Phoenix Group Holdings announces investment grade rating by Fitch Ratings
Phoenix Group Holdings ("Phoenix" and, together with its subsidiaries, the "Group") is pleased to announce that its two principal operating life companies, Phoenix Life Limited and Phoenix Life Assurance Limited have been assigned the Insurer Financial Strength ("IFS") ratings of "A" with a stable outlook by Fitch Ratings.
This is Phoenix's inaugural rating and reflects the Group's strong capital position, cash flows and track record. The rating also reflects the strength of the Group's competitive position as a leading closed life fund consolidator.
The "A" ratings for the Group's life companies and investment grade ratings for the Group's senior and hybrid debt mark the achievement of an ambition set out during 2014.
The investment grade ratings provide a number of benefits to the Group:
· A 50bps reduction in the interest margin on the Group's bank debt to 262.5bps, effective from 28 August 2015 on £780m of bank debt currently outstanding(1);
· The prospect of lower cost of long term funding;
· Broader access to the capital markets in future, with a wider universe of potential investors;
· Greater flexibility in future debt issuance, with regards to both the type and maturity of instruments; and
· Improved opportunities to issue hybrid debt to support the Group's regulatory capital position.
The following credit ratings were assigned to the Group's operating and holding companies:
Rating Type |
Entities |
Fitch Rating |
IFS ratings |
Phoenix Life Limited, Phoenix Life Assurance Limited |
A |
Issuer Default Rating |
Phoenix Group Holdings |
A- |
The following credit ratings were assigned to bonds issued by the Group:
Issuer |
Nominal |
Instrument |
Coupon |
Maturity |
Fitch Rating |
PGH Capital Limited |
£300m |
Senior bond |
5.75% |
07/07/2021 |
BBB+ |
PGH Capital Limited |
£428m |
Subordinated bond |
6.625% |
18/12/2025 |
BBB- |
Phoenix will continue to develop its relationship with the debt capital markets in future as it seeks to deliver its strategy of closed life fund consolidation.
Clive Bannister, Group Chief Executive, commented:
"This rating assessment is testament to Phoenix's progress in significantly reducing its gearing level and achieving a comprehensive debt restructuring. We have been able to demonstrate that the Group is now in a strong financial position, reducing our cost of debt and enabling us to focus our efforts on growing Phoenix through closed life acquisitions and thereby delivering greater enterprise stability for policyholders and value to shareholders."
Enquiries
Equity investors:
Sam Perowne, Head of Investor Relations, Phoenix Group
+44 (0) 20 3735 0021
Debt investors:
Rashmin Shah, Group Treasurer, Phoenix Group
+44 (0) 20 3735 0059
Media:
Neil Bennett, Maitland
Peter Ogden, Maitland
+ 44 (0) 20 7379 5151
Notes
(1) Net of £60m repaid on 30 June 2015.
Disclaimer
This announcement in relation to Phoenix Group Holdings and its subsidiaries (the 'Group') contains, and we may make other statements (verbal or otherwise) containing, forward-looking statements and other financial and/or statistical data about the Group's current plans, goals and expectations relating to future financial conditions, performance, results, strategy and/or objectives.
Statements containing the words: 'believes', 'intends', 'will', 'expects', 'plans', 'aims', 'seeks', 'targets', 'continues' and 'anticipates' or other words of similar meaning are forward-looking. Such forward-looking statements and other financial and/or statistical data involve risk and uncertainty because they relate to future events and circumstances that are beyond the Group's control. For example, certain insurance risk disclosures are dependent on the Group's choices about assumptions and models, which by their nature are estimates. As such, actual future gains and losses could differ materially from those that the Group has estimated.
Other factors which could cause actual results to differ materially from those estimated by forward-looking statements include but are not limited to: domestic and global economic and business conditions; asset prices; market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of governmental and/or regulatory authorities, including, for example, new government initiatives related to the financial crisis and ultimate transition to the European Union's "Solvency II" Directive on the Group's capital maintenance requirements; the impact of inflation and deflation; market competition; changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, gender pricing and lapse rates); the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; risks associated with arrangements with third parties; inability of reinsurers to meet obligations or unavailability of reinsurance coverage; the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which members of the Group operate.
As a result, the Group's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set out in the forward-looking statements and other financial and/or statistical data within this announcement. The Group undertakes no obligation to update any of the forward-looking statements or data contained within this announcement or any other forward-looking statements or data it may make or publish. Nothing in this announcement should be construed as a profit forecast or estimate.
