、 reflect adoption of IFRS 17.2 Incorporates changes to the Groups methodology for determining IFRS adjusted operating profit since HY 2023.3Strategic reportPhoenix Group Holdings plc Annual Report and Accounts 20232Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportOur busines

13、sOur vision is to be the UKs leading retirement savings and income business.We offer a broad range of savings and retirement income products to support people across all stages of the savings life cycle from 18 to 80+,through our family of brands.At a glancec.283bntotal assets under administration A

14、PMc.12mcustomersc.7,800colleagues as at 31 December 2023c.530mannual dividend paid to shareholdersFTSE 100and FTSE All WorldStandard Life has been trusted to look after peoples life savings and retirement needs for nearly 200 years.For more information visit Life is a closed book consolidator that h

15、as grown from a series of acquisitions and policy transfers throughout their 200-year history.ReAssure is a major life and pensions consolidator in the UK market.SunLifes straightforward and affordable financial products and services are designed to meet the needs of the over 50s.We offer a range of

16、 customer solutions across our businessesBusiness areasSavings for retirementRetirement incomeProducts and solutions that secure an income for customers in their retirement:Income drawdown and individual annuities.Defined benefit pension income.Home equity release.Products and solutions that support

17、 customers as they save for and transition to retirement:Defined contribution workplace pensions.Retail savings for retirement.Pension consolidation.Legacy pensions and savings products.Our family of brandsWe help customers journey to and through retirement.Our Workplace business supports people who

18、 save through their Defined contribution workplace pension scheme,and our Retail business supports individual customers to save for,transition to,and secure an income in retirement.Financial metrics shown refer to the assets under administration by segment type APM.Pensions and Savingsc.175bnWe part

19、icipate 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 equity release.Retirement Solutionsc.40bnStandard Life International,which operates in Irel

20、and 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.Europe and Otherc.29bnWe are a market leader in the safe and efficient management of legacy pensions and savings

21、 policies to deliver better customer outcomes,with a range of legacy With-Profits savings products that are closed to new business that we manage for our customers.With-Profits c.39bn See Our business model on pages 20 to 23 for more information45Phoenix Group Holdings plc Annual Report and Accounts

22、 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic reportEnhanceTransforming our operating model and culture.See pages 28 to 29Building a sustainable businessWe are committed to embedding sustainability and best practice governance to maintain high standards of

23、oversight,integrity and ethics.OptimiseOptimise our scale in-force business.See pages 26 to 27GrowMeeting more of our existing customers needs and acquiring new customers.See pages 24 to 25Our strategic prioritiesOur sustainability strategyHow we deliver our purpose-led business PeopleWe want to hel

24、p people live better longer lives.This means tackling the pension savings gap and supporting people to have better financial futures through promoting financial wellness and the role of good work and skills.Our purpose Helping people secure a life of possibilitiesOur visionTo be the UKs leading reti

25、rement savings and income business.PlanetWe want to help shape a better future.This means delivering better outcomes for our customers,playing a key role in delivering a net zero economy by 2050 and reducing our impact and dependency on nature.Better and long-term value for allOur purpose drives eve

26、rything we do.It reflects our aim to make better longer lives a reality for us all.For more information view our reports Sustainability Report Climate Report67Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic

27、 reportHelping people secure a life of possibilities Supporting financial wellbeingWe want to help our customers to be empowered to take charge of their finances,so that is why weve rolled out Our Money Mindset solution to over 1.5 million Standard Life Workplace pension scheme members.Money Mindset

28、 is a digital platform that allows customers to monitor their financial position.This better understanding helps put them in a position to improve their financial wellbeing,and the app provides the information they need to help plan for the future.With 9 in 10 people saying income certainty in retir

29、ement is important to them1,an annuity is likely to be an ideal solution for many.Claire Altman,MD Individual Retirement SolutionsBridging the digital divideWe believe digital inclusion is a collective responsibility and its vital we work in partnership across the public,private and third sectors to

30、 achieve it.We have successfully launched Digital Skills Hubs across our customer brands,which include online training videos and how-to guides.This enables our customers to access and learn online in their own time and at their own pace.Were also making sure our colleagues are fully informed about

31、digital inclusion,so that they can support our customers better,and ensure we design and aim to deliver an inclusive service for all our customers.Providing certainty in retirementWe are delivering new products and solutions to provide more support to new and existing customers as they journey to an

32、d through retirement.In September,we launched a new individual annuity product,the Standard Life Pension Annuity,that pays customers a guaranteed income for the rest of their life,bought with some or all of the proceeds from their pension plan.Available on the open market to both new and existing cu

33、stomers,the launch of this product has been welcomed by both advisers and customers and we have seen a strong pipeline of applications building.1 Retirement Voice|Standard Life.1 Standard Life partners with Moneyhub press release.Through our Lets Start Talking campaign we reached over 4 million peop

34、le,which inspired conversations about how we live,work,learn and save for the longer lives we lead.Ben Rhodes,Brand Director75%1of people dont know how much they have in pension savingsEncouraging a national conversationAt Phoenix Group we recognise that we all need to think differently about our fu

35、tures,and the futures of those we care about,if we are to lead better longer lives.Research from our think tank,Phoenix Insights,continues to highlight the scale and severity of under saving for retirement in the UK.To encourage a national conversation,we launched our Lets Start Talking campaign in

36、2023.It is designed to get people talking about the need to think about how we live,work,and save for the longer lives we are now leading.The campaign features real people sharing their stories and perspectives on preparing for the retirement they want,and emphasises the need to take steps now to ma

37、ke better longer lives a reality for all of us.As a purpose-led business we seek to address the needs of a broad range of stakeholders.Positive engagement and successful outcomes are key to ensuring a strong and sustainable business.1625 9%2635 28%3645 29%4655 25%5665+9%Age of Phoenix Groups workfor

38、ce9Phoenix Group Holdings plc Annual Report and Accounts 20238Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic reportTogether were building a purpose-led business,where our people are proud of the difference they make to our customers and communities.Sara Thompson,

39、Group HR DirectorEmpowering and inspiring colleagues Midlife MOT Wealth,work and wellbeingAs average life expectancy continues to rise,many of us will live and work for longer.Thedecisions we make now will affect us for the rest ofour lives,so theres no better time to start looking after our future.

40、Launched in 2023,our Midlife MOT assessment helps colleagues take stock:to see where theyre going,where they want to be and how to get there.Its designed to help colleagues,regardless of age,and focuses on the key areas of wealth,work andwellbeing.Delivering attractive returns for investors For deta

41、ils on our investment case see pages 16 to 17 Executing against our strategy is driving growth which underpins our progressive and sustainable ordinary dividend policy.This delivers a reliable and attractive income for our shareholders.Rakesh Thakrar,Group Chief Financial OfficerInvesting in a bette

42、r futureAs the UKs largest long-term savings and retirement business,we recognise our responsibility to tackle climate change.By taking the right actions to decarbonise,we believe that we can manage the risks and maximise the opportunities of climate change on behalf of our 12 million customers.And

43、with 283 billion of assets under administration,our scale means we can make a real difference.This year we published our Net Zero Transition Plan,which outlined the tangible steps we will take to become a net zero business by 2050.We believe that better career support,at all ages,allows people to bu

44、ild and develop long and fulfilling careers.Phoenix Insights is leading the way with a new campaign,Careers can change,to inspire people to see that their careers can change successfully,by small incremental shifts or total pivots.At the heart of this campaign is a new coalition of experts and partn

45、ers working with us.Together,we will raise awareness of good quality,accessible career support and make sure people are connected to it.Inspiring career changes and offering support For more information view our Net Zero Transition Plan11Phoenix Group Holdings plc Annual Report and Accounts 2023Stra

46、tegic report10Strategic reportPhoenix Group Holdings plc Annual Report and Accounts 2023Delivering on our purposeThe pensions savings gap in the UK is a growing societal problem.As the UKs largest long-term savings and retirement business,we are striving to raise awareness of this problem and advoca

47、te for the changes needed to deliver the solutions and help people secure a life of possibilities.We know that people can only save for their retirement if they have access to good work over their longer lives.That is why we are playing a role in promoting good work through Phoenix Insights,working

48、in collaboration with others to influence government policy.We are committed to innovating to develop the retirement income solutions of the future and we are advocating for the removal of policy barriers to enable us to support customers as they save for,journey to,and secure income in,retirement.M

49、ore specifically we have recommended a framework to support an increase in auto-enrolment contributions from 8%to 12%,and we believe that guidance and advice should be available for everyone,not just those who can afford to pay for it.We can drive good outcomes for our customers and manage the risks

50、 of climate change by delivering on our Net Zero Transition Plan commitments,outlined in our plan published in May,and by helping to unlock the barriers to allow capital to flow at scale into productive and sustainable investments.I was delighted that we were a leading signatory and vocal proponent

51、of the Mansion House Compact when it was unveiled in July.This seeks to address some of the issues around investing in unlisted equity,and the growth of UK companies of the future.I have every confidence the Compact will accomplish the dual aim of securing a brighter future for retirees and helping

52、to channel billions of pounds into the UK economy.Sabbatical reflections1 December 2023 marked my return as Chair of Phoenix Group,following a 14-month sabbatical where I fulfilled the role of Lord Mayor of the City of London.I am delighted to be back and look forward to supporting the continued evo

53、lution of our business.As Lord Mayor it was my great privilege and responsibility to represent and promote the UK financial services industry.In doing so,my sabbatical confirmed to me that this industry is an essential element of the UK economy,with a critical role to play in supporting both economi

54、c growth and the trajectory to net zero by 2050 through sustainable investment.The clear feedback from my international travels is that the UK financial services industry is perceived as market-leading and there is great optimism about its future.I would like to thank Alastair Barbour who assumed th

55、e role of Chair in my absence.He has made an enormous contribution to Phoenix over his ten-year tenure as a Director,and I wish him well for the future now that he has stepped down from the Board.Strong cash generation provides opportunity to invest and realise our vision The team has delivered stro

56、ng cash generation in 2023 with an acceleration in the organic growth story clearly evident,whilst at the same time maintaining a resilient balance sheet.We are on a journey to deliver our vision of becoming the UKs leading retirement savings and income business.The clear strategic success in buildi

57、ng the organic growth business over the last three years means we have reached a key milestone on our journey,as we evolve the business.The focus is now on investing to grow,optimise and enhance the business even further.Strategic outcomes support a new dividend policy I am delighted to announce tha

58、t the Board is recommending a 2.5%increase in the Groups 2023 Final dividend to 26.65 pence per share.This means the Groups Total dividend for 2023 will be 52.65 pence per share.The Board is confident in the Groups ability to deliver the next phase of our strategic journey,as we transition to our vi

59、sion of becoming the UKs leading retirement savings and income business.This has supported our decision to move to a progressive and sustainable ordinary dividend policy,which is underpinned by the sustainable growth in Operating Cash Generation we now expect to deliver.Thank youFinally,I would like

60、 to take this opportunity to thank the Board,our colleagues,our partners and our wider stakeholders for their hard work,dedication and support in delivering another year of strong progress.Nicholas Lyons Chair of the Group BoardAt Phoenix our purpose is our North Star and it drives all that we do.I

61、am delighted with the progress we have made this year to bring about better outcomes for all our stakeholders.Nicholas Lyons,Chair of the Group BoardSection 172 statementDuring the year,Directors have applied section 172 of the Companies Act 2006 in a manner consistent with the Groups purpose,values

62、 and strategic priorities.The Directors have acted in a way which they consider,in good faith,is most likely to promote the success of the Company for the benefit of its members as a whole.In doing so the Directors have paid due regard to the matters set out in section 172(1)(a)to(f),namely:the like

63、ly consequences of decisions in the long-term;the interests of any of the Companys employees;the need to foster the Companys business relationships with suppliers,customers and others;the impact of the Companys operations on the community and the environment;the desirability of maintaining the Compa

64、nys reputation for high standards of business conduct;and the need to act fairly between members of the Company.Examples of how Directors have considered these matters in connection with key decisions linked to our strategic priorities are detailed on pages 74 to 77 of the Corporate governance repor

65、t.We want to help people journey to and through retirement while investing in a better future for us all.Our approach focuses on two key areas:People and Planet.We are looking to address the UK pensions savings gap and manage the risk and opportunities of climate change.Delivering on our purpose Cha

66、irs statement1213Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic reportDelivering strong results 2023 has been another year of clear strategic delivery for Phoenix.Were a highly cash generative business,as

67、demonstrated by the delivery of 2.0 billion of total cash generation in 2023(2022:1.5 billion),exceeding our upgraded target of c.1.8 billion target for the year.This was supported by the completion of one of the largest ever UK insurance Part VII transfers.Executing against our strategic priorities

68、 enabled us to deliver another record year of new business long-term cash generation(NB LTCG)of 1.5 billion(2022:1.2 billion).This was supported by a c.70%increase in new business net fund flows in 2023 to 6.7 billion(2022:3.9 billion).Performance in our Pensions and Savings business included the tr

69、ansfer of the Siemens workplace scheme,one of the largest workplace scheme transfers to have been tendered in the UK market in recent years.This clearly demonstrates the success we have had in re-establishing the Standard Life brand as a major workplace player.Growth in our Retirement Solutions busi

70、ness was also strong,driven by our Bulk Purchase Annuities(BPA)business,which saw the Group write 6.2 billion of premiums during the year(FY22:4.8 billion)at a reduced capital strain.From a capital perspective,we saw a reduction in our Solvency II surplus to 3.9 billion(2022:4.4 billion)and our Shar

71、eholder Capital Coverage Ratio(SCCR)to 176%(2022:189%)after allocating capital into growth opportunities.However,we continue to operate towards the upper-end of our 140180%SCCR operating range.In terms of our earnings,our IFRS adjusted operating profit increased by 13%to 617 million(2022:544 million

72、)supported by growth in our Pensions and Savings business.However,we reported an IFRS loss after tax of(88)million,reflecting our investment into growth opportunities,as well as integration and transformation expenses in the period.However,this was significantly lower than the 2022 loss of(2,657)mil

73、lion,benefiting from less accounting volatility from market movements.As a result of this strong strategic and financial performance,the Board has recommended a 2.5%increase in the Final dividend of 26.65 pence per share,bringing the Total 2023 dividend to 52.65 pence per share,extending our strong

74、track record of dividend growth.A strategy supported by existing large and growing markets Phoenix Group is the UKs largest long-term savings and retirement business,managing c.283 billion of assets for c.12 million customers.Our purpose of helping people secure a life of possibilities is embedded i

75、n everything that we do and informs our single strategic focus,which is to help customers journey to and through retirement.We have a diversified and balanced business mix,across the long-term savings and retirement market,which can be largely categorised as Pensions and Savings and Retirement Solut

76、ions.Around two-thirds of our business is Pensions and Savings,which principally consists of capital-light fee-based products.I am delighted that 2023 was another year of strong new business growth for Phoenix Group.Having now built the component parts of a sustainably growing business,the next stag

77、e on our journey will see us grow,optimise and enhance our business so we can meet more of our customers retirement needs and deliver more value for our stakeholders.Andy Briggs,Group Chief Executive OfficerGroup Chief Executive Officers reportSuccessfully delivering our strategy2023 has seen Phoeni

78、x Group deliver significant strategic progress and strong results,further supporting our track record of dividend growth.We are on a journey from being a closed-book life consolidator to a purpose-led retirement savings and income business Strong 2023 results delivered through strategic execution We

79、 are balancing our investment to grow,optimise and enhance our business Our strategy delivers sustainable,growing Operating Cash Generation that more than covers our recurring uses and a growing dividend Phoenix will now operate a progressive and sustainable ordinary dividend policy2.0bn2023 Total c

80、ash generation(2022:1.5bn)REM APM+2.5%2023 Final dividend increaseInvesting in 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 our Retirement Solutions,Pensions and Savings and Europe

81、an businesses.The Standard Life brand has a deep history and heritage,and is well known and trusted by 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.As part of our drive to deliver ou

82、r growth targets,we are committed to investing in the brand through initiatives like our Race for Life partnership and recent advertising campaigns.2020:closed-book life consolidatorRun-offCash generationProven the wedgeSustainable cash generationIntegrate and BuildPhoenixLifeStandardLifeReAssureHer

83、itagebusinessOpenbusiness2021202320242026Grow,Optimise and Enhance2023:today2026:purpose-led retirement savings and income businessPensionsand SavingsRetirementSolutionsHeritageHeritageOpenGrowing Operating Cash GenerationInnovative retirement income solutions1415Phoenix Group Holdings plc Annual Re

84、port and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic reportGroup Chief Executive Officers report continuedWe will do this by building an innovative range of retirement income solutions and a compelling set of retail propositions,supported by a dig

85、ital customer interface with personalised data,guidance and advice.We are also now at the stage where we can further simplify our organisational structure,through integrating our Heritage and Open businesses onto a single Group-wide operating model.This will enable us to grow faster,by offering all

86、of our customers,whether in an Open or Heritage product,a seamless journey across their savings life cycle.It will also further enhance our existing cost efficiency.The successful execution of our strategy will enable us to win market share and grow our business sustainably over time as we journey t

87、owards our vision of becoming the UKs leading retirement savings and income business.Balancing investment across our strategic priorities To support us on our journey we have a clear set of strategic priorities to 1)Grow 2)Optimise and 3)Enhance,which are informed by and in support of our ESG themes

88、 of Planet and People and are underpinned by robust investment programmes within our new capital allocation framework.See pages 24 to 29 for more detail on our strategic priorities.Firstly,we will Grow through building an innovative range of retirement income solutions,and a compelling set of Retail

89、 propositions,supported by a digital customer interface,with personalised data,guidance and advice.We will also further strengthen our Workplace proposition and optimise our annuities business.This will require c.100 million of investment into our growth propositions,alongside c.200 million of capit

90、al per annum into annuities,the outcome of which is to support mid-single digit growth in Operating Cash Generation over the long term.Our second priority is to Optimise.As part of this we plan to continue our approach of repaying M&A-related debt with surplus cash.We expect to repay at least 500 mi

91、llion of debt by the end of 2026,on top of the c.800 million we have repaid since 2020.This will support us in getting to a c.30%Solvency II leverage ratio by the end of 2026,which we believe is an appropriate steady-state level for our business,absent M&A.We will also invest c.100 million to enhanc

92、e our asset and liability optimisation capabilities.This,alongside strong business growth,will support us in delivering increased recurring management actions of c.400 million by 2026.Our Enhance priority is designed to support us in transforming our operating model and culture,to create a leading,c

93、ost efficient and modern organisation.We continue to invest to complete our remaining customer migrations onto TCS Diligenta.In addition,we intend to invest to improve the support we give our customers throughout their lives and to drive scale cost efficiencies by integrating our business onto a sin

94、gle Group-wide operating model.Together,these migration,transformation and cost efficiency programmes will require c.500 million of investment.Our focus on driving cost efficiency will enable us to deliver c.250 million of annual cost savings by the end of 2026,which will enhance all of our key repo

95、rting metrics.We also continue to strive to make Phoenix Group the best place any of us have ever worked;through providing a great colleague experience.We passionately believe that by being diverse and inclusive well be a better organisation,well make better decisions,and well do a better job of rep

96、resenting our customers and communities.Our new simplified,diverse and inclusive organisational structure will better empower our colleagues to make the right decisions for our customers.Demonstrating the long-term sustainability of our businessOur strategy will support the delivery of sustainable,g

97、rowing cash generation,a resilient capital position and improved earnings.As part of our evolved financial framework we are introducing Operating Cash Generation(OCG)as a new metric,to demonstrate the long-term sustainability of our business.OCG is the sustainable level of surplus generation in our

98、Life Companies,each and every year,that is also then remitted as cash to our Group Holding Company.See page 33 in our Business Review for more detail.Executing against our strategic priorities will help us to grow OCG by c.25%over the next three years,from 1.1bn in 2023 to 1.4bn in 2026.After this t

99、ime,we expect it to grow at a sustainable,mid-single digit growth rate over the long term.Importantly,this OCG more than covers our recurring uses,and a growing dividend.Which generates excess cash that can support additional investment back into the business and/or additional shareholder returns.Th

100、e UK long-term savings and retirement market is already large,with c.3 trillion of total stock,but it is also growing fast,with annual flows of c.150200 billion.The breadth of our product portfolio means we are able to take advantage of a number of growing market opportunities.See pages 18 to 19 for

101、 Our growth drivers.Embarking on the next stage of our journey Back in 2020,we had a single core capability,which was executing M&A and integrating those businesses.However,over the past three years we have built a number of sustainably growing organic businesses too.This has seen us acquire and inv

102、est into the trusted Standard Life brand,and re-establish it amongst customers,corporates and advisers.We have used that brand to help turbo-charge our growth as we built a competitive and capital efficient annuities business,followed by our now large and rapidly growing capital-light Workplace busi

103、ness.In addition,we have built a highly-skilled in-house asset management capability,enabling us to efficiently manage our third-party asset managers,and to create long-term value through optimising our c.38 billion shareholder credit portfolio.We have an ongoing programme of initiatives to review o

104、ur products and services and over the past seven years,we have invested significantly in focusing on good customer treatments and outcomes across our businesses.During that time,we have set aside over 200m on reducing charges and we are making planned investment to migrate customers to more modern t

105、echnology.We are actively working to ensure we are well positioned to comply fully with the upcoming Consumer Duty requirements which come into effect on 31 July 2024,for which we set aside 70 million of Solvency II capital.Our successful execution has enabled us to prove“the wedge”hypothesis,with t

106、he new business cash from our Open businesses more than offsetting the Heritage run-off.That means we are today a sustainably growing business,and no longer reliant on M&A.The next phase of our strategy is therefore about building on the strong foundations we have developed,and completing our full-s

107、ervice customer offering.176%Shareholder Capital Coverage Ratio(2022:189%)APM6.7bnNew business net fund flows(2022:3.9bn)APM1.5bnIncremental new business long-term cash generation(2022:1.2bn)REM APM M&A can add further scale to our business Our existing scale and the success of our organic growth st

108、rategy mean that we are no longer reliant on M&A to grow our business and dividend,in the way we were when I joined.We continue to believe that M&A can generate significant shareholder value,as demonstrated by our strong track record,and we see it as a potential lever to add further scale to our bus

109、iness.However,we now have a range of organic growth opportunities available,in which to deploy our excess cash at very attractive returns,and so the bar for acquisitions is now higher than it has ever been.Outlook The economic backdrop in the UK means our societal purpose of helping people secure a

110、life of possibilities has never been more important.As we continue to strive to meet the needs of our customers,colleagues and other key stakeholders,this will support us in achieving our vision of becoming the UKs leading retirement savings and income business.We are investing to grow,optimise and

111、enhance our business to deliver this vision,which will enable us to win market share and grow our business sustainably over time.As a result,the Board believes it is now appropriate for us to move to a progressive and sustainable ordinary dividend policy,which is underpinned by the sustainable,growi

112、ng OCG we expect to deliver over the long term.We see this as a pivotal step in the evolution of Phoenix Groups investment case,and it is a reflection of the Boards confidence in our future strategy.Thank youThe fantastic progress Phoenix Group has made this year could not have been achieved without

113、 our exceptional people.I would therefore like to thank my colleagues throughout the Group for their continued contribution and dedication.I look forward to our team delivering another year of significant progress in 2024.Andy BriggsGroup Chief Executive OfficerPhoenix Group is transitioning from a

114、closed-book life consolidator to a purpose-led retirement savings and income business20232026RecurringusesDividend1.1bn1.4bnExcesscash+c.25%Mid-single digit percentage growth over the long term 20232026target617m900m+c.50%1617Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Ho

115、ldings plc Annual Report and Accounts 2023Strategic reportStrategic reportInvestment caseHow we generate shareholder valuePhoenix Groups dividend policyEnabling our financial framework and delivering a clear set of financial outcomes for our shareholdersSupporting our new progressive dividend policy

116、Our strategic priorities will strengthen our competitive advantagesCustomer accessWith c.12 million customers,we have an unrivalled level of customer access.This gives us deep customer insights that underpin our developing propositions,enabling us to better meet their evolving needs on their journey

117、 to and through retirement.Capital efficiencyAs a genuinely diversified long-term savings and retirement business,we get greater diversification from our breadth of products.Our capital position is also highly resilient,through our core capabilities in risk management,and capital optimisation.Cost e

118、fficiencyWe have a significant cost efficiency advantage,which is enabled through our customer administration and IT partnership with TCS.We are looking to further improve our cost efficiency through the next stage of our journey as we roll out our cost efficiency programme.CashGrowing Operating Cas

119、h Generation that more than covers our recurring uses and progressive dividendCapitalResilient balance sheet that supports investment to grow,optimise and enhance our businessEarningsGrowing IFRS adjusted operating profitIFRS adjusted operating profitOperating Cash Generation140180%Shareholder Capit

120、al Coverage Ratio operating range26.65p2023 Final dividend per share 52.65p2023 Total dividend per share+2.5%Increase in 2023 Final dividendc.4%13-year CAGRc.30%1Solvency II leverage ratio target by the end of 20261 Assuming economic conditions in line with 31 December 2023.For more information see

121、our Strategic priorities on pages 24 to 29 For more information see the Business review on pages 30 to 39 GrowOptimiseEnhanceThe Group operates a progressive and sustainable ordinary dividend policyThe move to our new dividend policy is supported by our strategy to deliver sustainable,growing Operat

122、ing Cash Generation over the long term,which more than covers our uses and generates excess cash.1819Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic reportOur growth driversThere is a huge societal need for

123、 what we do,as only c.10%of individuals take advice on their journey to and through retirement,and only 1-in-7 defined contribution(DC)pension savers are on track for a retirement income that maintains their current living standards.Significant growth opportunities are available through the provisio

124、n of retirement income and savings solutions.WorkplaceThe Workplace pension scheme market is growing rapidly,driven by auto-enrolment,an ageing population,the shift to Master Trust schemes,and the move from defined benefit pension schemes to defined contribution pension schemes.Salary inflation and

125、full employment Lower market flows Higher interest ratesRetailPeople are increasingly seeking advice and guidance on their journey to and through retirement,as responsibility for retirement planning has now shifted towards individuals away from corporates.Bulk Purchase AnnuitiesCorporates are de-ris

126、king their defined benefit pension scheme liabilities through Bulk Purchase Annuities(BPA)transactions in order to focus on their core businesses.This is fuelling increased demand for BPAs.Heritage M&APressure on insurance companies to focus their strategies,free-up capital trapped in Heritage books

127、,and to deal with cost inefficient legacy products and platforms,makes further consolidation in the UK market likely over time.c.4050bnof annual flowsc.80100bn of annual flowsc.4060bn of annual flowsc.435bn market opportunity Higher salary inflation and high levels of employment have accelerated gro

128、wth from our existing Workplace pension schemes.Despite cost-of-living pressures the vast majority of consumers are not opting out of making contributions into their workplace schemes.The Retail market has slowed down in this economic environment,with less switching of flows between providers.For Ph

129、oenix Group this is helpful,given our scale in-force book,as it helps us retain customers and extends their savings life cycle with us.Higher interest rates mean BPAs,both buy-ins and buy-outs,are more affordable for trustees,driving record levels of demand.We have clear structural growth opportunit

130、ies in the marketOrganic growthOpportunistic M&Awhich are accelerated by the current economic environmentM&A can add further scale to our businessWe can undertake M&A to:Acquire new customers Acquire capabilities See our Strategic priorities section on pages 24 to 29 for more information WealthLifet

131、ime2021Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic reportOur business modelA growing and sustainable businessWhat we doOur purposeHelping people secure a life of possibilitiesSaving for retirement Defin

132、ed contribution workplace pensions Retail savings for retirement Legacy pensions and savings productsTransitioning to retirement Pension consolidationSecuring income in retirement Income drawdown and individual annuities Defined benefit pension income Home equity release See our Investment case on p

133、ages 16 to 17Strong financial outcomes for our shareholders Sustainable,growing Operating Cash Generation that more than covers our recurring uses and progressive dividend Resilient balance sheet that supports investment,underpinned by our 140180%Shareholder Capital Coverage Ratio operating range Gr

134、owth in IFRS adjusted operating profit A progressive and sustainable ordinary dividend policy Additional positive outcomes for our other stakeholders Helping millions of people achieve a better longer life Managing the risks and opportunities presented by climate change to deliver good customer outc

135、omes Inspiring colleagues and attracting and developing new top talent See our Sustainability ReportAs the UKs largest long-term savings and retirement business,our focus is on offering the right retirement savings and income products that meet the needs of our customers today and in the future.How

136、we do itWe have made excellent progress in developing our capabilities to support organic growth.We are now investing to grow,optimise and enhance to build out our capabilities even further and increase efficiency.We want to improve the financial futures of our customers by offering a simple range o

137、f innovative retirement products and solutions to support them through their adult lives.Creating long-term valueUsing our scale and ambition,we are committed to creating long-term value for all our stakeholders.See pages 24 to 29 for Our strategic priorities See pages 22 to 23 for our products and

138、solutions For more information on our family of brands visit visionTo be the UKs leading retirement savings and income business.Key capabilities on the journey to our vision202020232026M&A execution and integrationA trusted and well-known consumer brand in Standard Life Competitive and capital-effic

139、ient BPA business Established and growing capital-light Workplace business In-house asset management capabilityInnovative retirement income solutionsAttractive Retail market propositionsDigital customer interface with personalised data,guidance and adviceSingle and efficient Group-wide operating mod

140、el2223Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Strategic reportStrategic reportOur business model continuedHelping customers journey to and through retirementWe focus on meeting the long-term savings and retirement needs of o

141、ur customers by providing the products they need through our family of brands,as they accumulate wealth through the savings phase,then transition to securing income in retirement.Saving for retirement Defined contribution workplace pensionsWith a Defined Contribution(DC)workplace scheme individuals

142、and typically their employer pay into their pension on a regular basis as they work.Standard Life is one of the leading UK providers that help employers and trustees set up high-quality,easy-to-run workplace pension schemes for their employees,and offer a leading digital interface for their employee

143、s to track and engage with their pension.Saving for retirement Legacy pensions and savings productsOver the years,Phoenix Group has grown through the acquisition of closed books of legacy pension and insurance policies from a number of companies.We are the market leader in the safe and efficient man

144、agement of legacy pensions and savings policies,with a strong track record of delivering better outcomes for customers of longstanding policies that are no longer sold in the wider market.Securing income in retirement Home equity releaseOur Mortgage Solutions business seeks to enable homeowners to a

145、ccess their property wealth in later life to financially support their retirement aspirations,by partnering with established lenders to fund innovative mortgage solutions in the market.Securing income in retirement Income drawdown and individual annuitiesIncome drawdown provides a flexible way for o

146、ur customers to take income from their pension pot as they can take out money whenever they like,while our individual annuity product offers pension savers secure guaranteed regular income certainty in retirement.Many customers have the need for a blend of both and Standard Life is working on a rang

147、e of innovative products to address this.We are delighted to have partnered with Standard Life,to provide long-term security and financial certainty for all members.Brian McGowan,Chairman of Chubb Pension Plan and Chubb Security Pension Fund Trustee BoardsSecuring income in retirement Defined benefi

148、t pension incomeAlso known as a final salary pension,a Defined Benefit(DB)pension pays out a guaranteed income to members for life through retirement,but they are generally no longer offered to employees.The remaining DB pension schemes are exposed to a range of market and demographic risks that the

149、 sponsoring employer is responsible for.To remove these risks and enhance benefit security for scheme members,sponsors and trustees look to insure some or all of their pension scheme obligations with a specialist insurance company like Standard Life.Transitioning to retirementPension consolidationFo

150、r people who have worked multiple jobs over the years,they may have been auto-enrolled into a number of pension plans by past employers,alongside any pension plans that they may have opened directly.With Standard Lifes pension transfer and consolidation expertise,customers can combine their pension

151、plans into a single plan,making things easier to track and manage.Standard Life has plans to launch direct advisory capability in the near future and continues to develop close relationships with third party financial advisers.Saving for retirement Retail savings for retirementWe help retail custome

152、rs both directly and indirectly via financial advisers by providing a range of pension and investment solutions to support their retirement ambitions,with a number of innovative new products and services in development that will be launched shortly.Customer engagement is at the heart of our proposit

153、ion and its why weve invested heavily in our app which is consistently highlighted by clients as a strength.Similarly,our dedicated Vulnerable Customer team means were set up to support the customers who need us most.Gail Izat,Managing Director of Workplace For more information visit standardlife.co

154、.ukA key part of our growth strategy is leveraging the power of the Standard Life brand which we utilise across our products to support customers as they save for,transition to and secure income in retirement.2425Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc An

155、nual Report and Accounts 2023Strategic reportStrategic reportHowever,due to the success we have had in building our scale and driving capital efficiency,we can now invest less capital going forward,while broadly maintaining our current volumes.We therefore expect to invest c.200 million of capital a

156、nnually from 2024.This also reflects our strategy of driving balanced growth and reflects the confidence we have in our future capital-light Pensions and Savings growth.We also successfully launched our Standard Life annuity product in September,for which initial feedback has been encouraging,demons

157、trating our ability to supplement our existing customer solutions.Investing in new and innovative products We have been investing to establish strong foundations and develop attractive propositions in the Retail market to become a leading consolidator for our customers.Our Retail business remains in

158、 net fund outflow at present,but through better supporting the 1-in-5 UK adults who are already Phoenix Group customers,we will be able to make significant inroads into stemming the annual outflows from our legacy products.Our commitment to invest a further c.100 million into our growth propositions

159、 across 20242026 will enable us to turn these outflows into inflows,as we leverage the changing market dynamics.For instance,we are optimistic that the FCAs recent Advice Guidance Boundary Review represents a step forward in addressing the persistent advice and guidance gap.The proposals outlined cr

160、eate the potential for financial services providers like us to offer a greater level of customer support and we will continue to engage with the regulator on this subject and review the services we are able to provide as a result of the ongoing consultation.In March 2024 we started piloting the Stan

161、dard Life Smoothed Return Pension Fund exclusively through the Fidelity Adviser Solutions platform,ahead of a full market launch later this year.We are also in the process of developing a number of new retirement income solutions which we hope to bring to market this year which will address customer

162、s needs for a combination of income certainty and flexibility.Engaging people in better financialfuturesWe set ourselves a 2023 target to deliver an awareness campaign reaching four million people on longer lives and under saving for retirement.We surpassed this target with our Lets Start Talking ca

163、mpaign reaching over 4 million people.Promoting financial wellnessStandard Life partnered with Moneyhub,to enhance our Money Mindset digital app and dashboard,providing access to over 1.5 million Workplace pension scheme members.By providing members with the relevant tools,content and information,Mo

164、ney Mindset allows customers to link,track and monitor their finances with the aim of improving their financial wellbeing.Phoenix Group has significant growth opportunities available,both through meeting more of our existing customers needs,on their journey to and through retirement,and by acquiring

165、 new customers as well.Given the significant market opportunities available to us(see our growth drivers on pages 18 and 19)we have consciously chosen to invest heavily in order to accelerate our organic growth.We also continue to engage people in their financial futures,and to advocate for broader

166、societal action to tackle under saving and encourage financial inclusion,which is a critical part of our commitment to our purpose.Delivering strong growth in our capital-light fee-based businesses Strong performance in Workplace has underpinned the growth in our capital-light fee-based business.Wor

167、kplace has a unique attractive characteristic whereby the growth is principally driven by high retention of existing customers.This enables us to benefit from the natural compounding effect of this business model,which comes from new joiners and salary inflation increases within existing schemes.Giv

168、en this characteristic it is extremely encouraging that we have not seen any material scheme losses in 2023 and do not anticipate any in 2024 either.In parallel our new scheme wins continue to accelerate,as we focus on the fast growing Master Trust segment of the market.Importantly we continue to wi

169、n larger schemes,in addition to the smaller ones.For example,in 2023 our c.2 billion of new Workplace scheme assets transferred included the transfer of the Siemens workplace scheme,one of largest scheme transfers to have been tendered in the UK market in recent years.We also expect to see further n

170、ew scheme assets transfer to Phoenix Group in 2024 and 2025 based on secured scheme wins,but this will grow as we win more schemes over the course of 2024,providing further momentum in both fund inflows and cash generation.We are confident of winning further schemes over time and are currently quoti

171、ng on a significant pipeline of new workplace schemes.Disciplined participation in a busy annuity market Within our Retirement Solutions business,the majority of the growth came from BPA,supported by a busy annuity market.We have been an active participant,writing 6.2 billion of premiums(2022:4.8 bi

172、llion),but remain disciplined in our approach.We will continue to grow our annuities business,to take advantage of the strong demand from corporates and consumers in this market.Priorities for 2024 Build a range of attractive Retail market propositions and innovativeretirement income solutions Inves

173、t c.200m p.a.into annuities Increase awareness of the pensions savings gap and motivate at least one million people to action through our brand campaign Supporting vulnerable customersThe needs of our customers are always changing and so it is important our services can adapt to meet these changing

174、needs.Our vulnerability strategy provides support for those most at risk of harm,and aims to continually raise standards across our industry.Our annual Vulnerable Customer Summits share best practice on how the industry can tackle the increasing issue of financial vulnerability in the UK.Our most re

175、cent one,in February 2024,was attended by over 80 institutions.Read the whitepaper hereGrowOur strategic priorities and KPIs Meeting more of our existing customers needs and acquiring new customers+72%2023 year-on-year increase in new business net fund flows(2022:3.9bn)APM6.2bnBulk Purchase Annuity(

176、BPA)premiums written(2022:4.8 billion)APM113New Workplace scheme wins(2022:76)2.7%BPA capital strain(pre-Capital Management Policy basis)(2022:3.2%)APM2023 highlights 1.5bn of new business long-term cash generation in 2023,achieving our 2025 target two years early Won one of the largest UK workplace

177、 transfers in recent years Successful launch of new individual annuity product Reached over 4 million people with our awareness campaign on longer lives and under saving for retirement2627Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts

178、2023Strategic reportStrategic reportPriorities for 2024 Enhance our asset and liability optimisation capabilities to support recurring management actions of c.400m per annum by 2026 Continued diversification of our asset portfolio and build-out of our directly sourced illiquid asset capability Begin

179、 deleveraging our balance sheet towards our c.30%Solvency II leverage ratio target by the end of 2026 Ensuring that we remain on track to meet our 2025 and 2030 interim targets on our way to net zero by 2050Taking action to reach net zero by 2050In 2023 we published our first Net Zero Transition Pla

180、n.This recognises the impact we can have as the UKs largest long-term savings and retirement business and puts the needs of our customers at its centre.We are focused on managing the risks whilst maximising the opportunities of climate change for customers.One of the key actions that we can take tow

181、ards net zero is to invest in climate solutions,but there are currently a number of barriers limiting both supply and demand of finance.That is why we partnered with campaign group Make My Money Matter to publish a report which outlined seven strategies for policymakers and regulators to unlock grea

182、ter investment by the UK pensions industry.See our Unlocking Climate Solutions reportOptimiseOur strategic priorities and KPIs continuedOptimise our in-force business2023 highlights Continued to deliver value accretive recurring management actions through our in-house asset management capability and

183、 by optimising our in-force balance sheet Strong capability developed for liquid and illiquid credit portfolio optimisation Published and implementing our Net Zero Transition Plan 303mRecurring management actions(2022:270m)APM176%Solvency II Shareholder CapitalCoverage Ratio(SCCR)(2022:189%)APM87%Il

184、liquid asset origination in sustainable and transition assets REM3.9bnSolvency II surplus(estimated)(2022:4.4bn)deployment of new business BPA transition asset portfolios,that are received from corporates.Here we can reinvest these individual portfolios,which are typically cash and gilts,into higher

185、 yielding liquid credit,and deliver enhanced risk adjusted returns.We also have a significant medium-term opportunity for recurring actions as we trade-up to our long-term illiquid asset allocation.Over the long-term we will also be able to source a wider range of illiquid assets through both our ex

186、panding strategic partnerships and the in-house direct origination capability we have now built.There is also a range of ongoing balance sheet efficiency actions available to us over time,including the regular ongoing capital model efficiencies we can deliver,as our risk profile changes and regulati

187、ons evolve.Looking forward,we are very confident that we can deliver a growing level of recurring management actions to c.400million per annum by 2026.This is supported by the further c.100 million investment we are making to enhance our asset and liability optimisation capabilities and the strong g

188、rowth we expect across our business.Using our scale to help create a better future Our certification as a signatory to the UK Stewardship Code in 2023 is a clear statement of our intent to manage the Environmental,Social and Governance(ESG)risks to which our business is exposed through active stewar

189、dship.We continue to be committed to integrating decarbonisation strategies into our portfolios.We see this commitment 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 being net

190、zero by 2050.We have worked with leading index providers to design customised equity benchmarks which will apply a decarbonisation tilt to our policyholder listed equity portfolio,with implementation commencing in 2024 and continuing in 2025.Building on the progress with decarbonising our policyhold

191、er assets,in 2023 we developed a decarbonisation strategy for our 12.5 billion shareholder corporate credit portfolio1.We intend to increase investments in net zero-aligned assets to 4050%of this portfolio by 2025,and 5070%by 2030.Finally,we exceeded our 5070%target with 87%of our illiquid asset ori

192、gination in the shareholder portfolio that are sustainable or transition assets in 20232 Maintaining a resilient balance sheet The high levels of cash generated in our business not only gives us the ability and flexibility to invest but also to maintain a resilient balance sheet.In line with recent

193、years,we plan to continue our approach of repaying M&A-related debt with surplus cash,and intend to repay at least 500 million of debt by the end of 2026.This will support us in targeting a Solvency II leverage ratio of c.30%3 by the end of 2026.Phoenix Group is a market leader in managing its in-fo

194、rce business for cash and ensuring a resilient capital position.The Groups cash generation stems from the emergence of surplus from our in-force business,which we enhance through the delivery of value accretive management actions,underpinned by the diversification of our portfolio and increasingly s

195、upported by the investments were making to enhance our asset management capabilities.In parallel,we deploy a comprehensive approach to risk management across our in-force business and we hedge the majority of our market risks including equity,interest rates and inflation.This brings resilience to ou

196、r Solvency II capital position.We are embedding sustainability throughout our business and across our strategic priorities.As a result,investing in a better future is a key part of optimising our in-force business,as we look to protect our customers from the risk of and maximise the opportunities pr

197、esented by climate change.Delivering recurring managementactions In 2023 we delivered 663 million(2022:739 million)of total management actions.Importantly though,303 million of these were recurring management actions.These are the day-to-day actions that we,and every other life insurance company tak

198、e,to optimise our in-force balance sheets.They“add value”which means they increase cash,capital and earnings.Over the last three years,we have invested in developing a highly-skilled in-house asset management team,whose day job is to optimise our assets and liabilities,and improve shareholder return

199、s.The continuous portfolio optimisation actions we undertake to optimise our assets,and the balance sheet efficiency actions to optimise our liabilities,mean that a significant,and growing proportion of our management actions,will be recurring over the long term.This includes the optimisation of our

200、 38 billion shareholder credit portfolio(2022:31 billion),where we can capture pricing dislocations across geographies,ratings and sectors.This is a sustainable source of recurring management actions,due to the dynamic nature of markets which will always create opportunities for us to enhance our ri

201、sk adjusted returns.For instance,in 2023,our asset management team completed c.$1 billion of bond rotations to and from sterling and dollar bonds,to enhance our risk adjusted returns and generate management actions.Our annuity asset allocation approach is another key area and this includes the rapid

202、 1 AUA as at year-end 2021.2 For definition of sustainable and transition assets see:Sustainable Finance:Classification Framework for Private Markets.3 Assuming economic conditions in line with 31 December 2023.2829Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc

203、Annual Report and Accounts 2023Strategic reportStrategic reportPriorities for 2024 Progress our ongoing migrations to Diligentas BaNCS platform Deliver initial cost savings as we simplify our operating modelCreating a way of working that works for our colleaguesWe know that people are generally look

204、ing for flexibility in the way they work as they navigate different stages of their life.We also recognise the importance of having a diverse intergenerational workforce.Phoenix Flex,our new approach to flexible working,is a key enabler by encouraging and celebrating flexibility at work,embracing ou

205、r differences and helping each of us to thrive.It can help those people raising families,those with caring responsibilities and those who are phasing up or down in their career.EnhanceOur strategic priorities and KPIs continuedTransforming our operating model and culture2023 highlights Completion of

206、 one of the largest ever UK Insurance Part VII transfers,of Standard Life and Phoenix Life Continued customer migrations to TCS Diligentas BaNCS platform Launched Phoenix Flex,our new approach to flexible workingc.700kCustomers migrated to TCS Diligenta in 2023+32Colleague engagement employee Net Pr

207、omoter Score(2022:+30)REMContinued migrations and driving scale efficiencies Looking forward,we will continue to progress our remaining migrations across Standard Life,ReAssure and Sun Life of Canada UK.In addition,as we progress on our strategic journey we are very focused on being more effective a

208、nd more efficient across our organisation,from both a customer and colleague perspective.This next phase is about building off the success of what weve had,taking the best from both Heritage and Open to create something new and improved.We will therefore invest c.500 million in our migration,transfo

209、rmation and cost efficiency programmes across 20242026,with around c.300m having been guided to previously.Importantly,these programmes will deliver cost efficiencies at scale as we bring together all of our businesses onto a single Group-wide operating model.Integral to this will be delivering furt

210、her Group cost efficiency activities,such as a range of organisational and governance simplification actions,and product and supplier rationalisation.Our focus on driving cost efficiencies will support c.250 million of annual cost savings by the end of 2026.Importantly,these cost savings will flow t

211、hrough to all of our key metrics,across our financial framework of cash,capital and earnings.Creating the best place any of us have ever workedAt Phoenix Group we want to be the best place any of us have ever worked,which means we need to provide a great colleague experience.To support this ambition

212、 we implemented Phoenix Flex earlier this year.This is our new approach to flexible working,empowering all of our colleagues to agree the flexible working arrangements that work for them and their teams.We also want Phoenix Group to reflect the customers we serve and the communities we operate in,an

213、d so we are striving to make sure our workplace is diverse.Building a diverse workforce allows us to attract the best talent,broaden our skill sets and widen our thinking.We made strong progress against our end-of-2023 Diversity,Equity and Inclusion targets although we did fall short on our gender d

214、iversity in senior leaders target;see pages of 32 and 33 of our Sustainability report for more detail.We report on our colleague engagement through an employee Net Promoter Score(eNPS),a broadly used and holistic metric that indicates how colleagues feel about working for Phoenix.We ended 2023 with

215、an eNPS score of+32,our highest ever eNPS score and+2 higher than our end-of-year 2022 score.1 Standard Life refers to Standard Life Assurance Limited and Standard Life Pension Funds Limited.2 Year end 2022 values.Enhancing our operating model and culture are key to our success.We do this by complet

216、ing our planned integrations and migrations,and through driving simplification to a single,Group-wide operating model that benefits both our customers and our colleagues.This supports us in delivering a seamless customer experience and enables us to further enhance our cost efficiency.Alongside this

217、,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.Progressing our integrations and migrations M&A activity and any subsequent integrations have historically created the most significant o

218、pportunities to enhance our operating model,above and beyond the management actions we take on a recurring basis to optimise the business.In November we reached a significant milestone by completing the Part VII transfer of Standard Life1 and Phoenix Life Assurance Limited businesses into Phoenix Li

219、fe Limited.This was one of the largest UK insurance Part VII transfers ever completed,bringing together the businesses of four legal entities,comprising c.8 million policies and c.200billion2 of assets into a single entity.We have a number of Part VII transfers in our plans as a result of other prev

220、ious acquisitions,including ReAssure and Sun Life of Canada UK.However,we are not expecting a similar scale of benefit for those Part VII transfers,as the business mixes are relatively similar to Phoenix Life Limited.During the year we successfully completed the migration of another c.700,000 Phoeni

221、x Life customers from Capita to TCS Diligentas BaNCS platform.Were now well over half way through this project with a total of over 1.2 million policies moved to BaNCS from the nearly 2 million in scope.We also delivered another significant milestone on our journey towards harmonised investment admi

222、nistration processes,as we migrated 12.3 billion of Phoenix Wealth Funds(c.700 funds)from our Investment Operations centre to HSBC Security Services.The objective was to harmonise our internal oversight model whilst ensuring the accurate and timely delivery of unit pricing,a key component in the end

223、-to-end servicing of all our Pension and Savings unit linked products.This allows us to deliver better value to our customers and shareholders by simplifying complex processes and systems.3031Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accou

224、nts 2023Strategic reportStrategic reportA strong performance in 2023Key financial performance metrics:20232022YOY changeCashTotal cash generation2,024m1,504m+35%New businessIncremental new business long-term cash generation1,514m1,233m+23%Net fund flows6.7bn3.9bn+72%DividendsTotal dividend per share

225、52.65p50.8p+3.6%Final dividend per share26.65p26.0p+2.5%IFRSAdjusted operating profit before tax1,2617m 544m+13%Loss after tax1,2(88)m(2,657)mN/ASolvency II capitalPGH Solvency II surplus3.9bn4.4bn-11%PGH Shareholder Capital Coverage Ratio 176%189%-13%ptsAssetsAssets under administration283bn259bn+9

226、%LeverageSolvency II leverage ratio36%34%+2%pts1 2022 restated comparative to reflect adoption of IFRS 17 2 Incorporates changes to the Groups methodology for determining adjusted operating profit since Half Year 2023 (see Note B.1 to the consolidated financial statements for further details).In 202

227、3 we have once again delivered a year of strong performance,as we execute on our strategy and fulfil our purpose.We have delivered another year of resilient cash generation,with 2.0 billion of total cash generated in 2023,exceeding our upgraded target of c.1.8 billion.With 5.2 billion delivered acro

228、ss 2021 to 2023,we have also therefore over-delivered our three-year cash generation target of 4.4 billion,by c.0.8billion.We saw a strong performance in our growth businesses,which increased our incremental new business long-term cash generation(NB LTCG)by 23%year-on-year to 1,514 million,and there

229、fore have achieved our 2025 target two years early.This was supported by new business net fund flows that grew 72%to 6.7 billion(2022:3.9 billion).Our Shareholder Capital Coverage Ratio(SCCR)of 176%remains towards the upper-end of our operating range of 140180%,but reduced given our investment into

230、growth,as well as our integration and transformation expenses.Similarly,our Solvency II(SII)surplus reduced to 3.9 billion,but remains resilient.Our key performance indicatorsWith our financial framework designed to deliver cash,capital and earnings,we recognise the need to use a broad range of metr

231、ics to measure and report the performance of the Group,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 36 to 37 and the IFRS financial statements are set out from

232、page 164 onwards.Alternative performance measuresIn 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.

233、We use a range of Alternative Performance Measures(APMs)to evaluate our business,including the below.Please see the APM section on page 312 for further details.Total cash generationCash generation represents the total cash remitted from the operating entities to the Group,supported by the Operating

234、Cash Generation(see below)and the release of free surplus above capital requirements in the Life companies,which is generated 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,in

235、terest costs and shareholder dividends,with any surplus then available to reinvest into organic and inorganic growth opportunities.Operating Cash Generation Operating Cash Generation(OCG)is a new reporting metric.It represents the sustainable level of cash generation in our life companies each and e

236、very year,that is remitted from our underlying business operations.It comprises the emergence of cash as in-force business runs off over time and capital unwinds,plus day one surplus from writing new business(net of day one strain for fee-based business),group tax relief and recurring management act

237、ions.In addition,it includes a small cash contribution from the release of the Capital Management Policy that we hold in our Life Companies.The measure provides the sources of recurring organic cash generated which can be used to support sustainable cash remittances from the Life Companies,which in

238、turn supports the Groups dividend,group costs and debt interest as well as funding investment to generate sustainable growth.Incremental new business long-term cash generationIncremental new business long-term cash generation is a key metric for measuring growth.It represents the operating companies

239、 cash generation that is expected to arise in future years as a result of new business transacted in the period.New business net fund flows Represents the aggregate net position of assets under administration inflows less outflows for new business.Adjusted operating profitThe Group uses adjusted ope

240、rating profit as a measure of IFRS performance based on long-term assumptions.Adjusted operating profit is less affected by the short-term market volatility driven by Solvency II hedging(as illustrated on page 36)and non-recurring items than IFRS profit.A more detailed definition of adjusted operati

241、ng profit is set out on page 312.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).

242、The excess value above the SCR is reported as both a financial amount,Solvency II surplus,and as a ratio Solvency II Shareholder Capital Coverage Ratio(SCCR).Solvency II leverageThe Group seeks to manage the level of debt on its balance sheet by monitoring its financial leverage ratio.Solvency II le

243、verage is calculated as the Solvency II value of debt divided by the value of Solvency II Regulatory Own Funds.Values for debt are adjusted to allow for the impact of currency hedges in place over foreign currency denominated debt.The progress we have made in executing our strategic priorities has e

244、nabled us to deliver a strong set of results in 2023,and supported the Boards decision to recommend a 2.5%increase in the Final 2023 dividend.Rakesh Thakrar,Group Chief Financial OfficerIn Retirement Solutions,we continue to adopt a disciplined approach to Bulk Purchase Annuities(BPA)and have been s

245、uccessful in reducing our capital strain.In September,we also launched a new individual annuity product,our first that is available in the openmarket.From an M&A perspective,we successfully completed the acquisition of Sun Life of Canada UK(SLOC)in April with the integration progressing well.In summ

246、ary,2023 has been another year of clear strategic progress,that has supported the delivery of a strong set of results.We continue to deliver sustainable and resilient cash generation,which underpins our new progressive and sustainable ordinary dividend policy.Our Solvency capital position also remai

247、ns highly resilient,and can support the investment to grow,optimise and enhance our business going forward.An evolved financial framework for the next phase of our journey We are introducing our evolved financial framework that focuses on the three financial outcomes we deliver for our shareholders:

248、cash,capital and earnings.Phoenix has always managed its business for cash and capital,but our evolved key metrics provide clearer line of sight to the underlying business performance and more comparability with peers.We are also elevating the importance of IFRS earnings in our framework,following t

249、he transition to IFRS 17.The key metrics we use can be seen here Our strong overall performance this year has therefore enabled the Board to recommend a dividend increase of 2.5%for the year.In terms of our IFRS earnings,the Groups adjusted operating profit grew 13%to 617 million,supported by 27%gro

250、wth in our Pensions and Savings business and an 8%increase in our Retirement Solutions business.While we reported an IFRS loss after tax of 88 million,this was a 2,569 million improvement on 2022.The loss in 2023 was primarily driven by(781)million of non-operating items,as outlined on page 36.The s

251、egmental information given reflects the Groups new operating segments,further information is provided in note B.1 on page 180.Clear strategic progressWe have made significant strategic progress in delivering sustainable organic growth.In Pensions and Savings,our Workplace business continues to see a

252、n attractive retention rate with existing clients but is also now winning new larger schemes.Our Retail business remains in net outflow,but we have a clear strategy to address this over the coming years,by investing to deliver compelling customer propositions.Delivering sustainable cash generationBu

253、siness review202220232025 target1,066m934m249m50m53m395m1,233m1,514mc.1.5bn+23%Retirement SolutionsPensions and SavingsEurope and OtherSurplusemergenceRecurringmanagementactionsReleaseof CapitalManagementPolicyOthermanagementactionsRelease ofexcess capitalTotal cashgenerationOperating Cash Generatio

254、nOperating surplus generationNon-operatingcash generationDividend,operating costs and debt interestAnnuities capitalc.0.1bn Growth propositionsMigration,transformation and cost efficiencyc.0.1bn Asset and liability optimisation capabilitiesDebt repaymentHoldCo cashHoldCo cashNon-operatingcash genera

255、tionOperating Cash GenerationRecurring usesc.0.9bnc.0.5bnc.0.5bnc.0.6bnc.2.7bnc.3.7bnc.0.7bn1.0bnGrowOptimiseEnhanceInvestment priorities:20242026 Total Cash Generation of 4.4bn3233Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and Accounts 2023Str

256、ategic reportStrategic report2,024m Total cash generation REM APM1,514m Incremental new business long-term cash generation REM APMCashBusiness review continuedNon-operating cash outflows were 111 million(2022:395 million).This primarily comprises centrally funded projects and investments totalling 3

257、07 million.Of this,129 million relates to Group project expenses for the transition activity in relation to legacy platform migrations,18 million for other ongoing integration programmes including ReAssure and SLOC,56 million of investment related to our growth propositions,and 12 million for our Fi

258、nance Transformation.These costs were partially offset by a 196 million inflow in respect of net collateral cash and hedge close-outs.Debt repayments and issuance in 2023 reflect the debt re-terming exercise we undertook in the fourth quarter.The shareholder dividend of 520 million represents the pa

259、yment of 260 million in May for the 2022 Final dividend and the payment of the 2023 Interim dividend of 260 million in September.Funding of 288 million(2022:285 million)has been provided to the Life companies to support another strong year in BPA with 6.2 billion of premiums written(2022:4.8 billion

260、).The Groups success in further optimising its capital efficiency is reflected in the reduction of the Groups capital strain on BPA to 2.7%(2022:3.2%)on a pre-Capital Management Policy(CMP)basis,including the benefit of the Solvency II reform risk margin reduction.This enabled the Group to write inc

261、reased NB LTCG but with a similar level of capital invested.Strong incremental new business long-term cash generationOperating Cash Generation is expected to more than cover our recurring uses and generates surplus to invest into our businessWe are introducing Operating Cash Generation as a new metr

262、ic to demonstrate the long-term sustainability of our business modelIntroducing Operating Cash GenerationAs part of our evolved financial framework we are introducing Operating Cash Generation(OCG)as a new alternative performance metric to demonstrate the long-term sustainability of our cash generat

263、ion.OCG is the combination of the operating surplus emerging and recurring management actions.It represents the sustainable surplus generation remitted from our Life Companies to the Group Holding Company.OCG can be easily reconciled to operating surplus generation(OSG),with the bridge being the sma

264、ll release of the Capital Management Policy(CMP)held in our Life companies.OCG totalled 1.1 billion in 2023,comprising 0.8 billion of surplus emergence and 0.3 billion of recurring management actions.Outlook We will grow OCG sustainably over the long term through investing our surplus cash across ou

265、r three strategic priorities of Grow,Optimise and Enhance.Group cash flow analysism20232022Cash and cash equivalents at 1 January503963Total cash generation12,0241,504Uses of cash:Operating expenses(97)(78)Pension scheme contributions(16)(16)Debt interest(229)(244)Non-operating cash outflows(111)(39

266、5)Debt repayments(350)(450)Debt issuance346Shareholder dividend(520)(496)Total uses of cash(977)(1,679)Support of BPA activity(288)(285)Cost of Sun Life of Canada UK acquisition(250)Closing cash and cash equivalents at 31 December1,0125031 Total cash receipts include 219 million received by the hold

267、ing companies in respect of tax losses surrendered(2022:55 million).Total cash generationCash generation represents cash remitted by the Groups operating companies to the holding companies.Please see the APM section on page 312 for further details of this measure.Cash generation is principally used

268、to fund the Groups operating costs,debt interest and repayments,investment into growth and shareholder dividends.Excess cash is available for investment into the business and/or additional shareholder returns.The cash flow analysis that follows reflects the cash paid by the operating companies to th

269、e Groups holding companies,as well as the uses of those cash receipts.Cash receipts Total cash generated by the operating companies during 2023 was 2,024 million(2022:1,504 million).This exceeded the Groups upgraded target of c.1.8 billion for the year,due to additional management actions being deli

270、vered.Uses of cashOperating expenses of 97 million (2022:78 million)represent corporate office costs,net of income earned on holding company cash and investment balances.The increase compared to 2022 reflects the investment we have made in our Group capabilities to support our growth strategy,Debt i

271、nterest of 229 million(2022:244 million)reflects interest paid in the period on the Groups debt instruments.The decrease year-on-year is due to the repayment of debt in July 2022.Incremental new business long-term cash generationNB LTCG reflects the impact on the Groups future cash generation arisin

272、g as a result of new business transacted in the year.It is stated on an undiscounted basis.In 2023 we delivered another record year of organic new business growth including NB LTCG of 1,514 million(2022:1,233 million),enabling us to achieve our 2025 target two years early.Strong growth in our capita

273、l-light fee-based business,Pensions and Savings,led to a contribution of 395 million(2022:249 million).Our disciplined approach in a buoyant BPA market drove an increase in NB LTCG in our Retirement Solutions business to 1,066 million(2022:934 million).Europe and Other contributed 53 million(2022:50

274、 million).We will Grow by investing c.100 million into our growth propositions and by continuing to grow our annuities business with c.200 million of capital invested annually.This will support strong growth across our Pensions and Savings and Retirement Solutions businesses.As we Optimise,we will d

275、eliver recurring management actions of c.400 million per annum by 2026,supported by c.100 million investment in our asset and liability optimisation capabilities and as our business grows.As we Enhance our business,we will continue to migrate customers and drive through cost efficiencies that will d

276、eliver c.250 million of annual cost savings by the end of 2026.Together these will increase OCG by c.25%from 1.1 billion in 2023 to 1.4 billion in 2026.After which we expect it to grow at a sustainable mid-single digit growth rate over the long term.Future sources and uses of total cash generationWh

277、ile OCG is our new primary metric,total cash generation remains very important,as we invest across our strategic priorities.We have set a new total cash generation target of 4.4 billion across 20242026,that will enable us to cover our recurring uses,pay our growing dividend and invest in our busines

278、s.We expect to generate c.3.7 billion of OCG over this period,which will more than cover our recurring uses and our planned investment of capital into annuities each year.In addition we expect to generate a further c.0.7 billion of non-operating cash generation across 20242026 comprising other manag

279、ement actions and the release of historic excess capital that has built up in our Life Companies.That provides us with a significant amount of surplus cash that we can invest across our strategic priorities.Our HoldCo cash position is a healthy 1billion today,which we expect to remain broadly consis

280、tent over 2024 to 2026.FY23FY226.7bn7.2bn11.1bn11.1bnOwn FundsSCROwn FundsSCR153%166%Surplus4.4bnSurplus3.9bnFY23FY224.9bn5.0bn9.3bn8.9bn176%189%Surplus4.4bnSurplus3.9bnSurplus asat FY22RecurringmanagementactionsSurplusemergenceOthermanagementactionsOperating costs,debt interest and dividendNew busi

281、nessstrainEconomicsInvestment ingrowthConsumerDutyOtherSurplus asat FY234.4bn3.9bn0.8bn0.3bnOperating surplus generation(OSG)0.4bn(0.9)bn(0.3)bn(0.3)bn(0.1)bn(0.1)bn(0.3)bn189%+20%+7%+16%(19)%(10)%(9)%(3)%(2)%(13)%176%3435Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdin

282、gs plc Annual Report and Accounts 2023Strategic reportStrategic report3.9bn Group Solvency II surplus(estimated)176%Group Solvency II shareholder capital Coverage Ratio(estimated)APMCapital Capital management A Solvency II capital assessment involves a valuation in line with Solvency II principles o

283、f the Groups Own Funds and a risk-based assessment of the Groups Solvency Capital Requirement(SCR).The Groups Own Funds differ materially from the Groups IFRS equity for a number of reasons,including the recognition of future shareholder transfers from the With-Profits funds and future management ch

284、arges on investment contracts,the treatment of certain subordinated debt instruments as capital items,and a number of valuation differences,most notably in respect of insurance contract liabilities,taxation and intangible assets.Group Solvency II capital position Our Solvency II capital position rem

285、ains strong and resilient,with a surplus of 3.9 billion(2022:4.4 billion),after the accrual for the deduction of our 2023 Final dividend of 267 million.Our SCCR reduced marginally to 176%(2022:189%)but remains towards the upper-end of our 140180%operating range,providing the capacity to continue inv

286、esting to grow,optimise and enhance our business.Change in Group Solvency II surplus and SCCR Operating surplus generation increased the SII surplus by 1.1 billion,contributing to an increase in the SCCR of 27%pts.This was comprised of our ongoing surplus emergence which increased the SII surplus by

287、 0.8 billion during the year and recurring management actions of 0.3 billion.Other management actions increased the SII surplus further by 0.4 billion and added 16%pts to the SCCR.Business review continuedOperating costs,debt interest and dividend totalled 0.9 billion,reducing the SCCR by 19%pts.We

288、have also chosen to invest 0.4 billion of surplus capital into growth.This includes 0.3 billion of capital investment to fund 6.2 billion of BPA premiums written in the year,reducing the SCCR by 10%pts,and 0.1bn of investment into our organic growth propositions,reducing the SCCR by a further 3%pts.

289、Our comprehensive hedging strategy is designed to protect our capital position.In 2023 this led to a small adverse impact from economic variances of(0.3)billion on our Solvency II surplus.This included a(0.1)billion adverse impact from unhedged gilt-swap spread movements,as well as adverse currency

290、movements and some other smaller adverse impacts.We are on track for the effective date for Consumer Duty on back-book products in July.Our ongoing focus on ensuring good outcomes for Heritage customers means we have identified only a small number of products that we believe need addressing in advan

291、ce of the compliance date.We have set aside a prudent c.70 million of Solvency II capital to reflect the impact of the possibility of introducing further charging caps on certain products,reducing the SCCR by 2%pts.Other movements include the benefit of the Solvency II risk margin reform and favoura

292、ble longevity assumption changes.These were offset by the strengthening of expense provisions associated with our transformation projects,in addition to a net adverse impact arising on the completion of the SLOC acquisition.Overall,these movements decreased Solvency II surplus by 0.3 billion and the

293、 SCCR by 13%.Sensitivity and scenario analysisAs part of the Groups internal risk management processes,the Own Funds and regulatory SCR are regularly tested against a number of financial scenarios.The table provides illustrative impacts of changing one assumption while keeping others unchanged and r

294、eflects the business mix at the balance sheet date.Extreme market movements outside of these sensitivities may not be linear.While there is no value captured in the Group stress scenarios for recovery management actions,the Group does proactively manage its risk exposure.Therefore in the event of a

295、stress,we would expect to recover some of the loss reflected in the stress impacts shown.Unrewarded market risk sensitivities We have a low appetite to equity,interest rate,inflation and currency risks,which we see as unrewarded,i.e.the return on capital for retaining the risk is lower than for hedg

296、ing it.In order to stabilise our Solvency II surplus,we regularly monitor risk exposures and use a range of hedging instruments to remain within a Board-approved target range.Equity risk primarily arises from our exposure to a variation in future management fees on policyholder assets exposed to equ

297、ities,while our currency exposure primarily arises from our foreign currency denominated debt.Our interest rate exposure principally relates to our shareholder credit portfolio,while our inflation exposures arises from both cost inflation expectations and inflation-linked policies.Rewarded market ri

298、sk sensitivities We do however retain the credit risk in our c.38 billion shareholder credit portfolio,and property risk in equity release mortgages,where we see these risks as rewarded.The shareholder credit assets are primarily used to back the Groups annuity portfolio.Exposure to these risks is n

299、eeded to back growth in the Groups annuity portfolio.Stress testing is used to inform the level of risk to accept and to monitor exposures against risk appetite.We actively manage our portfolio to ensure it remains high quality and diversified,and to maintain our sensitivities within risk appetite.O

300、ur portfolio is c.99%investment grade and we have suffered no defaults,testament to the proactive approach taken by our in-house asset management team.We also remain conservative in our property exposure.We have c.4.5 billion of our credit portfolio exposed to equity release mortgages,which are all

301、UK-based with an average rating of AA and average loan-to-value(LTV)of 33%,and c.1.1 billion in commercial real estate which is high quality and all UK-based with an average LTV of 47%.The full sensitivity we focus on for credit is a full letter downgrade of 20%of our credit portfolio,which is(0.3)b

302、illion and is therefore small relative to the Groups 3.9 billion Solvency II surplus.Managing demographic risksWe have three key demographic risks lapse risk from early surrenders,longevity risk on our annuity portfolio and mortality risk on our protection book.We manage lapse risk through our stron

303、g customer proposition.Our longevity risk principally arises from our annuity book,but this is managed through reinsurance.We retain around half of this risk across our current in-force book,and reinsure most of this risk on new business.Mortality risk arises from our protection business and we seek

304、 to manage this as part of a well-diversified portfolio.Life Company Free SurplusLife Company Free Surplus represents the Solvency II surplus for the Life Companies that is in excess of their Board-approved CMPs.It is this Free Surplus from which the Life Companies remit cash to Group.We retain a si

305、gnificant Life Company Free Surplus of 2.2 billion which provides resilience to the Groups long-term cash generation.Solvency II capital outlook We maintain a 140180%SCCR operating range,which reflects our low sensitivity to economic volatility due to our comprehensive hedging.We have been at the to

306、p-end of our range for the past three years,but will invest some of this surplus as we transform our business,with the investment more front-end weighted across 20242026.In addition,our intention to repay at least c.500 million of debt by the end of 2026 will also reduce our SCCR over the coming yea

307、rs.Leverage We manage our leverage position by considering a range of factors including our cash interest cover,the interplay of our balance sheet hedging,and our capital tiering headroom.It also includes a number of output metrics that we monitor,such as the Fitch leverage ratio and Solvency II lev

308、erage ratio.Our approach to leverage has always been to increase leverage to support M&A and then pay down that debt with surplus cash as it emerges.Since 2020 the Group has repaid c.800 million of debt through this approach.As at 31 December 2023,our Solvency II leverage ratio was 36%(2022:34%).Thi

309、s increased in 2023,largely due to our investment in growth,integration and transformation.The Groups Fitch leverage ratio was 23%compared to full year 2022 on a restated basis of 23%,and is favourably below Fitchs stated range of 2530%for an investment grade credit rating.We plan to continue our ap

310、proach of repaying M&A-related debt with surplus cash,and subject to regulatory approval,we intend to repay at least 500 million of debt by the end of 2026,including the 250 million Tier 2 bond that is callable in June 2024.This will support us in achieving a c.30%1 Solvency II leverage ratio by the

311、 end of 2026.This is a steady-state level of leverage that we will believe is the appropriate for our business,absent M&A.1 Assuming economic conditions in line with 31 December 2023.3.9 billion Group Regulatory Solvency II surplus3.9 billion Group Shareholder Solvency II surplus2023 change in Group

312、 Solvency II surplusEstimated impact on PGH Solvency II1Surplus bnSCCR%Solvency II base3.9176Equities:20%fall in markets0.15Long-term rates:100bps rise in interest rates20.16Long-term rates:100bps fall in interest rates2(0.1)(5)Long-term inflation:50bps rise in inflation3(0.1)(1)Property:12%fall in

313、values4(0.2)(5)Credit spreads:135bps widening with no allowance for downgrades5(0.2)(4)Credit downgrade:immediate full letter downgrade on 20%of portfolio6(0.3)(9)Lapse:10%increase/decrease in rates7(0.1)(1)Longevity:6 months increase8(0.4)(8)1 Illustrative impacts assume changing one assumption on

314、1 January 2024,while keeping others unchanged,and that there is no market recovery.They should not be used to predict the impact of future events as this will not fully capture the impact of economic or business changes.Given recent volatile markets,we caution against extrapolating results as exposu

315、res are not all linear.2 Assumes the impact of a dynamic recalculation of transitionals and an element of dynamic hedging which is performed on a continuous basis to minimise exposure to the interaction of rates with other correlated risks including longevity.3 Rise in inflation:15yr inflation+50bps

316、.4 Property stress represents an overall average fall in property values of 12%.5 Credit stress varies by rating and term and is equivalent to an average 135bps spread widening.It assumes the impact of a dynamic recalculation of transitionals and makes no allowance for the cost of defaults/downgrade

317、s.6 Impact of an immediate full letter downgrade across 20%of the shareholder exposure to the bond portfolio(e.g.from AAA to AA,AA to A,etc.).This sensitivity assumes management actions are taken to rebalance the annuity portfolio back to the original average credit rating and makes no allowance for

318、 the spread widening which would be associated with a downgrade.7 Assumes most onerous impact of a 10%increase/decrease in lapse rates across different product groups.8 Only applied to the annuity portfolio.As at FY22CSM(net of tax)ShareholdersequityAdjustedoperating profitbefore taxNon-operating it

319、emsTax creditOther comprehensive income(OCI)for the periodDividends paid on ordinary sharesMovementin CSM(net of tax)As atFY235.2bn2.0bn3.2bn2.5bn2.1bn4.6bn0.6bn0.1bn(0.8)bn(0.1)bn0.2bn(0.5)bn3637Phoenix Group Holdings plc Annual Report and Accounts 2023Phoenix Group Holdings plc Annual Report and A

320、ccounts 2023Strategic reportStrategic report617m Adjusted operating profit before tax APM4.6bn Adjusted shareholders equity APMEarnings IFRS results IFRS(loss)/profit is a GAAP measure of financial performance and is reported in our statutory financial statements on page 164 onwards.Adjusted operati

321、ng profit before tax is a non-GAAP financial performance measure based on expected long-term investment returns.It is stated before amortisation and impairment of intangibles,other non-operating items,finance costs and tax.Please see the APM section on page 312 for further details of this measure.On

322、 1 January 2023,the Group adopted the new accounting standard,IFRS 17:Insurance Contracts,with comparatives restated from 1 January 2022.IFRS 17 requires a company to recognise profits as it delivers insurance services(rather than when it receives premiums)and to provide information about insurance

323、contract profits the company expects to recognise in the future.The impact of the transition to IFRS 17 is set out in note A2.1.IFRS loss after tax attributable to ownersThe Group generated an IFRS loss after tax attributable to owners of 88 million(2022:loss of 2,657 million).The improvement versus

324、 2022,primarily reflects a 3,456 million improvement in economic variances due to a much lower level of market volatility in the period,particularly interest rates.This has been partially offset by an increase in non-operating items as a result of our investment into growth in the period and ongoing

325、 migrations and transformation.Basis of adjusted operating profitAdjusted operating profit is based on expected investment returns on financial investments backing business where asset returns accrue to the shareholder and surplus assets over the reporting period,with allowance for the corresponding

326、 expected movements in liabilities(being the interest cost of unwinding the discount on the liabilities).Adjusted operating profit includes the unwind of the Contractual Business review continuedService Margin(CSM)and risk adjustment attributable to the shareholder.The principal assumptions underlyi

327、ng the calculation of the long-term investment return are set out in note B 2.1 to the IFRS consolidated financial statements.Adjusted operating profit includes the effect of variances in experience relating to the current period for non-economic items,such as mortality and expenses.It also incorpor

328、ates the impacts of asset trading optimisation and portfolio rebalancing where not reflected in the discount rate used in calculating expected return.Any difference between expected and actual investment return,along with other economic variances described further in note B1.1 are shown outside of a

329、djusted operating profit.Adjusted operating profit is net of policyholder finance charges and policyholder tax.Adjusted operating profitThe Group increased adjusted operating profit by 13%to 617 million(2022:544 million).This primarily reflects strong growth in our Pensions and Savings business,whic

330、h delivered adjusted operating profit of 190 million,an increase of 27%year-on-year(2022:150 million).This was largely driven by higher AUA resulting in increased charges,and an improved margin through operating leverage.Our Retirement Solutions business delivered an adjusted operating profit of 378

331、 million(2022:349 million).The 8%increase year-on-year primarily reflects a higher expected investment margin as a result of higher risk-free rates.The positive impact of BPA new business on CSM amortisation has offset the run-off of the remaining annuity book despite the phasing of a significant pr

332、oportion of new business in late 2023.With-Profits adjusted operating profit declined to 10 million(2022:54 million)in line with the expected run-off profile of the investment contract profits to which it relates.The amortisation and impairment of acquired in-force business during the period of 316

333、million(2022:347 million)has decreased year-on-year reflecting the impact of the business run-off.Amortisation and impairment of other intangible assets totalled 6 million in the period(2022:6 million).Other non-operating itemsOther non-operating items in the period totalled a 439 million loss(2022:262 million loss),inclusive of a 66 million gain recognised on the Sun Life of Canada UK acquisition