In the half year results statement, it highlighted how SunLife was “a leading provider of financial protection products direct to the over 50s market in the UK and a valuable asset which contributes to the Group’s new business growth”.

But it reported that “given the current uncertainty in the protection market, the Board has decided to discontinue the sale process and will focus on enhancing the value it generates within the Group”.

Phoenix said its overall operating cash generation was up 19% at £647m (H1 2023: £543m), driven by increased surplus from our growing business and strong delivery of recurring management actions.

Total cash generation was £950m (H1 2023: £898m) and Phoenix said it was “confident of delivering at the top-end of our £1.4-1.5bn target range in 2024”.

IFRS adjusted operating profit increased 15% to £360m (H1 2023: £313m5), driven by profitable growth in both Pensions and Savings (£149m) and Retirement Solutions (£210m).

IFRS loss after tax of £(646)m (H1 2023: £(245)m), primarily due to £(698)m of adverse economic variances from higher interest rates and global equities which are the consequence of its SII hedging approach.

IFRS shareholders’ equity therefore reduced to £1.8bn (FY 2023: £2.7bn6 restated), but the reduction in interest rates since June reversed some of the economic variances and this reversal would continue as interest rates reduce further, it said.

Phoenix Group CEO, Andy Briggs (pictured) said: “Phoenix’s vision is to be the UK’s leading retirement savings and income business, and I am pleased with the initial progress we have made in executing on our 3-year strategy, as our 2024 interim financial results demonstrate.

“We have delivered 19% growth in Operating Cash Generation and remitted total cash generation of £950 million in the first half. We have generated 3%pts of recurring Solvency II capital and our resilient balance sheet has enabled us to repay £250 million of debt and to invest in our business.

“Strong growth in our capital-light Pensions and Savings business in particular has supported a 15% increase in operating profit. The Board has declared an Interim dividend which is a 2.5% year-on-year increase.

“I am confident that as we continue to execute on our strategy we are building a growing business that is on track to deliver our financial targets and create shareholder value.”

Phoenix further reported +3%pts of recurring Solvency II (SII) capital generation in H1, supported by recurring Own Funds growth.

The £3.5bn SII surplus “remains resilient (FY 2023: £3.9bn), after planned £0.25bn debt repayment and c.£0.2bn investment into our strategic priorities”, it said.

There was also £250m of debt repayment in the period, in line with its intention to repay at least £500m by the end of 2026; SII leverage ratio reduced to 35% (FY 2023: 36%), with (2)%pts debt repayment benefit partly offset by a reduction in Regulatory Own Funds from higher interest rates due to its SII hedging approach.

Future Growth Capital (FGC) will, subject to all regulatory approvals, support the objectives of the UK’s Mansion House Compact, unlocking investment opportunities in private markets for millions of new pension savers to benefit from the diversification and investment return opportunities that unlisted assets can offer.

FGC aims to deploy an initial £1bn and £10-20bn over the next 10 years into UK and global private markets. Phoenix Group intends to invest 5% of its relevant savings products on behalf of its policyholders, in line with its Mansion House Compact commitment. This will provide scale at inception, with ongoing fundraising led by both Schroders and Phoenix Group.

The new investment manager will design and manage UK and Global multi-private asset solutions for UK insurance and pension clients to open access to a broader range of innovative companies and investment opportunities for millions of UK pension clients. Initially it will leverage Schroders’ pioneering Long-Term Asset Fund (LTAF) investment platform, providing investment advice to the fourth and fifth LTAFs planned for launch by Schroders’ dedicated private markets business, Schroders Capital, in the UK.

A key focus of FGC will be investing on behalf of pension savers to grow the UK’s companies of the future. FGC will provide long-term financing for innovative, growing businesses, helping to create jobs and boost the UK economy. As a major investor in the UK’s private markets, it will help to develop the UK private market ecosystem and to promote the UK as an attractive private market investment destination.

Chancellor of exchequer Rachel Reeves said: “I welcome today’s multi-billion-pound announcement from Schroders and Phoenix Group, which will ensure that more of people’s pension savings are invested into the UK’s highest growing companies. We want pension fund money to work harder for people and the economy. That’s why our pensions review will explore how we can unlock even more investment in the UK economy while boosting pension pots.”

Peter Harrison, group chief executive officer, Schroders, said: “The UK’s private companies are an untapped universe of investment opportunity. By stimulating investment into our private markets, our partnership will address the multiple challenges of the looming retirement crisis and boosting UK growth. By connecting long-term savers with our country’s most inventive companies, Future Growth Capital will help more people to fund a secure and comfortable retirement, whilst supporting businesses to grow and thrive right here in the UK. In doing so, we’ll be making the UK an even more attractive place to live, work, retire and invest.”

Andy Briggs, group chief executive officer, Phoenix Group, said: “For too long, pension savers in the UK have received lower returns than their counterparts in the P7 such as Australia and Canada, partly because the UK allocates much less capital to private market assets than other developed countries. By forming FGC with Schroders, it will help us to deliver our goal of giving UK long-term savers a way to invest in a more diversified portfolio with the potential for higher returns, from a broader range of assets. This facility will also play a significant role in the future design of our flagship defaults. FGC will be a long-term, patient capital investment manager, constructed to ensure that customer protection remains at its core by taking a blended approach to asset allocation.”