The underlying strength of the business model and the stable and predictable long term cash generation has enabled us to declare a 2015 interim dividend of 26.7p per share, in line with the 2014 interim dividend. We are in a sound financial position as we transition to Solvency II and I look forward to providing further detail on the progress of our Internal Model application during the remainder of this year.
With the investment grade credit rating and continued financial delivery against our targets we are well placed to build on our existing position as the UK's largest specialist consolidator of closed life funds."
Financial highlights
•Investment grade credit rating achieved from Fitch Ratings, with the Group's two principal operating life companies being assigned an Insurer Financial Strength rating of "A"
•£110 million of cash generation1 in H1 2015 (HY14: £332 million). The Group remains on track to achieve cash generation targets of £200 million - £250 million in 2015 and £2.8 billion between 2014 - 2019
•£84 million of incremental MCEV enhancement achieved in H1 2015, on track to meet the incremental MCEV target of £400 million between 2014 - 2016 having achieved £345 million from management actions
•Group MCEV of £2.6 billion at 30 June 2015 (FY14: £2.6 billion)
•Group IFRS operating profit of £135 million in H1 2015 including £23 million from management actions (HY14: £266 million, including £114 million from management actions)
•Financial Leverage2 of 39.2% at 30 June 2015 (FY14: 39.3%), with £60 million of bank debt amortisation paid in H1 2015
•IGD surplus of £1.6 billion and IGD headroom of £0.8 billion at 30 June 2015 (FY14: £1.2 billion and £0.5 billion respectively)3
•PLHL ICA surplus of £0.7 billion and PLHL ICA headroom of £0.6 billion at 30 June 2015 (FY14: £0.7 billion and £0.6 billion respectively)3
•Interim dividend of 26.7p per share, in line with 2014 interim and final dividends, demonstrating our commitment to a stable and sustainable dividend for shareholders
Solvency II update
•The Group submitted its application for regulatory approval of its Internal Model in June 2015
•The Group expects to be well capitalised under the new Solvency II regime, with the Group capital position under Solvency II3 expected to be in excess of the current PLHL ICA surplus, subject to regulatory approval
Operational highlights
•Implemented options for customers to take advantage of the new pension freedoms introduced in April, either directly by Phoenix Group or through its partnership agreements with other product providers
•Exchange offer of Tier 1 bonds into new subordinated notes with a maturity of 2025 completed in January 2015, with a 99% take-up rate by bondholders
•Completed funds merger of National Provident Life Limited into Phoenix Life Assurance Limited
•Simplification of Group corporate structure in H1 2015, increasing IGD surplus and providing a more appropriate Group structure for the Solvency II capital regime
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