Most with-profit contracts give a guaranteed minimum payment on a specified date or range of dates or on death if before that date or dates. For pensions contracts, the specified date is the policyholder’s chosen retirement date or a range of dates around that date. For endowment contracts, it is the maturity date of the contract. For with-profit bonds it is often a specified anniversary of commencement, in some cases with further dates thereafter. Annual bonuses when added to with-profit contracts, usually increase the guaranteed amount.
Some pensions contracts include guaranteed annuity options (see deferred annuities in section 39.5.2 for details). The total amount provided in the with-profit and non-profit funds in respect of the future costs of guaranteed annuity options are £1,575 million (2012: £2,054 million) and £29 million (2012: £31 million) respectively.
Non-profit funds: Deferred annuities – with guarantees 51 – – – Deferred annuities – without guarantees 621 5 – – Immediate annuities 7,051 – 1,102 –
With-profit funds: Pensions: Deferred annuities – with guarantees 9,562 180 799 – Deferred annuities – without guarantees 1,893 – – – Immediate annuities 3,385 – 725 – Unitised with-profit 1,198 9,179 4 –
The Group has significant discretion regarding investment policy, bonus policy and early termination values. The process for exercising discretion in the management of the with-profit funds is set out in the PPFM for each with-profit fund and is overseen by With-Profit committees. Advice is also taken from the with-profit actuary of each with-profit fund. Compliance with the PPFM is reviewed annually and reported to the PRA, FCA and policyholders.
The bonuses are designed to distribute to policyholders a fair share of the return on the assets in the with-profit funds, together with other elements of the experience of the fund. The shareholders of the Group are entitled to receive one-ninth of the cost of bonuses declared for some funds and £nil for others.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 39. RISK MANAGEMENT CONTINUED 39.5 INSURANCE RISK CONTINUED Deferred annuities Deferred annuity policies are written to provide either a cash benefit at retirement, which the policyholder can use to buy an annuity on the terms then applicable, or an annuity payable from retirement. The policies contain an element of guarantee expressed in the form that the contract is written in, i.e. to provide cash or an annuity. Deferred annuity policies written to provide a cash benefit may also contain an option to convert the cash benefit to an annuity benefit on guaranteed terms; these are known as GAR policies. Deferred annuity policies written to provide an annuity benefit may also contain an option to convert the annuity benefit into cash benefits on guaranteed terms; these are known as Guaranteed Cash Option (‘GCO’) policies.
During the last decade, interest rates and inflation have fallen and life expectancy has increased more rapidly than originally anticipated. The guaranteed terms on GAR policies are more favourable than the annuity rates currently available in the market available for cash benefits. The guaranteed terms on GCO policies are currently not valuable. Deferred annuity policies, which are written to provide annuity benefits, are managed in a similar manner to immediate annuities and are exposed to the same risks.
The main risks associated with this product are longevity and investment risks. Longevity risk arises where the annuities are paid for the lifetime of the policyholder, and is managed through the initial pricing of the annuity and through Reinsurance (appropriately collateralised) or transfer of existing liabilities. Annuities may also be a partial ‘natural hedge’ against losses incurred in protection business in the event of increased mortality (and vice versa) although the extent to which this occurs will depend on the similarity of the demographic profile of each book of business.
Operating lease rentals charged within administrative expenses amounted to £14 million (2012: £14 million).
To subscribe to private equity funds and other unlisted assets 371 286 To purchase, construct or develop investment property 33 46 For repairs, maintenance or enhancements of investment property 3 2 To acquire property, plant and equipment 5 5 42. RELATED PARTY TRANSACTIONS This note gives details of the transactions between Group companies and related parties which comprise our pension schemes and key management personnel.
Pearl Group Staff Pension Scheme Investment management fees 0.2 0.1 0.6 0.1 Payment of administrative expenses (3.6) – (4.0) –
The Pearl Scheme has invested in collective investment schemes that are controlled by the Group. At 31 December 2013 the Pearl Scheme held nil units (2012: 458,795 units) in the Ignis Systematic Strategies Fund, 59,138,904 units (2012: nil units) in the Castle Hill Enhanced Floating Rate Opportunities Limited Fund and nil units (2012: 121,909,177 units) in the Ignis Liquidity Fund. The value of these investments at 31 December 2013, was £nil million (2012: £70 million), £97 million (2012: £nil million) and £nil million (2012: £122 million) respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 42. RELATED PARTY TRANSACTIONS CONTINUED Transactions with key management personnel The total compensation of key management personnel, being those having authority and responsibility for planning, directing and controlling the activities of the Group, including the Executive and Non-Executive Directors, are as follows: £m £m
Salary and other short-term benefits 4.2 3.7 Equity compensation plans 2.2 2.2
Details of the shareholdings and emoluments of individual Directors are provided in the Remuneration report on pages 68 to 89.
Insurance companies BA (GI) Limited (general insurance company) 1 UK Ordinary shares of £0.05 National Provident Life Limited (life assurance company) UK Ordinary shares of £1 Phoenix Life Assurance Limited (formerly Pearl Assurance Limited)
‘B’ ordinary shares of £1 ‘C’ ordinary shares of £1 and ‘D’ ordinary shares of £1 Mutual Securitisation plc (finance company) ROI Quasi subsidiary NP Life Holdings Limited (holding company) UK ‘A’ ordinary shares of £1 and ‘B’
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED The information disclosed on the previous page is only in respect of those undertakings which materially affect the figures shown in the Group’s consolidated financial statements. There are a number of other subsidiaries and associated undertakings whose business does not materially affect the Group’s profits or the amount of its assets and particulars of these have been omitted in view of their excessive length.
45. EVENTS AFTER THE REPORTING PERIOD This note highlights significant events that have occurred between the end of the reporting period and the date when the financial statements are authorised for issue in accordance with accounting policy 1(ee).
There are no other comprehensive income items for 2013 and 2012.
The notes identified alphabetically on pages 201 to 207 are an integral part of these Company financial statements. Where items also appear in the consolidated financial statements, reference is made to the notes (identified numerically) on pages 109 to 196.
Cash flows from investing activities Dividends received from subsidiaries 50 – Advance to Group entities (11) – Repayment of loan from Group entities 29 48 Interest received from Group entities 19 23 Capital contributions to subsidiaries (282) (2) Net cash flows from investing activities (195) 69
Cash flows from financing activities Proceeds from issuing ordinary shares, net of associated commission and expenses 233 – Ordinary share dividends paid (120) (72)
Net decrease in cash and cash equivalents (7) – Cash and cash equivalents at the beginning of the year 16 16 Cash and cash equivalents at the end of the year L 9 16 199 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
Issue of ordinary share capital, net of associated commissions and expenses – 233 – – – 233 Dividends paid on ordinary shares – (120) – – – (120) Credit to equity for equity-settled share-based payments (note P) – – – – 6 6 Expired contingent rights – – (5) – 5 –
A. ACCOUNTING POLICIES (A) BASIS OF PREPARATION The financial statements of Phoenix Group Holdings have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS’) and also provides the legally required information in accordance with Part 9, Book 2, of the Dutch Civil Code.
B. SEGMENTAL ANALYSIS The Company has one reportable segment, comprising its investment in and loans to/from its subsidiaries. Its revenue principally comprises the dividend and interest income derived from these investments and loans. Information relating to this segment is included in the Company’s primary financial statements on pages 198 to 200.
Investment income Dividend income from other Group entities 58 8 Interest income from other Group entities 49 53
1 In addition to the Non-Executive Board members, one employee was employed by Phoenix Group Holdings during the period (2012: one). Other Group employees are employed by subsidiaries of the Company.
Authorised: 410 million (2012: 410 million) ordinary shares of €0.0001 each 31,750 31,750
In January 2013, the Group announced an equity raising of £250 million as part of the re-terming of the Impala facility. The equity raising comprised equity placings with certain Och-Ziff funds and an open offer to raise aggregate proceeds of £250 million through the issuance on 21 February 2013 of 50 million ordinary shares. The proceeds of the equity raising net of deduction of commissions and expenses were £232 million.
During the year, the Company issued 231,153 shares at a premium of £1 million in order to satisfy its obligation to employees under the Group’s share schemes.
Certain of Phoenix Group Holding’s subsidiaries are subject to restrictions on the amounts of funds they may transfer in the form of cash dividends or otherwise to their parent companies. Distribution of the retained earnings held within the long-term business funds and surplus assets held within the owners’ funds of the life companies is subject to retaining sufficient funds to protect policyholders’ interests.
There were no fair value gains or losses recognised in comprehensive income.
Warrants are categorised as Level 2 financial instruments. Details of the factors considered in determination of the fair value are included in note 34.2.1 to the consolidated financial statements.
For a list of principal Group entities, refer to note 44 of the consolidated financial statements. The entities directly held by Phoenix Group Holdings are highlighted separately by an asterisk.
J. COLLECTIVE INVESTMENT SCHEMES Carrying value Fair value £m £m £m
K. LOANS AND RECEIVABLES Carrying value Fair value £m £m £m
On 22 March 2010, the Company subscribed for £250 million of Eurobonds which were issued equally by PGH (MC1) Limited and PGH (MC2) Limited. On 23 March 2010, the Eurobonds were listed on the Channel Islands Stock Exchange. Interest accrues on these Eurobonds at a rate of LIBOR plus a margin of 2.5% and the final maturity date to 30 June 2025. The Eurobonds were initially recognised at fair value and are accreted to par over the period to 2025. At 31 December, £84.2 million was due (2012: £70 million).
On 12 December 2011, the Company, PGH (LCA) Limited and PGH (LCB) Limited, became party to a joint £77.1 million loan agreement to formalise an inter-company balance which had arisen in 2009 relating to fees payable to a syndicate of external banks. The loan accrues interest at a rate of LIBOR plus a margin of 1.25% and matures on 30 June 2016. Interest of £0.2 million was capitalised during the year (2012: £1.6 million) and £28.8 million was repaid (2012: £48.2 million). At 31 December 2013, £4.6 million was due (2012: £33.2 million).
On 16 July 2010, the Company entered into an interest free facility arrangement with Phoenix Group Holdings’ Employee Benefit (‘EBT’). In 2013, £11 million was drawndown against this facility. The loan is recoverable until the awards held by the EBT vest to the participants, at which point the loan is reviewed for impairment. Any impairments are determined by comparing the carrying value to the estimated recoverable amount of the loan.
Interest income from other Group entities (49) (53) Dividends received (58) (8) Share-based payment charge 6 5
There are no externally imposed capital requirements on the Company. The Company’s capital is monitored by the Directors and managed on an on-going basis via a monthly close process to ensure that it remains positive at all times.
Details of the Group risk management policies are outlined in note 39 to the consolidated financial statements.
The principal risks and uncertainties facing the Company are: − interest rate risk, since the movement in interest rates will impact the value of interest receivable and payable by the Company; − liquidity risk, exposure to liquidity risk as a result of normal business activities, specifically the risk arising from an inability to meet shortterm cash flow requirements; and
Q. DIRECTORS’ REMUNERATION Details of the remuneration of the Directors’ of Phoenix Group Holdings is included in the Remuneration report on pages 68 to 89 of the Annual Report and Accounts.
Dividends received 58 8 Interest received on loans and receivables due from Group entities 18 23
Amounts due to related parties at the end of the year: £m £m
T. EVENTS AFTER THE REPORTING PERIOD Details of events after the reporting date are included in note 45 to the consolidated financial statements.
On 25 March 2014, the Board recommended a final dividend of 26.7p per share (2012: 26.7p) for the year ended 31 December 2013. Payment of the final dividend will be in cash and is subject to compliance with the processes set out in the Group’s main credit facilities and shareholder approval at the AGM on 30 April 2014. If the proposed dividend is approved by shareholders, Phoenix Group Holding’s shares will be quoted ex-dividend on 2 April 2014.
Collective investment schemes 5,332 UKCPT 584 Cash held in other Group entities 1,085 General insurance business 9 Corporate derivative liabilities (5) Adjustments on consolidation 1 Total Group consolidated assets 65,559 Comprised of: Investment property 1,603 Financial assets 56,888 Cash and cash equivalents 9,224 Derivative liabilities (2,156)
Collective investment schemes 5,339 UKCPT 587 Cash held in other Group entities 352 General insurance business 8 Corporate derivative liabilities (36) Adjustments on consolidation 3 Total Group consolidated assets 71,249 Comprised of: Investment property 1,727 Financial assets 63,520 Cash and cash equivalents 9,028 Derivative liabilities (3,026)
The life companies’ debt portfolio was £30.4 billion at 31 December 2013. Shareholders had direct exposure to £11.2 billion of these assets (including supported participating funds), of which 95% of rated securities were investment grade. The shareholders’ credit risk exposure to the non-supported participating funds is primarily limited to the shareholders’ share of future bonuses. Shareholders’ credit risk exposure to the unit-linked funds is limited to the level of asset management fee, which is dependent on the underlying assets.
The following table sets out a breakdown of the life companies’ financial institution corporate debt security holdings by country: Analysis of financial institution corporate debt security holdings by country
The life companies had £32 million shareholder exposure to financial institution corporate debt of the Peripheral Eurozone at 31 December 2013. This exposure has increased, from £6 million at 31 December 2012, as a result of one of the funds increasing its exposure in Italian insurance companies, which was done as part of the general investment policy. The £2,564 million (2012: £2,555 million) total shareholder exposure comprised £1,597 million (2012: £1,771 million) senior debt, £367 million (2012: £321 million) Tier 1 debt and £600 million (2012: £463 million) Tier 2 debt.
ADDITIONAL LIFE COMPANY ASSET DISCLOSURES CONTINUED The following table sets out the credit rating analysis of the debt portfolio: Credit rating analysis of debt portfolio
Participating non-supported £m Unit-linked £m Total £m 97% of rated securities were investment grade at 31 December 2013 (2012: 97%). The percentage of rated securities that were investment grade in relation to the shareholder and policyholders’ funds were 95% and 98% respectively (2012: 94% and 99% respectively).
Total £m 216 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE MARKET CONSISTENT EMBEDDED VALUE When compliance with the CFO Forum MCEV principles published in June 2008 and amended in October 2009 is stated those principles require the Directors to prepare supplementary information in accordance with the MCEV principles and to disclose and provide reasons for any non-compliance with the principles.
The MCEV methodology adopted by the Group is in accordance with these MCEV principles with the exception of: − risk-free rates have been defined as the annually compounded UK Government bond nominal spot curve plus 10 basis points rather than as the swap rate curve; − the value of the asset management and the management service companies has been included on an IFRS basis; and
Specifically, the Directors have: − determined assumptions on a realistic basis, having regard to past, current and expected future experience and to relevant external data, and then applied them consistently; − made estimates that are reasonable and consistent; and
− provided additional disclosures when compliance with the specific requirements of the MCEV principles is insufficient to enable users to understand the impact of particular transactions, other events and conditions and the Group’s financial position and financial performance.
We have audited the Consolidated Phoenix Group MCEV (‘Phoenix Group MCEV’) supplementary information for the year ended 31 December 2013, which comprises the Summarised consolidated income statement – Group MCEV basis, MCEV earnings per ordinary share, Statement of consolidated comprehensive income – Group MCEV basis, Reconciliation of movement in equity – Group MCEV basis, Group MCEV analysis of earnings, Reconciliation of Group IFRS equity to MCEV net worth and related notes. The Phoenix Group MCEV supplementary information has been prepared by the Directors of Phoenix Group Holdings in accordance with the basis of preparation set out on pages 224 to 227.
DIRECTORS’ RESPONSIBILITIES FOR THE PHOENIX GROUP MCEV SUPPLEMENTARY INFORMATION The Directors are responsible for the preparation of this Phoenix Group MCEV supplementary information in accordance with the basis of preparation set out on pages 224 to 227 and for such internal control as the Directors determine is necessary to enable the preparation of supplementary information that is free from material misstatement, whether due to fraud or error.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Phoenix Group MCEV supplementary information. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the Phoenix Group MCEV supplementary information, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Group’s preparation of the Phoenix Group MCEV supplementary information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the Phoenix Group MCEV supplementary information.
OPINION In our opinion the Phoenix Group MCEV supplementary information, for the year ended 31 December 2013, has been prepared, in all material respects, in accordance with the basis of preparation set out on pages 224 to 227.
Ernst & Young LLP London 25 March 2014 219 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
MCEV EARNINGS PER ORDINARY SHARE For the year ended 31 December 2013
Group MCEV earnings after tax Basic1 76.2p 116.5p 1 Based on 212 million shares (2012: 173 million) as set out in note 15 of the IFRS consolidated financial statements.
2 Based on 212 million shares (2012: 173 million) as set out in note 15 of the IFRS consolidated financial statements.
Issue of ordinary share capital, net of associated commissions and expenses 233 – Dividends paid on ordinary shares (120) (73) Dividends paid on shares held by the employee trust and Group entities 2 – Movement in equity for equity-settled share-based payments 6 5 Shares acquired by the employee trust (11) – Shares issued in lieu of dividends – 1 Total capital and dividend flows – external 110 (67)
1. BASIS OF PREPARATION OVERVIEW The supplementary information on pages 220 to 232 has been prepared on a Market Consistent Embedded Value (‘MCEV’) basis except for the items described further below.
The MCEV methodology adopted by the Group is in accordance with the MCEV principles and guidance published by the CFO Forum in June 2008 and amended in October 2009, except that: − risk-free rates have been defined as the annually compounded UK Government nominal spot curve plus 10 basis points rather than as a swap rate curve; − no allowance for the cost of residual non-hedgeable risk (‘CNHR’) has been made because, in the opinion of the Directors, the Group operates a robust outsourcer model in terms of operational risk, does not write new business, is focused entirely on the back book, and has succeeded in closing out significant legacy risks. The theoretical value of CNHR is disclosed separately in note 1(b); and
− the asset management and management service companies’ values are calculated on an IFRS basis. Under CFO Forum principles and guidance productivity gains should not be recognised until achieved. This treatment is inconsistent with the cost profile of a closed fund where continual cost reductions are expected to maintain unit costs as the business runs off. In the opinion of the directors, if the MCEV principles and guidance were to be applied to the asset management and the management service companies, it would not provide a fair reflection of the Group’s financial position. These companies are therefore reported alongside the Group’s other holding companies at their IFRS net asset value.
In January 2013, the Group announced an equity raising of £250 million as part of the re-terming of the Impala facility. The equity raising comprised equity placings with certain Och-Ziff funds and an open offer to raise aggregate gross proceeds of £250 million through the issuance on 21 February 2013 of 50 million ordinary shares. The Group MCEV reported at 31 December 2013 includes the proceeds of the equity raising net of deduction of commissions, fees and expenses, of £232 million as well as the arrangement and restructuring fees of £21 million paid in connection with the amendments to the Impala facility agreement and £450 million prepayment on 22 February 2013. The value of in-force business at 31 December 2012 was already reduced by £21 million to reflect the lower level of tax attributes expected to be available to relieve tax on emerging surpluses due to the accelerated repayment of debt.
MCEV METHODOLOGY The embedded value of covered business is based on a market-consistent methodology. Under this methodology, assets and liabilities are valued in line with market prices and consistently with each other.
The market consistent VIF business represents the present value of profits attributable to shareholders arising from the in-force business, less an allowance for the time value of financial options and guarantees embedded within life insurance contracts and frictional costs of required capital.
The TVFOGs allow for the impact of management actions, consistent with those permitted by the Principles and Practices of Financial Management. The modelling of management actions vary for each of the funds but typically include management of bonus rates and policy enhancements, charges to asset shares to cover increases to the cost of guarantees and alterations to investment strategy.
Required capital is defined as the minimum regulatory capital requirement, which is the greater of Pillar 1 and Pillar 2 capital requirements, plus the capital required under the Group’s capital management policy. This equates to 145% of the Pillar 1 minimum regulatory capital requirement or 128% of the Pillar 2 minimum regulatory capital requirement (2012: 150% Pillar 1, 129% Pillar 2).
Costs of residual non-hedgeable risks (‘CNHR’) The CNHR should allow for risks that can have an asymmetric impact on shareholder value to the extent these risks have not already been reflected in the PVFP or TVFOGs. The majority of such risks within the Group are operational and tax risks.
For with-profits business the CNHR would increase the TVFOGs by £25 million (2012: £52 million).
For other business the cost would be £105 million (2012: £127 million). This equates to an equivalent average cost of capital charge of 1.3% (2012: 1.5%). The level of capital assumed in this calculation is determined based on a 99.5% confidence level over a one year time horizon, consistent with the ICA methodology. Allowance is made for diversification benefits between non-hedgeable risks, but not between hedgeable and non-hedgeable risks.
e) New business The MCEV places a value on the profits expected to be earned on annuities arising from policies vesting with guaranteed annuity terms. The value is calculated based on management’s assumptions as to long-term profit margins and projected take-up rates. As at 31 December 2013, the Group MCEV included £191 million in respect of these policies (2012: £177 million). These policies are excluded from the definition of new business on the basis that the annuity being provided is an obligation under an existing policy and the life companies are already reserving for the cost of these guarantees.
f) Participating business Allowance is made for future bonus rates on a basis consistent with the projection assumptions and established Company practice.
g) Pension schemes The MCEV allows for pension scheme deficits as calculated on an IFRS basis, but no benefit is taken for pension scheme surpluses.
The proposals are yet to be enacted in legislation, and therefore their impact remains uncertain. No adjustments have been made to the MCEV supplementary information in this regard.
Ignis Asset Management contributed £108 million to the Group MCEV as at 31 December 2013. The contribution of Ignis Asset Management to Group MCEV operating earnings before tax and Group MCEV earnings after tax for the year ended 31 December 2013 was £49 million and £36 million respectively.
NOTES TO THE MCEV FINANCIAL STATEMENTS CONTINUED 3. ANALYSIS OF COVERED BUSINESS MCEV EARNINGS (AFTER TAX)
New business value 13 5 18 Expected existing business contribution (reference rate)1 27 56 83 Expected existing business contribution (in excess of reference rate)2 2 40 42 Transfer from VIF to net worth 188 (188) –
New business value 10 10 20 Expected existing business contribution (reference rate)1 36 67 103 Expected existing business contribution (in excess of reference rate)2 36 45 81 Transfer from VIF to net worth 198 (198) –
Total £m 6. ASSUMPTIONS REFERENCE RATES (a) Risk-free rates Risk-free rates are based on the annually compounded UK Government bond nominal spot curve plus 10 basis points, extrapolated as necessary to meet the term of the liabilities.
Had the Group used the swap rate curve as set out in the CFO Forum principles, the MCEV would have been £160 million lower (2012: £168 million lower).
OPERATING EARNINGS The Group uses normalised investment returns in calculating the expected existing business contribution. The Group considers that an average return over the remaining term of its in-force business is more appropriate than using a short-term rate and is more consistent with the Group’s expectation of longer term rates of return. Therefore, the Group calculates the expected contribution on existing business using a 15-year gilt rate at the beginning of the reporting period plus 10 basis points and long-term expectations of excess investment returns.
Listed debt and non-controlling interests Perpetual Reset Capital Securities 444 377 444 286 Phoenix Life Limited subordinated debt 211 205 211 173
NOTES TO THE MCEV FINANCIAL STATEMENTS CONTINUED 7. SENSITIVITY TO ASSUMPTIONS The table below summarises the key sensitivities of the MCEV of covered business at 31 December 2013: Life MCEV
ANNUAL GENERAL MEETING Our Annual General Meeting (‘AGM’) will be held on 30 April 2014 at 1pm.
Dec 13Nov 13Oct 13Sep 13Aug 13Jul 13Jun 13May 13Apr 13Mar 13Feb 13Jan 13 234 PHOENIX GROUP HOLDINGS ANNUAL REPORT AND ACCOUNTS 2013
REGISTRAR DETAILS Computershare Investor Services (Cayman) Limited c/o Queensway House Hilgrove Street St Helier Jersey JE1 1ES
WARNING TO SHAREHOLDERS Over recent years, many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas-based ‘brokers’ who target UK shareholders, offering to sell them what often turn out to be worthless or high-risk shares in US or UK investments. These operations are commonly known as ‘boiler rooms’.
− Check that they are properly authorised by the Financial Conduct Authority (‘FCA’) before getting involved by visiting www.fca.org.uk/firms/systems-reporting/register
− Report the matter to the FCA by calling the FCA Consumer Helpline on 0800 111 6768
SHARE PRICE You can access the current share price of Phoenix Group Holdings on the Group’s website together with electronic copies of the Group’s financial reports and presentations at
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
− Market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally
− The timing, impact and other uncertainties of future acquisitions or combinations within relevant industries
− Inability of reinsurers to meet obligations or unavailability of reinsurance coverage
Nothing in the 2013 Annual Report and Accounts is, or should be construed as a profit forecast.
GROSS MCEV Gross MCEV is the sum of the Group MCEV and the value of the shareholder and hybrid debt as included in the MCEV
ICA Individual Capital Assessment – A life company’s Pillar 2 assessment of its capital requirements to ensure that assets exceed liabilities 99.5% of the time over a 1-year period or (in other words) to be able to withstand a 1 in 200 year event
INHERITED ESTATE The assets of the long-term with-profit funds less the realistic reserves for non-profit policies written into the non-profit fund, less asset shares aggregated across the with-profit policies and any additional amounts expected at the valuation date to be paid to in-force policyholders in the future in respect of smoothing costs and guarantees
A type of company or a fund in the UK that is structured to invest in other companies with the ability to adjust its investment criteria and fund size
OPERATING COMPANIES Refers to the trading companies within Phoenix Life (which includes Opal Reassurance Limited) and all trading companies within Ignis Asset Management
PEARL BUSINESSES PGH (LCA) Limited, PGH (LCB) Limited, PGH (TC1) Limited, PGH (TC2) Limited and Opal Reassurance Limited, together with their subsidiaries, being the five companies acquired by Phoenix Group Holdings on 2 September 2009
TCF Treating Customers Fairly – The FCA aims to secure an appropriate degree of protection for customers and protect/enhance the integrity of the UK financial system
The total return, over a fixed period, to an investor in terms of share price growth and dividends (assuming that dividends paid are re-invested, on the ex-dividend date, in acquiring further shares)
WITH-PROFIT FUND A fund where policyholders are entitled to a share of the profits of the fund. Normally, policyholders receive their share of the profits through bonuses. Also known as a participating fund as policyholders have a participating interest in the with-profit funds and any declared bonuses. Generally, policyholder and shareholder participation in the with-profit funds in the UK is split 90:10
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Principal place of business: Phoenix Group Holdings 1st Floor 32 Commercial Street St Helier JE2 3RU Jersey www.thephoenixgroup.com