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Phoenix revises cost savings from Axa acquisitions

This week Phoenix confirmed a redundancy round following its decision to buy parts of Axa’s business last year, but is saving more than it planned

Phoenix Group expects to save between £13m to £15m each year from its acquisition of Axa Wealth’s pensions and protection businesses.

The cost saving estimates have been raised from initial expectations of £10m per year.

Earlier this week, it announced redundancy plans resulting from the acquisition.

Phoenix lines up job cuts after Axa acquisition

A Phoenix spokeswoman explains the cost savings announced in the results are not due to the job cuts.

She says: “A large majority of the staff will be moving over to our outsource service partners which includes Diligenta to ensure we retain their experience and expertise. We are also working to identify other potential opportunities within the group and with the outsourcers for those employees that have been put at risk of redundancy.”

According to a results statement, the Axa acquisition has generated £282m of cash to date, including £165m in 2017. Phoenix had originally set a target of £250m of cash generation within six months of completing the acquisition.

The closed-book provider snapped up Axa Wealth businesses Embassy, its off-platform investment and pension division and Sun Life, its direct protection business, in a deal signed last May, before also buying rival closed-book operation Abbey Life off Deutsche Bank in September.

Phoenix says the Abbey Life acquisition will lead to £7m in cost savings.

Group chief executive Clive Bannister says: “The group continues to deliver strong cash generation and remains on track to achieve its targets, supported by capital and cost synergies from the Axa and Abbey Life acquisitions.”

He adds: “Our strengthened capital position and the recent upgrade from Fitch Ratings gives us the financial flexibility to execute additional acquisitions in future.”

The business reported £360m of cash generation in the first half of the year compared to £147m in the same period of 2016.

The business reported operating profit of £215m in the first half of 2017, which was an increase on the 2016 result of £107m.

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Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Cost savings = Redundancies

    Higher cost savings = more redundancies that we thought.

    Executive pay – up!
    Services levels – down!

    Brilliant innit?

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