Is there anything you are looking to acquire at the moment?
The only thing I can say is that our corporate objective is to consolidate books of business and look after them. That remains our objective but we will look at opportunities as they come up.
Has there been an increase in the pace of consolidation in the market or has it remained relatively steady?
It has ebbed and flowed a bit. Between 2004 through to 2006/07, there was quite a lot of activity. That slowed down with the advent of Solvency II. When it looked like Solvency II and the capital regime was going to be implemented, companies took a breath.
While there were some deals during that period, there were fewer than there had been. In the past 12 months we have seen an increase, as you can see with our acquisitions of Axa and Abbey.
Companies have been looking at the impact of Solvency II and at their strategy and asking, “Where do we want to deploy our capital to the best effect?” Hence there has been a bit more activity and I think we will see more activity over the next couple of years.
Are you affected by regulatory changes in the same way as open book managers?
We are subject to the same rules and standards as everybody else. It remains something we spend quite a lot of time on.
Do you foresee Brexit having any implications for the business?
Because we don’t sell into Europe and have no plans to, Brexit is not too much of a concern. The issues we face are economic: the management of the long-term rates and the impact that might have for us in terms of longer-term returns for both shareholders and policyholders.
We are keeping a watchful eye on developments but, as a closed book, it is probably not such a big impact for us.
How are policyholders affected when their books are acquired?
We have a rolling programme across all of our products to ensure the terms and conditions that policyholders signed up to are being adhered to. It is important to us that our customers understand as much as they can about the product they engage with and are actually being delivered what they were promised at the start of that product.
It is also about considering what outcomes customers are going to get moving forward and whether there are things we can do to improve these outcomes.
Do you think Phoenix Group will acquire more open books?
As we look to buy something, our primary focus will be on closed books. That doesn’t mean it is closed when we buy it. Some of the Axa Wealth business was open prior to our acquisition but we closed it, either on acquisition or just before completion.
Our focus will remain on closed books of business but if there are things that we think might make sense for us, we would look at them provided we felt it would add value to the group.
Would you ever consider reopening a closed book?
I would say never say never. Have we got any plans to do that today? No, but obviously if we felt there was something that could add value to the customer longer term, we would consider it.
But, as I said, our focus is very much on closed-book business and I expect that, for the foreseeable future, the majority of our business will be around closed books.
