(Reuters) - Phoenix Group Holdings <PHNX.L> on Thursday handily topped estimates for first-half operating profit and said it expects to generate more cash than originally targeted for 2017 and 2018.
Phoenix, Britain's largest owner of life assurance funds closed to new customers, said it generated 349 million pounds ($445.1 million) of cash in the first half of the year, up from 360 million pounds a year earlier. Analysts had expected 298 million pounds.
The company now expects to exceed its cash generation target of 1 billion pounds to 1.2 billion pounds for 2017 and 2018. Still, it maintained its forecast of generating 2.5 billion pounds of cash between 2018 and 2022.
Phoenix, which makes money by buying European life insurers that are closed to new customers and running them more efficiently, also said it completed its first bulk annuity deal for 470 million pounds with the Trustee of the Marks and Spencer Pension Scheme.
Bulk annuity deals, where insurers take over a company's final salary pension scheme, are becoming popular as businesses look to reduce risks and insurers look for new sources of income.
The company said it would no longer describe itself as purely a "closed" business, but as a consolidator of both open and heritage life businesses with a new business capability.
Phoenix said Solvency II surplus stood at 2.3 billion pounds as of June 30, rising 27.8 percent from Dec. 31, matching analysts' average estimate, according to a company-compiled consensus.
Phoenix will pay an interim dividend of 22.6 pence per share, compared with 25.1 pence a year earlier and in line with analysts' expectations.
The life insurer said IFRS operating profit rose marginally to 216 million pounds in the six months ended June 30. Analysts had expected IFRS operating profit before financing costs of 172 million pounds, according to company-supplied consensus estimates.
Phoenix said it expects to complete its acquisition of Standard Life Assurance at the end of this month, and maintained its targets for cost savings and cash generation from the deal.
(Reporting by Noor Zainab Hussain and Arathy S Nair in Bengaluru; Editing by Sai Sachin Ravikumar)