Phoenix Group Holdings plc

Thank you Claire and good morning everyone and welcome to Phoenix's 2025 half year results. Today I'll start with a summary of the progress we've made. Nick will then take you through the first half financial performance and I will close with an overview of some of the strategic developments we'll be delivering over the coming months before taking your questions. Last March I set out our vision to become the UK's leading retirement savings and income business helping more people on their journey to and through retirement. Today marks the halfway point of our three-year strategy and there are three key messages I'd like you to take away. The first is that we're making strong progress on executing against our strategic priorities. We're meeting more of our customers' needs and driving organic growth. Second, I'm particularly pleased that this set of results evidences that the balance sheet pivot is beginning to show. so we can confidently say we're on track to deliver all of our financial targets. And third, what I'm most excited about is that we're uniquely positioned to capture the momentum in our structurally growing markets. Progress towards achieving our vision is delivered through our strategic priorities of grow, optimise and enhance. We've achieved a number of material strategic milestones already this year. To grow, we need the products which meet the needs of our customers and build out our ability to engage with them both directly and through advisors. From an engagement perspective, it's great that we've received approval from the SCA for our in-house advice proposition, which will launch later this year. And from a product perspective, we've launched the standard life guaranteed lifetime income fund, completing our full product suite. So we're now able to help customers at every stage of their retirement journey from when they first start saving right into later life. Within Optimise, we've taken a material step forward on the journey to in-housing the asset management of annuity-backing assets that I spoke to you about back in March. And we're currently preparing to in-house a further £20 billion, which I'll come on to later. Lastly, Enhance. Key here is completing the migration of customer administration to modern technology-enabled platforms. We migrated a further 0.8 million policies onto the TCS banks platform in the first half. We also entered into a new strategic partnership with Wipro to manage an additional 1.9 million policies. This delivers an acceleration in our cost savings run rate and increases execution certainty as we are no longer migrating these policies. Progress against our strategic priorities is translating directly into attractive financial outcomes. And hence, our first-task performance has been strong across our financial framework of cash, capital and earnings. Operating momentum is excellent, with 9% growth in operating cash generation and 25% growth in IFRS-adjusted operating profits. And I'm particularly pleased with capital, where our solvency capital coverage ratio grew from 172% at the end of last year to 175% at the half year, even after retiring £200 million of debt. Our leverage ratio improved from 36% to 34%, taking us a step closer to our 30% target. And we are materially accelerating delivery of our cost savings target. So, firmly on track across the board. The UK retirement savings and income market is already huge, with over 3.5 trillion pounds of stock. It's also structurally growing, driven by a range of demographic and socioeconomic trends. Summarising the grey boxes across the top, there are two themes I'll draw out. Firstly, the structural growth is driven by the ageing population and the shift from defined benefit to defined contribution. Secondly, people simply are not on track to have saved enough for a decent standard of living in retirement. And most are doing this without any advice or guidance. We feel passionate about helping everyone achieve financial security in retirement. And it's a huge opportunity for us. we will continue to advocate for the changes that will make the biggest difference to our customers. So I'm really encouraged by recent regulatory and political proposals that create additional tailwinds to our industry, as outlined in the orange boxes on the slide. These will accelerate the existing structural growth drivers in the market. As a top three player in workplace, we're already well in excess of the £25 billion minimum threshold requirement for default funds, as set out in the Government's Pension Scheme Bill. So we are ready to take on business from corporates who need a secure provider. We think the Pension Adequacy Review must raise savings levels through an increase in auto-enrolment contribution rates to help close the pension savings gap. And the introduction of targeted support and pensions dashboard has the potential to be a game changer for engaging customers and helping them make better financial decisions. We are well positioned to benefit from these structural market drivers. Turning to slide eight, the top of the slide shows how those market trends are driving substantial flows across the savings and retirement market. The bottom half of the slide sets out our ambition and strategy where our business mix is diversified and balanced across the key markets we operate in. We are the only at scale UK player focused solely on the retirement savings and income market via workplace, retail and annuities. And we're already taking a good share of flows in each, but with plenty of upside potential. Specifically in workplace, our ambition is to consolidate our top three position as that market grows strongly and consolidates down. In retail, we're looking to move from a top 10 to a top five position and we'll continue to focus on this. And in retirement solutions, we aim to maintain a top five position. These clear ambitions are underpinned by robust strategies supported by the strength of our franchise, brand, customer base and product set. Essential to a robust strategy is being crystal clear on how we are well positioned to win share in these growing markets. And this starts with the three competitive advantages of the group. Customer engagement is key, and with one in five UK adults being customers of Phoenix, including a large existing workplace book, we have an exceptional level of customer access. This gives us deep customer insights, which in turn supports how we develop and design propositions. We also benefit from capital efficiency from our diversified business model, comprising both capital-like fee-based and capital-utilising spread-based businesses. And we have cost advantages underpinned by our scale with 12 million customers and which have been achieved by leveraging technology across our business. This will increase further through our cost savings program. These three group advantages then directly translate to the specifics needed in our customer offerings in each market. Taking Workplace as an example, on the bottom left of the slide, where we're one of the top three players in the market. I regularly meet our employee benefit consultant partners and they consistently tell me that we win by having excellent customer engagement through offering leading employer propositions as we truly understand what customers, both employers and their employees, want and need. Offering excellent service is also key to winning. When I was in Edinburgh at a workplace pitch last week, it was clear that providing their employees with exceptional service is critical. Our ability to succeed here is underpinned by our strong digital capabilities, which include our market leading app, rated 4.7 stars on the App Store. Alongside this, our capital and cost efficiency and inherent scale mean we can offer our products at competitive prices while delivering attractive margins. Let me now touch on some of the activity the teams have been doing to enable us to keep winning in these markets from both an engagement and product perspective, starting with pensions and savings. Engagement is key here. On this slide, I call out the imminent launch of our retail advice proposition that I mentioned earlier. So as we start to roll out trusted in-house advice, we'll provide customers with a compelling reason to stay with Standard Life. To be clear, we'll start small here and scale over time. In partnership with digital engagement specialist Life Moments, we've launched Family Finance Hub. And Standard Life also completed its connection to the pension dashboard ecosystem, both being examples of ways we've looked to empower our customers and increase engagement with them. Testament to our commitment to excellent service, we are the first workplace provider to win the Master Trust treble. across the Pensions Corporate Advisor, PensionsAge and Professional Pensions Awards. I'm really proud of the team for this external recognition. From a financial perspective, our pensions and savings business is simple. It's about growing assets, which we've done, and it's about expanding margins, which we've also done. Together, this delivered 20% growth in operating profit. We've also continued about winning products for customers in retirement solutions. We launched the standard life guaranteed lifetime income plan for advisors on the Fidelity platform in March. Separately, we've enhanced our BPA offering. Many DB schemes have existing longevity reinsurance and we've leveraged our extensive expertise to innovate these into a BPA transaction. What does this mean? It means we're better placed to win by helping corporates with their broad range of requirements. As proof, this, among other innovations, enabled us to complete our largest ever BPA deal in July, worth £1.9 billion. This particular transaction was the in-house scheme of a large employee benefit consultant, so a really positive testament to our proposition. The other item I call out on this slide is the launch of the UK's first fully digital, signature-free application for annuities. As you'll know from your own experiences, having a hassle-free digital experience is increasingly important, so we're always looking at ways to make our customer journeys easier. Looking at the financials, Nick will come on to the actual annuity volumes in the first half, which were relatively modest, but we've now secured over 3 billion of BPAs, with individual annuities performing strongly too. Of course, our focus remains on value, not volume, and our execution here enabled 36% growth in profits. To optimise customer outcomes and enhance returns, we've been evolving our approach to asset management. Historically, we've had an outsourced operating model for all assets. For our pensions and savings business, which represents the majority of our assets, this strategy is unchanged. Moving forward, we expect to consolidate the number of asset managers we partner with, and Aberdeen continues to be our key asset management strategic partner, potentially attracting a greater share of these assets. As signalled in March, our strategy for the management of the annuity backing assets is evolving to one which is predominantly in-house. We will leverage the internal capabilities we have built to manage public credit and private assets alongside partnering to source differentiated and unique private assets. We're now managing 5 billion of our 39 billion portfolio in-house and are preparing to in-house a further 20 billion. To be clear, this in-housing only covers our annuity backing assets. We have no intention of becoming a fully-fledged asset manager nor are we looking to manage third-party assets. But we're excited about the benefits this brings by underpinning the delivery of management actions in annuity portfolio re-optimization and with greater cost efficiency. Our strategic execution is creating financial flexibility for the future. This chart focuses on operating cash generation. This is the most important way to look at our financials because it's the sustainable surplus generation in our life operating companies but it's also remitted as dividends up to the holdco. Hence, it's the primary driver of shareholder dividends. We reiterate our ongoing target of mid-single digit percentage growth for the full year and going forwards. This level of cash generation not only means that our dividend of circa £550 million is well covered and secure, but also generates at least £300 million of excess cash per annum after financing our recurring uses. We will deploy this excess in accordance with our capital allocation framework, with our current focus continuing to be on deleveraging, as we remain laser focused on achieving our 30% target. As you would expect, the board would look to allocate capital to the highest returning opportunity, and we are excited about the optionality our strategy is creating. With that, I'll hand over to Nick, who will talk in detail about our financial performance. Nick.

Thank you, Andy. Good morning, everyone, and may I extend my own welcome to all of you joining us today. I am pleased to be reporting strong operational performance in the first half, evident by the profitable growth in both our pension and savings and our retirement solutions operations, by the execution of sizable recurring management actions, and by the acceleration of our cost savings initiatives. This operational momentum is driving strong value creation with improvements across all three pillars of our financial framework, with growth in operating cash generation of 9%, growth in net recurring capital generation of 4 percentage points, and growth in IFRS operating profit of 25%. It is also supporting the emerging balance sheet pivot with both leverage and overall solvency capital levels improving. This means that we are firmly on track to achieve all of our 2026 targets. Turning to the financial highlights, operating cash generation grew to $705 million and we delivered total cash generation of $784 million. The shareholder solvency coverage ratio increased to 175% remaining in the top half of our operating range, and our solvency to leverage ratio improved to 34%. IFRS operating profit increased to 451 million, and whilst the IFRS loss after tax was 156 million, the impact of this loss was cushioned by CFM growth of 10%, with IFRS adjusted shareholders equity closing at 3.4 billion. In line with our policy, the board declared a 2.6% increase in the interim dividend to 27.35 pence per share. Let me now take you through these results in more detail. Operating cash generation shown on the left was up 9% to 705 million, supported by growth in surplus emergence to 411 million, and an increase in recurring management actions to 294 million. I am committed to providing you with the segmental OCG analysis by business, and will do so with the full year results. For now, I continue to share an indicative split. As you can see, the contribution from retirement solutions is greater, given the capital heavy nature of this business. The contribution from the capital light pensions and savings business is lower, but is growing fast, benefiting from new business flows and cost savings. On the right, you can see that operating cash generation more than covered our dividends and recurring uses, generating excess cash of 246 million in the period. This result has been flattered by the relatively low level of annuity investment in the first half, reflecting timing of BPA deals. At the full year, we expect excess cash to be at least in line with the 0.3 billion reported last year. Turning next to recurring management actions, these represent repeatable sources of value that we deliver year after year across our business. In any given period, these will vary in quantum between the three categories we first highlighted in March, which are repeated on this slide. On the left, The largest component relates to annuity portfolio yield re-optimization actions, which generated 189 million of OCG in the first half. By way of reminder, we captured such opportunities by making frequent small-sized trades through market cycles, which optimized the risk-adjusted return of our portfolio without taking on more risk, whilst remaining duration and cash flow matched. We delivered 81 million of OCG through capital improvement actions, representing a longstanding Phoenix capability of extracting recurring value from model and data improvements, primarily from our capital heavy business. On the right, you can see the 24 million OCG contribution from ongoing fund simplification. In the first half, we closed 65 out of a total of around 5,000 funds, delivering further operational and service fee reductions. This component represents an enduring source of value as we continue to simplify our fund range with further fund closures expected in the second half. Our half-year performance puts us firmly on track to deliver recurring management actions in the order of 500 million at the full year, in line with our guidance. Having delivered 705 million of OCG in the first six months, going forward, we expect a more even half and half profile compared to 2024, which was second half weighted. And so we reiterate the mid-single digit percentage annual OCG growth guidance. On the right, you can see that the total cash generation over the last 18 months of 2.6 billion is also tacking towards our 5.1 billion cumulative three-year target. Turning from cash to capital, I set out on this slide the shareholder solvency walk, which I will step through in some detail. Looking at the two bookends of the chart, you can see that we increased both our solvency surplus to 3.6 billion and our solvency coverage ratio to 175% after repaying 200 million of debt in February. In between these bookends, we analyze the various recurring and non-recurring components of the walk and show the corresponding own funds and SCR values in the table below. You will see that our recurring net capital generation, represented by the items grouped in the top left box of the chart, was positive 0.2 billion, equivalent to 4 percentage points of solvency coverage ratio. The corresponding recurring owned funds generation shown in the bottom left box was also positive 0.2 billion, supporting the favorable evolution of our leverage ratio. The items grouped in the top right box show a net positive generation from non-recurring items of 0.1 billion. Stepping through each component in turn, other management actions were 0.1 billion positive and include benefits arising from two sources. The first relates to the expense savings from in-housing annuity backing assets. And the second results from selling the shareholders 10% share of future income in one of our 9010 funds to the estate of this fund. We have initiated a program covering 12 with profit funds, which over the next two years would release total surplus of around 150 million. There is more detail in the appendix for those who are interested. Economics and temporary strain were neutral overall. Our hedging strategy delivered as expected, producing 8.1 billion negative, which was offset by the unwind of the annuity temporary strain that we carried over from full year 24. The investment spend, another component, reflects continued spending on our investment program, offset by the beneficial impact of the WIPRO strategic partnership, which has accelerated the start point from which the lower per policy administration charges apply on the 1.9 billion impacted policies. Before leaving the slide, I would note that the capital improvement in the period is flattered by the timing of BPA deals. By way of illustration, if we had written the same BPA volumes as in the first half of 2024, the coverage ratio would have been around three points lower, reflecting both the day one capital investment and the related temporary strain. Notwithstanding this, the underlying capital improvement in the first half remains strong. Turning to leverage, we made a clear commitment to bring this ratio down to 30% by the end of 2026. Leverage improves to 34% in the period, supported by the 200 million debt repayment and the growth of regulatory-owned funds, reflecting the drivers that I covered in the previous slide. We remain firmly in control of our path to 30%, supported by the 650 million of excess cash that we expect to generate over the next 18 months. As I said before, the path to 30% will not be linear and the leveraging will be managed within the upper half of our 140 to 180 operating range. Our IFRS adjusted operating profit increased by 25% with our two main business divisions growing at a strong double digit rate. I will come back to their respective performances shortly. The overall increase to 451 million is supported by business growth, which has driven our asset base higher and increased both investment contract revenues and insurance contract CSM releases. It is also supported by a higher level of investment margins, reflecting the value added by Phoenix Asset Management, and by cost savings, which I will cover on the next slide. A successful delivery of our grow, optimise and enhance strategic initiatives puts us well on track to achieve our 1.1 billion operating profit target by full year 26. Consistent with the comment I made earlier on OCG in-year profile, IFRS operating profit will also be more even first half on second half going forward. In March, I shared my assessment that our cost savings target of 250 million was credible and that I was looking for opportunities to accelerate its delivery. The actions we have taken in the period, mainly the introduction of Wipro as a strategic partner for customer administration and other changes to our operating model have accelerated the delivery profile with 160 million cumulative run rate savings now expected to be achieved by full year 25 some $35 million higher than our previous guidance. At the end of the half, cumulative run rate savings reached $100 million, with actions taken in the period adding $37 million to the full year 24 total. Some $40 million of this run rate total was earned in the period. Our cost savings initiatives remain a key underpin to delivering the 2026 operating profit target and to supporting ongoing business margin improvements. Our pensions and savings business continues to grow in assets, profitability, and margins. As Andy outlined earlier, we continue to win in workplace with a leading employer proposition, excellent customer service, and competitive pricing. This translated into $4.9 billion in workplace growth inflows, including 0.7 billion in new scheme wins. You may recall that last year, we won a 0.9 billion large scheme, which are relatively infrequent, boosting the prior year comparator. Excluding new scheme wins, we reported robust growth in gross inflows to 4.2 billion, highlighting the workplace flywheel effect as the combination of strong new business flows in recent periods and low bulk losses expands our overall regular premium base. Our workplace pipeline is at a very healthy level, reinforcing our optimism of sustained business growth. Workplace outflows were slightly up year on year, reflecting higher base AUA and the natural attrition from those taking their pensions or porting their workplace schemes to their new employer. Moving across the slide to retail business flows, it is pleasing to see an uptick in gross inflows with outflows stabilizing. Positive market effects have more than offset the overall net fund outflows with average AUA closing up year on year. Looking at the bottom half of the slide, IFRS operating profit increased 20% to 179 million. The improved investment contract result is supported by higher fee revenues from the 5% growth in average AUA and continued cost discipline. Our scale and operating leverage supported an improved operating margin of 19 basis points. Our retirement solutions business also delivered a strong operating performance in the first half. As a reminder, new volumes are not the primary driver of profits here. We run 39 billion of annuity assets, so it is the management of this large book of business that drives most of our profitability. Stepping through the slides, starting in the top left, BPA volumes were 0.3 billion in the first half, reflecting market factors and our selected participation. We have since completed a 1.9 billion deal, and we are at an exclusive stage for deals totaling one billion. So at 3.2 billion year to date, our BPA volumes are robust. In individual annuities, new premiums grew by 20% to 0.6 billion, with our market share rising to 13%. In the bottom right, you can see that operating profit increased strongly in the period, up 36% to 286 million. The improvement is supported by higher CSM releases, reflecting growing business scale, higher investment margins, reflecting the value-add by Phoenix Asset Management, and ongoing operational leverage. We have maintained pricing discipline, with business incepted at a similar level of strain to last year of around 3%, generating mid-teen IRRs. We remain committed to deploying up to 200 million of capital this year, provided we secure sufficiently attractive returns. The 10% increase in our store of insurance contract value recorded in the CSM represents another key underpin to our future operating profitability. This increase reflects ongoing contributions from the usual sources, as well as a sizable contribution in this period from strategic projects, mainly the expense savings benefit from in-housing annuity backing assets and the impact of the WIPRO strategic partnership on associated contracts. Completing the IFRS picture, this next slide shows the first half movement in IFRS adjusted shareholders equity. Our higher operating profitability means that we continue to close the gap between recurring sources and uses being negative 36 million in the period compared to negative 139 period last year. Non-operating expenses reduced to 184 million, reflecting the tapering of our planned investment spend. We reported adverse economic variances of 275 million, driven primarily by the negative marks on equity hedges, following a 7% rise in markets. As I illustrated back in March, This is a known consequence of our hedging strategy which protects cash and solvency capital but gives rise to an accounting mismatch under IFRS. The slide which accompanied the explanations provided in March is included in the appendix. Actions such as the With Profits initiative to sell 0.7 billion of future shareholder transfers to the estate will reduce our overall equity risk exposure allowing us to shrink the size of the equity hedging program by around 10%. On the right of the chart, you will see that we closed the period with an adjusted shareholders' equity of 3.4 billion. Before leaving the slide, I reiterate that our aim is for IFRS shareholders' equity ex-economics to grow from 2027. Moving next to dividend, Phoenix is a highly cash generated business. We have a strong track record of consistent dividend growth and operate a sustainable and progressive dividend policy. I outlined in March the financial metrics that the board considers when undertaking the annual dividend assessment. These are repeated on this slide, being mainly OCG, the solvency coverage ratio, and the parent company distributable reserves, all of which remain healthy. Consistent with previous guidance, the Board continues to consider that the group's consolidated IFRS shareholders' equity does not give rise to any practical limitations to dividend payments. To conclude, we have made positive progress at the midpoint of our three-year strategy, and we have increased execution certainty across all of our 2026 financial framework targets. We have positioned the business to generate mid single digit percentage annual OCG growth, producing a level of OCG which more than covers our recurring uses and delivers excess cash of 300 million or more per annum. We're on track to reduce our leverage ratio to 30% by 2026 with all the levers required to achieving this being firmly within our control. Finally, supported by the acceleration of our cost-saving plans. We are on track to deliver 1.1 billion of IFRS operating profit in 2026, enabling us to cover our recurring uses on this reporting basis as well. Thank you for your attention. I will now hand you back to Andy.

Thank you, Nick. Our vision is simple, to become the UK's leading retirement savings and income business, serving customers of all stages of their life cycle from 18 to 80 plus. And we're making great progress. We have built leading propositions across our pensions and savings and retirement solutions businesses and enhanced our asset management capabilities. Our focus will now turn to further building out our customer engagement tools which will be enhanced by our increasingly digitally enabled customer interface, shown in the lighter purple. Our strategic priorities are clear, and we're excited about what comes next. Looking forward, we expect the second half of 2025 to be just as busy as the first, as we continue to execute against our strategic priorities. For Grow, while we'll continue to consolidate our excellent position in workplace and annuities, the focus of our investment is in retail as we build out our capabilities. Priorities here are engaging our customers, so I'm particularly excited about the imminent launch of our retail advice proposition. Also connecting our full range of products into key platforms, and so the launch of our smooth managed fund on the Quilter platform, one of the largest in the market, is a key step forward to reach more customers. For Optimise, we will progress our shift to in-housing annuity backing assets. And for Enhance, by the end of the year, 75% of policies will be on their end-state platform. Today, we're announcing our intention to change our group name from Phoenix to Standard Life PLC in March 2026. Our move to standard life brings our most trusted brand to the forefront and demonstrates our commitment to helping customers secure a better retirement. It's a brand known to all of you and the brand we are already using for new business in the pensions and savings and retirement solutions markets. The move aligns our brand strategy with our group strategy, supporting our focus on organic growth. It unifies our colleagues and strengthens our employer brand. And it simplifies our business, reducing duplication and cost. In summary, we are successfully executing on our vision to be the UK's leading retirement, savings and income business. Let me recap the three key messages. I'm delighted with the progress we're making against our strategic priorities. I'm pleased that the balance sheet pivot is beginning to emerge. and I'm optimistic about the future. Delivery on our strategy is enabling us to meet more customer needs and in turn deliver strong shareholder returns. So with that, let us move to questions. So we'll start with questions from the audience in the room. If you can raise your hand if you have a question and we'll direct one of the roaming microphones to you. Please you can start by introducing yourself and the institution you represent. For anyone watching on the webcast, please use the Q&A facility and we'll come to your questions after we've answered those in the room. So, we'll start with Abid there. Good morning. I hope it's three questions first, yeah? It is three questions.