LONDON (ShareCast) - Phoenix Group Holdings, a company that acquires and manages closed life insurance businesses, posted a reduction in first-quarter cash generation on Thursday.

Cash generation fell from £410m to £235m year-on-year, although the total holding company's cash rose to £1,197m compared to £995m at the 2013 year-end.

The company in March announced plans to sell Ignis Asset Management to Standard Life for £390m, for which it is due to receive a debt repayment of £250m on completion, expected to take place by the end of the second quarter.

The divestment of Ignis and subsequent debt repayment is expected to be broadly neutral on the Insurance Groups Directive (IGD) surplus.

At the end of March, the group had an estimated IGD surplus of £1.2bn, on par with the 2013 year-end.

Group Chief Executive Clive Bannister said: "We have continued our strong 2013 performance into the first three months of 2014, delivering a further £235m of cash generation. We are on track to meet our full year cash target.

"The regulatory approval process for the divestment of Ignis is progressing and we anticipate the completion of the transaction by the end of the first half of the year. We remain fully focused on our policyholders with further actions taken during the first quarter aimed at the continued improvement of service and performance."

He also said the company looked forward to "engaging with the FCA review on the fair treatment of long-standing customers in life insurance".

Going forward, the group said it was on track to meet its financial targets, including cash generation by its operating companies of between £500 and £550m in 2014, excluding the proceeds of the Ignis divestment.

It also said gearing would be reduced to 40% by the end of 2016.

The share price had moved 0.29% higher to 685p by 11:05.

NR

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