Andy Briggs, chief executive of Phoenix Group, has agreed to have £70,000 deducted from his annual bonus as the insurer disclosed a series of failings in its accounts for the second time.
The FTSE 100 insurer said it had identified “material corrections to previously reported results”, which led to it having to restate its assets, liabilities, operating profits and shareholders’ equity.
Katie Murray, non-executive chairwoman of the audit committee, who is also the Nat West chief financial officer, pointed to “operational weaknesses” within the group’s internal controls.
Briggs was penalised because problems first identified in 2023 continued into 2024 and “therefore had a greater impact than had been foreseen originally”, the Phoenix board said in the annual report.
Rakesh Thakrar, who quit as chief financial officer in May, also had his bonus trimmed as a result of the failings, with £57,000 cut from it.
It was the second year running that both men were penalised for the accounting lapses. Last year Briggs’s bonus was cut by £50,000 and Thakrar’s by £75,000. Briggs’s total pay package after the bonus reduction came in at £3.45 million, up from £2.97 million last time.
The auditor EY was replaced last May by KPMG, while there have also been internal audit changes, with the departure of the chief audit officer Ian Gray. Neither of these changes was due to the accounting difficulties, Briggs said.
In spite of the botched accounting, shares in Phoenix were marked 9.5 per cent higher to 573½p in afternoon trading as it reported a 22 per cent increase in operating cash generation to £1.4 billion in 2024 and lifted its targets.
Phoenix is one of Britain’s biggest life and pensions groups, with 12 million customers of its products, which it offers under the Standard Life, Phoenix Life, Sun Life and Reassure brands.
The operating cash number was met two years ahead of target, Briggs said, and the aim was to lift it from now on by mid single-digit percentage numbers each year. He also pleased investors by lifting targets for total cash generation and operating profits.
Adjusted operating profit increased 31 per cent to £825 million with both the pensions and saving and the retirement solutions divisions producing growth. The former delivered profits growth of 66 per cent as Phoenix generated another £5.3 billion of inflows from workplace pension schemes.
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In Retirement Solutions, Phoenix received £1 billion of individual annuity premiums, up from £600 million last year, and claimed a 12 per cent market share. It re-entered the sector in 2023. It saw a fall in bulk purchase annuity business — essentially the transfer of liabilities from traditional workplace pension schemes — from £6.2 billion to £5.1 billion.
Phoenix said the accounting problems were due to difficulties in implementing so-called IFRS 17, a new set of accounting rules governing insurance contracts. A reported 2023 loss of £88 million was in fact a profit of £84 million. Adjusted profits were £629 million, not £617 million, and adjusted shareholders’ equity was £4.8 billion, not £4.6 billion.
“We were late implementing IFRS 17. It wasn’t our proudest hour,” Briggs said. Asked about the view of its regulator, the Prudential Regulation Authority, he said: “They weren’t disagreeing with that [verdict], let’s put it that way.”
A 2.6 per cent increase in the final dividend to 27.35p makes a total for the year of 54p. Phoenix is one of the biggest dividend payers in the FTSE 100 with a yield of almost 10 per cent.
