Helping people

secure a life

of possibilities

Annual Report and Accounts 2024

Phoenix Group Holdings plc

We are the UK’s largest long-term savings and retirement

business.

Our purpose is helping people secure a life of

possibilities. We want to help people journey to and through

retirement while shaping a better future. It has never been more

important to take action to make living better longer lives a

reality for all of us. This includes engaging people, innovating to

provide solutions at scale, and collaborating with policy makers

and businesses to talk about how we achieve this together.

We’re shaping

that conversation.

Who we are

You can find out more

about our activities,

financial performance,

sustainability strategy

and our progress towards

becoming a net zero

business by 2050 by

visiting our website:

thephoenixgroup.com

1 Company analysis August 2024 based on life technical provisions.

Look out for these icons in

the annual report:

For further reading in

the Annual Report

For more information read

our supplementary reports

Reference to further

reading online

In this report

2 Strategic report

2 At a glance

4 How we deliver our

purpose-led business

10 Chair’s statement

12 Group Chief Executive

Officer’s report

16 Our business model

20 Our growth drivers

22 Introducing our divisions

26 Our strategic priorities

32 Investment case

34 Key performance indicators

36 Business review

43 Risk management

50 Viability statement

52 Sustainability review

84 Corporate governance

84 Chair of the Group Board’s

introduction to governance

86 Board leadership and

Company purpose

91 Division of responsibilities

98 Stakeholder engagement

101 Workforce engagement

103 Composition, succession

and evaluation

118 Audit, risk and internal controls

134 Directors’ Remuneration report

166 Directors’ report

172 Statement of

Directors’ responsibilities

173 Financials

340 Additional information

The Strategic report was approved by the Board of Directors on 16 March 2025

and signed on its behalf by

Andy Briggs

Group Chief Executive Officer

2024 performance

Key performance indicators

All amounts throughout the report

marked with REM are KPIs linked to

Executive remuneration. See Directors’

Remuneration report on pages 134

to 165. All amounts throughout the

report marked with APM are alternative

performance measures. Read more

on page 334.

Operating Cash

Generation

£1,403m

(2023: £1,146m) APM

Group Solvency II surplus

(estimated)

£3.5bn

(2023: £3.9bn)

Group Solvency II Shareholder

Capital Coverage Ratio

(estimated)

172%

(2023: 176%) APM

Total cash

generation

£1,779m

(2023: £2,024m) REM APM

Total ordinary dividend

per share

54.00p

(2023: 52.65p)

IFRS adjusted

operating profit

£825m

(2023: £629m

) APM

IFRS loss

after tax

£(1,078)m

(2023: £84m

profit after tax)

IFRS adjusted

shareholders’ equity

£3,656m

(2023: £4,882m

) APM

Solvency II

leverage ratio

36%

(2023: 36%) APM

1 In the UK, Solvency II as modified by the PRA’s

2024 reforms (‘Solvency UK’) became effective from

31 December 2024. Solvency UK has been referred to

in this document except for where referring to relevant

Alternative Performance Measures and other solvency

metrics, where we refer to Solvency II in line with the

current PRA guidance and consistent with the name

of the prudential regime in the PRA policy manual.

2 The Group identified material corrections to previously

reported results, leading to the restatement of 2023

adjusted operating profit from £617 million reported to

£629 million, the 2023 loss after tax from £88 million as

reported to a profit of £84 million, the 2023 shareholders’

equity from £2,496 million as reported to £2,742 million,

and 2023 adjusted shareholders’ equity from £4,636

million as reported to £4,882 million. Further information

on this restatement can be found in note A3 to the

consolidated financial statements.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

At a glance

Our vision is to be the UK’s leading retirement savings

and income business. We offer a broad range of

savings and retirement income products to support

people across all stages of their savings life cycle

from 18 to 80+, through our family of brands.

Our business

£292bn

total assets under administration APM

c.12m

customers

c.7,000

colleagues

c.£530m

annual dividend paid to shareholders

FTSE 100

and FTSE All World

Standard Life has been

trusted to look after people’s

life savings and retirement

needs for 200 years.

Phoenix Life focuses on

providing a secure home for

policies, brought together

from a number of life

companies over the years.

ReAssure looks after

customers across a broad

range of retirement,

investment and

protectionproducts.

SunLife’s straightforward

and affordable financial

products and services

are designed to meet the

needs of the over 50s.

Our family of brands

For more information visit

thephoenixgroup.com/about-us/our-brands/

2 Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategic report

Our customer solutions

Our business areas

Saving for retirement

• Defined contribution

workplace pensions

• Retail savings for retirement

• Legacy pensions and

savingsproducts

Retirement income

• Income drawdown

and lifetime annuities

• Defined benefit

pensionincome

• Home equity release

Transitioning to retirement

• Pension consolidation

• Fixed-term annuities

• Smooth managed fund

See Our business model

on pages 16 to 19

Financial metrics shown refer to the assets under administration by segment type APM.

We help customers journey to and

through retirement. Our Workplace

business supports people who save

through their Defined contribution

workplace pension scheme, and our

Retail business supports individual

customers to save for, transition to,

and secure an income in retirement.

See more on our Pensions

and Savings division on

pages 22 to 23

We participate across the key

retirement markets, as we seek

to help customers secure income

certainty in retirement, including

Bulk Purchase Annuities and

individual annuities.

See more on our

Retirement Solutions

division on pages 24 to 25

Standard Life International, which

operates in Ireland and Germany,

offers a range of pensions and savings

products, including international bonds.

SunLife offers protection solutions

direct to the over 50s market in the UK.

We are a market leader in the safe

and efficient management of legacy

pensions and savings policies to deliver

better customer outcomes, with a range

of legacy With-Profits savings products

that are closed to new business that we

manage for our customers.

Pensions and Savings£187bn

£292bn

Assets under administration

Retirement Solutions£40bn

Europe and Other£29bn

With-Profits £36bn

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Enhance

Transforming our operating

model and culture.

See pages 30 to 31

Building a

sustainable business

We are committed to embedding sustainability and

best practice governance to maintain high standards

of oversight, integrity and ethics.

Optimise

Optimising our scale in-force

business and balance sheet.

See pages 28 to 29

Grow

Meeting more of our existing customers’

needs and acquiring new customers.

See pages 26 to 27

Our strategic priorities Our sustainability strategy

How we deliver our

purpose-led business

People

We want to help people live better longer lives.

This means tackling the pensions savings gap and

supporting people to have better financial futures

through promoting financial wellness and the role

of good work and skills.

Our purpose

Helping people secure a life of possibilities

Our vision

To be the UK’s leading retirement savings and income business

Planet

We want to help shape a better future. This means

delivering good outcomes for our customers,

playing a key role in delivering a net zero economy

by 2050 and understanding and taking action to

manage our impact and dependency on nature.

For more information view our

Sustainability Report

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Let’s talk about how we make better longer lives

a reality for all. Trusted by c.12 million customers,

our shared purpose, scale and ambition give us

a powerful voice for change.

We’re shaping

the conversation.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

How do we help

people prepare

for a better

retirement?

Responsibility for retirement saving has

moved to the individual. That’s why we’ve

created new propositions and services to

help customers navigate this journey more

easily as they save for retirement and access

an income when that time comes.

Andy Curran

Chief Executive Officer, Standard Life, part of Phoenix Group

Did you know?

14%

Only 14% of Defined contribution savers are on track

to maintain their standard of living into retirement,

above a minimum income level

Shaping the conversation continued

Raising awareness

In 2023 we wanted to start a conversation on the way we

live, work and save for the longer lives we’re now leading.

Our Let’s Start Talking campaign engaged four million

people in the UK to think about this, and in 2024 we wanted

to go further and inspire people to take action. We shared

real life stories of the challenges people face and inspired

c.1.4 million people to either check in on their retirement

savings or find out more about living or working longer.

Campaigning for secure retirement

We believe furthering automatic enrolment’s success by

reviewing its scope, contribution rate and suitability for

different savers is key to ensuring everyone has enough

savings for a secure retirement. Over the last year we

continued our work engaging with government on this

important topic, including sharing our new report illustrating

the cost of delaying automatic enrolment increases.

1 www.thephoenixgroup.com/media/hzcfg1wo/phoenix-insights-

great-expectations-report.pdf

6 Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategic report

Providing new innovative

retirement products

Not all customer needs are being met by current

products so we are launching new capital-light

innovative products to meet this gap, including the

Standard Life Smoothed Return Pension Fund. The

‘smoothing’ process is designed to cushion the daily

ups and downs of the stock market. This helps reduce

the risks created by needing to withdraw income at

regular but otherwise inopportune times, as well as

those arising from the unpredictability of life events.

As many as 9-in-10 people say income certainty

in retirement is important to them, while the same

proportion say it’s important to access all or some

of their money flexibly. For these customers, the

Standard Life Guaranteed Fixed-term Income

product, launched in September 2024 through

our adviser channel, delivers flexibility with an

option to redeem and reassess their financial

needs at a later stage.

Did you know?

9-in-10

people say income certainty

in retirement is important to them

Supporting financial wellbeing

We offer all pension scheme members a host of tools through

an online dashboard and through our Standard Life digital

app to support their financial wellbeing along their journey

towards retirement. This includes the ‘How much will I need in

retirement’ tool which helps customers understand the basic

cost of living they will need to save for in retirement, using the

Pension and Lifetime Savings Association (‘PLSA’) minimum

retirement living standards

We’ve enhanced our open finance platform ‘Money Mindset’

to align with financial priority areas including: Everyday Money,

Savings Goals and Back-up Plans. Additionally, we’ve made

retail discounts available through the platform to facilitate

increased savings.

The support for financial wellbeing extends to our recently

launched ‘Good Money Mood’ webinar series, which helps

provide information, resources and tools to help empower

members with financial decisions at key life moments.

Encouraging pension

consolidation

With the average person having at least 11 jobs

their working lifetime, the process of tracking pensions

down and managing them simultaneously is proving

a challenge for many.

Recognising the problem, Standard Life has partnered

with Raindrop, a fintech offering innovative pension

finding technology, to help tackle the problem for

pension savers throughout the UK and allows

customers to regain control of their pensions savings.

Did you know?

c.£27bn

Value of unclaimed pension pots in the UK

2 Standard Life Retirement Voice 2024.

3 www.gov.uk/government/news/thousands-more-make-contact-with-long-lost-funds

4 Lost Pensions 2022: What’s the scale of the impact?

5 www.retirementlivingstandards.org.uk/

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Shaping the conversation continued

How do we

support a society

where we work

and live for longer?

We need to ensure that government and

employers put in place the policies and

practices that enable people to remain

in good-quality paid work for as long as

they want or need to, so they can save

enough for a decent retirement.

Catherine Foot

Director, Phoenix Insights

Did you know?

£9bn

could be added to the UK economy if the employment

rate for people aged 50–64 rose above 75% by 2030

1 ageing-better.org.uk/sites/default/files/2024-06/50%2B_

Employment_Commitment.pdf

Read more about the Careers can change campaign

For further reading in the Sustainability Report

Inspiring career changes

Our Careers can change campaign champions

the importance of supporting people in midlife and

later to change careers to sustain a longer working life.

The campaign shows people that careers really can

change and provides events, guidance and advice to

help people on their journey.

Caring for Carers

In 2024 we launched our Caring for Carers initiative,

which aims to support our customers, c.24% of whom

are carers, to better balance some of the challenges

they might face, be they personal, financial,

professional or emotional. Through partnering

with Carers UK we can support the great work

it does and help drive real change in society.

8 Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategic report

Read more in our Charting the UK’s Net Zero Future:

Policy recommendations to unlock investment

Read more in our Net Zero Transition Plan

Read more on FGC

2 www.thephoenixgroup.com/news-views/policy-paper-from-phoenix-group-

recommends-key-net-zero-policy-priorities-for-new-parliament/

Investment from the private sector and

the pensions industry will be crucial

in funding the net zero transition, and

we’re using our scale and voice to unlock

investment in a way that supports good

customer outcomes.

Bruno Gardner

Head of Climate Change and Nature, Phoenix Group

How does

the way we

invest shape a

better future?

Unlocking

opportunities in

private markets

We launched Future Growth

Capital (‘FGC’), the UK’s first

private market investment

manager established to

promote the objectives of the

Mansion House Compact.

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 whilst supporting

the goal of achieving better

returns for our customers.

Reducing climate-related

risks for our customers

We’ve also launched a bespoke Climate Aware index

series in collaboration with FTSE Russell. The index

series will enable us to introduce benchmarks that aim

to increase the resilience of customers’ portfolios to

climate change related transition risks.

Did you know?

£1.2tn

could be invested by the pensions industry in climate

solutions by 2035

, accounting for half of the overall

gross capital investment needed by 2035 for the UK

to remain on track with its net zero transition

9Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategic report

Chair’s statement

Driving positive impact

through our purpose

In the UK we face a crisis of retirement

readiness. As the UK’s largest long-term

savings and retirement business

we are

striving to inspire people to take action

and influence the policy agenda to help

people secure a life of possibilities.

In order to increase our customers’

preparedness for the future, we are investing

to develop innovative retirement savings

and income solutions. We also continue

to advocate for the implementation of

policies that increase pension and long-term

savings to the benefit of our customers

throughout their savings life cycle.

We welcomed the government’s commitment

to look at pension outcomes, including

assessing retirement adequacy. There is an

ever-growing body of research evidencing

the scale of the retirement savings gap in the

UK and that by the early 2040s we expect

3-in-5 people will be entering retirement

with inadequate savings

. The government’s

retirement adequacy review is essential to

assess the complexity of factors impacting

adequacy and create consensus on an

implementation timeline for recommended

policy solutions. In support of the review,

Phoenix Insights has proposed a way forward

to address challenges and improve the

retirement prospects for future generations,

which includes furthering automatic

enrolment, and increasing contribution rates

from 8% to at least 12% gradually. Increasing

default contributions into workplace pensions

is undoubtedly the single biggest lever the

We want to help people journey to and

through retirement while investing in a

better future for us all. That’s why our

purpose-led approach focuses on two

critical areas: People and Planet. We

are looking to address the UK pensions

savings gap and manage the risks and

opportunities of climate change.

Driving positive

impact through

our purpose

At the heart of Phoenix

is its purpose and it

drives our determination

to help more people

journey to and through

retirement, while

delivering better

outcomes for all

ourstakeholders.

Sir Nicholas Lyons

Chair of the Group Board

For further reading in the Sustainability Report

10 Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategic report

government could pull to increase the

amount of private pension savings.

To compound the positive impact of our

customers saving more for retirement we

strive to provide them with better returns.

As a founding signatory to the Mansion

House Compact in 2023, we advocated for

reforms to enable pension funds to invest

more into alternative asset classes. We are

delighted that the reforms we advocated

for are now being implemented by the UK

government and enabling us to take tangible

action. In collaboration with Schroders we

launched Future Growth Capital (‘FGC’),

the first private market investment manager

to be established in the UK to promote the

objectives of the Mansion House Compact.

FGC aims to deliver improved outcomes

for long-term pension savers in the UK by

enabling efficient access to private markets

investments and their potential for delivering

higher long-term investment returns.

We can drive good outcomes for our

customers and manage the risks of

climate change by delivering on our Net

Zero Transition Plan commitments and

understanding our impact and dependency

on nature. In parallel we are helping to

unlock the barriers to allow capital to flow

at scale into productive and sustainable

investments. OurUnlocking Investment

in Climate Solutions reportfound that,

with the right reforms and on the right

terms for pension savers, the UK pension

sector could quadruple its investment

in UK climate solutions between now

and 2035 to up to £1.2 trillion

Research suggests that only c.10% of people

access and pay for independent financial

advice

when making important financial

retirement decisions, which means the majority

of people are facing an ‘advice gap’. As a

result consumers face making life-changing

complex decisions without sufficient support,

risking a range of harms. Targeted support, as

proposed by the Financial Conduct Authority

(‘FCA’), could enable firms to provide more

tailored support to customers so they are

better informed to make decisions. Thiswould

be a big change from the status quo, andwe

believe it’s vital to understand more about

how people would use this to ensure the

best outcomes for savers. Our research

is designed to bring informed individual

consumer voices into this discussion.

Strong cash generation supports

opportunity to invest and realise

our vision

We are now one year into our 3-year strategy

to deliver our vision of becoming the UK’s

leading retirement savings and income

business. The team has delivered strong cash

generation in 2024 through an acceleration

in our organic growth story, and the resilience

of our balance sheet has enabled us to invest

across each of our strategic priorities.

2024 has seen us launch new products to

better serve our customers and to harness

our capabilities to achieve the desired

outcomes of our 3-year strategy sooner than

expected, reflected in our upgraded targets.

Attractive shareholder returns

I am delighted to announce that the Board is

recommending a 2.6% increase in the Group’s

2024 Final dividend to 27.35 pence per

share. This means the Group’s Total dividend

for 2024 will be 54.00 pence per share.

In operating its progressive and sustainable

dividend policy and assessing longer-term

affordability, the Board considers the quantum

and trajectory of the Group’s Operating Cash

Generation (‘OCG’), Solvency II surplus and

Shareholder Capital Coverage Ratio, and

the distributable reserves of the Group’s

holding company. In this overall context

and consistent with previous guidance, and

given the Board’s confidence in the Group’s

3-year strategy as evidenced by our revised

targets, the Board considers that the Group’s

consolidated IFRS shareholders’ equity is not

a constraint to the payment of our dividends.

Board changes

During 2024 the Board was delighted to

welcome Nicolaos Nicandrou as Group Chief

Financial Officer (‘CFO’) after Rakesh Thakrar

stood down from the position in September.

Nicolaos’ extensive insurance and asset

management experience will be invaluable

to the Group as we execute our strategy

to achieve our vision and implementour

evolved financial framework. I’d like to take

c.12m

customers

(2023: c.12m)

Section 172 statement

During the year, Directors have applied

section 172 of the Companies Act 2006

in a manner consistent with the Group’s

purpose, values and strategic priorities.

The Directors have acted in a way which

they consider, in good faith, is most likely

to promote the success of the Company

for the benefit of its members as a whole.

In doing so the Directors have paid due

regard to the matters set out in section

172(1) (a) to (f), namely:

• the likely consequences of any

decision in the long-term;

• the interests of any of the

Company’s employees;

• the need to foster the Company’s

business relationships with suppliers,

customers and others;

• the impact of the Company’s

operations on the community

and the environment;

• the desirability of maintaining

the Company’s reputation for high

standards of business conduct; and

• the need to act fairly between

members of the Company.

For details on how the Directors

haveconsidered these matters

inconnection with key decisions,

andoutcomes for engagement

withour key stakeholder groups

throughout 2024 can be found

onpages 98 to 100 of the

Corporate governance report.

this opportunity to thank both Rakesh and

Stephanie Bruce, who served as Interim CFO

whilst we recruited a permanent candidate,

for their positive contributions to the Group.

In addition, John Pollock retired from

the Board with effect from 31 December

2024. We welcome Sherry Coutu who

joins the Board with effect from 1 May

2025. More information relating to Board

changes can be found on page 85.

Thank you

Finally, I would like to take this opportunity

to thank the Board, our colleagues, our

partners and our wider stakeholders for

their hard work, dedication and support in

delivering another year of strong progress.

Sir Nicholas Lyons

Chair of the Group Board

1 Company analysis August 2024 based on life

technicalprovisions.

2 www.thephoenixgroup.com/media/sjodudvd/

tomorrows-problem-analysing-the-future-impact-of-dc-

pension-undersaving.pdf

3 Relative to our 2019 baseline.

4 www.thephoenixgroup.com/news-views/policy-paper-

from-phoenix-group-recommends-key-net-zero-policy-

priorities-for-new-parliament/

5 www.thephoenixgroup.com/phoenix-insights/publications/

what-role-could-targeted-support-play-in-supporting-

consumers-at-retirement/

£292bn

total assets under administration APM

(2023: £283bn)

52%

reduction in the carbon intensity of

our listed equity and credit portfolio

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Andy Briggs

Group Chief Executive Officer

Delivering progress

against our

3-year strategy

Phoenix Group is the UK’s largest long-term

savings and retirement business, managing

£292 billion of assets for c.12 million

customers. Our purpose of ‘helping people

secure a life of possibilities’ is embedded in

everything that we do as we help customers

journey to and through retirement.

Group Chief Executive Officer’s report

We proudly serve people with our products

at all stages of their life savings cycle from

18to 80+. Our business mix is balanced across

the long-term savings and retirement market,

which can be largely categorised as Pensions

and Savings and Retirement Solutions.

Around two-thirds of our business by assets

is Pensions and Savings, which principally

consists of capital-light fee-based products and

c.14% of our business by assets is Retirement

Solutions, our capital-utilising business.

See pages 22 to 25 Introducing

our divisions for more detail

In March 2024 we outlined a 3-year

strategy for 2024–26, which will support

us in delivering our vision of being the UK’s

leading retirement savings and income

business; a sustainable and growing

business, which delivers growing cash,

capital and earnings, and which can support

a progressive and sustainable dividend.

Growth in our Operating

Cash Generation was

underpinned by the

positive trading

momentum in both our

Pensions and Savings

and our Retirement

Solutions businesses.

2024 highlights

• Excellent customer focused proposition development

to leverage our scale customer base

• Strong build-out of our in-house Asset

Managementcapabilities

• Good start to our cost reduction programme by

progressing our migrations and simplifying our business

• Operating Cash Generation of £1.4bn, achieving

our 2026 target two years early

• Attractive shareholder returns supported by our

progressive and sustainable ordinary dividend policy

• £0.3bn excess cash generated this year which

is available to deploy in line with our capital

allocationframework

12 Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategic report

We are executing on our 3-year strategy to become

the UK’s leading retirement savings and income

business, meeting more of our customers’ retirement

needs, delivering on our financial targets and creating

value for our stakeholders.

Andy Briggs

Group Chief Executive Officer

Progress against our 3-year

strategy underpins upgraded targets

I am pleased with the progress we have

made in the first year into our 3-year strategic

journey. There is clearly more to do, but we

are ahead of schedule from both a strategic

and financial performance perspective

and I am encouraged by the significant

opportunities we have ahead of us.

Phoenix has always managed its business

for cash and capital. As part of our evolved

financial framework we introduced Operating

Cash Generation (‘OCG’) in March 2024 as

the metric which we feel best demonstrates

the long-term underlying value generation

from our business. We are a highly cash

generative business reflected in the 22%

growth in OCG in 2024 to £1,403 million

(2023: £1,146 million), enabling us to achieve

our 2026 target two years early. This growth

was driven by a strong performance in

both Pensions and Savings and Retirement

Solutions, the benefits of our cost savings

programme and another strong year of

delivering recurring management actions.

At this level, not only does OCG more than

cover our recurring uses and a growing

dividend, but it delivers around £300 million

of excess cash each year, providing us with

additional optionality to deploy capital

into the highest returning opportunity,

including further deleveraging, investment

into growth, M&A and share buybacks.

Total cash generation of £1,779 million

(2023: £2,024 million) exceeded the

top-end of our £1.4–1.5 billion target range.

The year-on-year decline was due to the

prior year benefiting from a c.£400million

impact from a Part VII transfer.

Our Solvency balance sheet remains resilient

with our Shareholder Capital Coverage

Ratio (‘SCCR’) of 172% (2023: 176%) in the

top-half of our 140–180% operating range.

The Group’s IFRS adjusted operating profit

grew 31% to £825 million (2023: £629

million

) driven by profitable growth in both

our Pensions and Savings business and

our Retirement Solutions business. Growth

in the underlying businesses, particularly

Retirement Solutions, is also reflected in

the 14% growth (2023: 10%) in the Group

Contractual Service Margin (‘CSM’). However,

we are reporting an IFRS loss after tax of

£1,078 million (2023: £84 million profit

). This

primarily reflects adverse economic variances

which are a consequence of our Solvency

II hedging approach that protects our cash

and capital and therefore our dividend, as

well as planned investment spend as we

deliver our 3-year strategy. This means our

IFRS shareholders’ equity has reduced in the

period to £1,213 million (2023: £2,742 million).

For 2024 the Board has recommended a 2.6%

increase in the Final dividend of 27.35 pence

per share, bringing our Total dividend to 54.00

pence per share, extending our strong track

record of dividend growth. The progress we

have made in the first year of our 3-year strategy

means we are achieving our desired outcomes

sooner than expected, which in turn has led us

to upgrade a number of our financial targets.

Having achieved our 2026 OCG target two

years early we have upgraded our 2024–2026

total cash generation target to £5.1 billion, up

from £4.4 billion, and we now expect OCG

to grow at mid-single digit percentage per

annum going forward. In addition we have

upgraded our 2026 IFRS adjusted operating

profit target from £900 million to c.£1.1 billion,

a level of profit which is sufficient to cover

our recurring uses and create excess to cover

non-recurring uses. The remainder of our

2026 financial targets are reaffirmed.

Please see more detail in our

Business review on pages 36 to 42

Celebrating our 200-year heritage

The Standard Life brand has a deep history and heritage, with

roots that can be traced back to 1825. The brand is well known

and trusted by advisers and customers and we are very proud

to be celebrating our 200-year anniversary this year.

Our Standard Life brand continues to play a pivotal role in

achieving our future growth ambitions. We are continuing to

invest in the brand, building products and services to help

people feel confident about their financial plans in retirement;

and ensuring that we are a brand that our customers, clients

and advisers can continue to rely on.

We are proud to have been around for 200 years and are looking

forward to continuing to help people long into the future.

1 The Group identified material corrections to previously

reported results, leading to the restatement of 2023

adjusted operating profit from £617 million reported to £629

million, the 2023 loss after tax from £88 million as reported to

a profit of £84 million, the 2023 shareholders’ equity from

£2,496 million as reported to £2,742 million, and 2023

adjusted shareholders’ equity from £4,636 million as

reported to £4,882 million. Further information on this

restatement can be found in note A3 to the consolidated

financial statements.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Group Chief Executive Officer’s report continued

£1,403m

2024 Operating Cash Generation

(2023: £1,146m) APM

£1,779m

2024 Total cash generation

(2023: £2,024m) REM APM

+2.6%

2024 Final dividend increase

(2023: 2.5%)

A combination of employers looking to

simplify arrangements, seeking best-in-

class customer propositions, and evolving

regulatory and legislative factors is driving

the shift. With a top-3 position in this market

already with assets under administration

(‘AUA’) of £66.5 billion we are benefiting from

the £70–80 billion of annual market flows,

demonstrated by our gross inflows of £9.3

billion in 2024, and will continue to benefit.

Corporates are continuing to de-risk their

Defined benefit (‘DB’) pension scheme

liabilities through Bulk Purchase Annuities

(‘BPA’) transactions in order to focus

on their core business. We have built a

compelling end-to-end BPA proposition

which is competitively priced and supported

by bespoke administration. We also re-

entered the individual annuity market

in 2023 and have already managed to

secure a 12% market share, driven by our

ability to launch a product that is both

competitively priced and delivered via

aleading digital customer experience.

Our existing c.12 million customers provide

us with a unique opportunity to win market

share in the retail market – both via advisers

and direct to customers. We have been

encouraging customers to consolidate

towards and decumulate with us. Ourability

to win is further evidenced by our expanding

product range now meeting more of our

customers’ needs in retirement and the

opportunity to attract new customers

through our product innovation and an

omni-channel customer experience.

Ourability to leverage the opportunities

that the retail market presents will be further

enabled by the work we are doing to build

the capabilities to provide customers with

the advice and guidance they need. This will

enhance our ability to offer timely services

to our customers and is very much aligned

to our priority, to provide consistently

good outcomes for our customers.

See pages 20 to 25 for more

on Our growth drivers and

Introducing our divisions

1 Company estimate based on data from Broadridge,

PPF Purple Book, and company financial disclosures.

2 Company estimate based on data from Platforum,

Fundscape, Broadridge, HMRC, ABI, FCA, LCP and

company financial disclosures.

Building on our strengths

toachieveour vision

To achieve our vision this phase of our strategy

is about building on the strong foundations

we have already developed, leveraging our

scale and strong positions in the attractive

markets we operate in and completing

our full-service customer offering.

To ensure we offer our customers the full

range of retirement savings and income

solutions, we have successfully launched a

number of new propositions in 2024 which

supplement our existing portfolio range.

These product launches were driven first

and foremost by customer needs, who

increasingly want to balance having a

flexible and guaranteed income as they

secure income for retirement. At the

same time these products offered us the

opportunity to participate in the growing

retirement market in a capital-light way.

There is a significant opportunity to scale

these offerings further through additional

distribution channels, as we continue to build

up a positive track record of performance.

Alongside a broad product portfolio, we

know we need to offer an excellent customer

experience to ultimately deliver better

outcomes for our customers. To support

this we have been investing in a number of

digital tools as well as telephony capacity

to both increase customers’ financial

wellness and to create the opportunity to

deepen our relationships with them. We

have also entered into partnerships with

fintechs, including Raindrop and Money

Hub, which supplement our engagement.

The ongoing progress we are making

in integrating and migrating customer

policies following M&A activity and

continued investment into our digital

infrastructure and systems will enable

a seamless digitally-led journey for our

customers through their savings life cycle.

We have built Phoenix Asset Management,

a highly skilled, scale in-house asset

management capability. Our operating model

strives for a balance between in-housing

and partnering. The in-house team drives

all strategic asset allocation decisions and

selects best-in-class partners to work with in

each asset class. The in-house capabilities

we have built enable us to deliver high

levels of recurring management actions.

To support us on our 3-year journey we

have a clear set of strategic priorities to

1) Grow 2) Optimise and 3) Enhance. Our

strategic priorities are informed by – and

in support of – our ESG themes of People

and Planet which look to address the UK

pensions savings gap and manage the risks

and opportunities of climate change.

See pages 52 to 83 for our

Sustainability review

A strategy supported by existing

large and growing markets with

strong market positions

The UK long-term savings and retirement

market is already large, with c.£3.2 trillion

of total stock

, but it is also growing fast,

with annual flows of c.£220–270 billion

The breadth of our enlarged and increasingly

innovative product portfolio in parallel

with our existing strong positions in the

key workplace, annuity and retail markets

means we are able to take advantage of a

number of growing market opportunities.

The workplace market continues to see

a structural shift away from unbundled

trust arrangements to bundled solutions,

including Master Trust that we support.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Demonstrable progress against

ourstrategic priorities

Executing on our strategy supports

growth in assets and enhanced margins

to grow our Pensions and Savings business.

In parallel, disciplined deployment of

capital into annuities within Retirement

Solutions has enabled us to optimise

returns and grow our CSM.

As we continue to optimise our scale in-force

business and balance sheet we have further

strengthened our asset management

capabilities and have repaid historic

M&A-related debt as part of our ongoing

debt repayment programme.

Enhancing our operating model has enabled

us to deliver £63 million of run-rate cost

savings in 2024 and make significant progress

with the migration and integration of policies.

See pages 26 to 31 for more

detail on our progress against

our strategic priorities of Grow,

Optimise and Enhance including

our non-financial KPIs

Summary and outlook

The economic backdrop and pension

‘advice gap’ in the UK mean our societal

purpose of helping people secure a life

of possibilities is even more important.

Our 2024 results reflect strong operating

momentum in the business, delivering

profitable growth in Pensions and Savings

andRetirement Solutions, underpinned

by progress against our strategic priorities

of Grow, Optimise and Enhance. This

enabled usto deliver our 2026 OCG

target two yearsearly and upgrade our

2024–26 total cash generation and our

2026 operating profit targets. Our SCCR

remains comfortably in the top half of our

SCCR operating range and our strong

cash generation has enabled us to repay

debt whilst also investing in our business.

As we continue to strive to meet the needs

of our customers, colleagues and other key

stakeholders, this will support us in achieving

our vision of becoming the UK’s leading

retirement savings and income business.

We will continue to invest to deliver this vision,

which will enable us to continually grow our

business sustainably over time, reflected in

the mid-single digit percentage growth per

annum in OCG we expect going forward.

This strong OCG growth delivers a

secure, growing dividend and with at

least c.£300million per annum excess

cash to deploy, this creates further

financial flexibility and enables us to

focus on further deleveraging.

Thank you

The demonstrable progress Phoenix Group

has made in this first year of our 3-year

strategy could not have been achieved

without our fantastic people. This progress

has seen the business continue to change

and I would like to thank my colleagues

throughout the Group for their continued

contribution and dedication as we have

navigated these changes in what has been

a challenging environment for some.

I look forward to working with Nicolaos

and the rest of our team in delivering

significant progress in 2025 and beyond.

Andy Briggs

Group Chief Executive Officer

Delivering on our vision to become the UK’s leading retirement

savings and income business

Digital customer interface with personalised data, guidance and advice

Assets and fund performance optimised by Phoenix Asset Management

Efficient Group-wide operating model

We deliver this by investing to Grow, Optimise and Enhance

Retirement Solutions

Innovative retirement

income solutions

Pensions and Savings

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our business model

As the UK’s largest long-term savings and retirement business

our focus is on offering the right retirement savings and income

products to meet the needs of our customers today and in the future.

A growing and

sustainable business

What we do

We want to improve the financial futures

of our customers by offering a simple range

of innovative retirement products and solutions

tosupport them through all their adult life stages.

See pages 18 to 19 for our products and solutions

For more information on our family of brands visit

thephoenixgroup.com/about-us/our-brands/

1 Company analysis August 2024 based on life technical provisions.

Creating long-term value

Using our scale and ambition, we are

committed to creating long-term value for

all our stakeholders. We make money by

earning a fee on our capital-light fee-based

products and managing the associated costs.

On our annuity products we earn a spread

by effectively managing the risks to optimise

the returns on the assets backing the liabilities.

See our Investment case on pages 32 to 33

Our purpose

Our vision

To be the UK’s leading

retirement savings and

income business

Helping people secure

a life of possibilities

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Wealth

Lifetime

• Defined contribution

workplace pensions

• Retail savings for retirement

• Legacy pensions and

savingsproducts

• Pension consolidation

• Fixed-term annuities

• Smooth managed fund

• Income drawdown

and lifetime annuities

• Defined benefit

pension income

• Home equity release

Saving for

retirement

Transitioning

to retirement

Securing income

in retirement

Ensuring we achieve consistently

good outcomes for our customers

Our first priority is ensuring we achieve consistently good outcomes for

our customers and helping millions of people secure a life of possibilities.

Additional priorities include…

Reinvestment back

into the business

• Grow to meet more of

our customers’ needs and

acquire new ones

• Optimise our scale in-force

business and balance sheet

• Enhance and transform our

operating model

Distribution back

to shareholders

• Sustainable and growing

Operating Cash Generation

underpins our progressive

and sustainable ordinary

dividend policy

Positive outcomes for

ourother stakeholders

• Managing the risks and

opportunities presented

byclimate change

• Inspiring our colleagues and

attracting and developing

newtop talent

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our business model continued

Helping

customers

journey to

and through

retirement

We focus on meeting the long-term savings and

retirement needs of our customers by providing the

products they need through our family of brands,

as they accumulate wealth through the savings phase,

then transition to securing income in retirement.

Saving for retirement

Defined contribution

workplace pensions

With a Defined contribution (‘DC’)

workplace scheme, individuals and

typically their employer pay into their

pension on a regular basis as they work.

Standard Life is one of the leading UK

providers that help employers and trustees

set up high-quality, easy-to-run workplace

pension schemes, including our award-

winning Master Trust offering. We offer

a leading digital interface for employees

to track and engage with their pensions.

Saving for retirement

Legacy pensions

and savings products

Over the years, Phoenix Group has grown

through the acquisition of closed books

of legacy pension and insurance policies

from anumber of companies. We are the

market leader in the safe and efficient

management of legacy pensions and

savings policies, with a strong track record

of delivering better outcomes for customers

of long-standing policies that are no longer

sold in the widermarket. We are leveraging

the products and services from Standard Life

to better support these customers at

retirement and we are providing a digital

and telephony guidance journey for when

they want to access their income.

Saving for retirement

Retail savings

for retirement

We help retail customers both directly

and indirectly via financial advisers

by providing a range of pension and

investment solutions to support their

retirement ambitions.

For many their first experience of saving for

retirement begins at the workplace. Our focus on

supporting members’ understanding of pensions

and their wider financial wellness is creating

stronger engagement and the prospect of better

financial outcomes.

Gail Izat

Managing Director of Workplace

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Securing income in retirement

Home equity release

Our Mortgage Solutions business seeks

toenable homeowners to access their

property wealth in later life to financially

support their retirement aspirations, by

partnering with established lenders to fund

innovative mortgage solutions in the market.

Securing income in retirement

Income drawdown and

lifetime annuities

Income drawdown provides a flexible way

for our customers to take income from

their pension pot as they can take out

money whenever they like, while our

lifetime annuity product offers pension

savers secure guaranteed regular income

certainty in retirement.

Securing income in retirement

Defined benefit

pension income

Also known as a ‘final salary’ pension,

a Defined benefit (‘DB’) pension pays

out aguaranteed income to scheme

members for lifein retirement, but they

are generally no longer offered to

employees. The remaining DB pension

schemes are exposed to a range of

market and demographic risks that the

sponsoring employer is responsible for.

To remove these risks and enhance

benefit security forscheme members,

sponsors and trustees look to insure some

or all of their pension scheme obligations

with a specialist insurance group like

Phoenix, through our Standard Life brand.

Transitioning to retirement

Pension consolidation

For people who have worked multiple

jobsover the years, they may have been

auto-enrolled into a number of pension

plans by past employers, alongside any

pension plans that they may have opened

directly. We provide a range of tools to

and through retirement to help customers

with planning their savings and retirement.

For example, Standard Life’s pension

transfer and consolidation expertise means

customers can combine their pension plans

into a single plan, making things easier

to track and manage.

Transitioning to retirement

Fixed-term annuities

The Standard Life Guaranteed Fixed-term

Income product provides a guaranteed

income for a particular period of time,

typically between three and 25 years,

but also provides flexibility with an option

for customers to surrender it and reassess

their financial needs at a later stage.

It’s a useful tool when bridging the gap

in the run-up to retirement.

Transitioning to retirement

Smooth managed funds

Smoothed funds are designed to provide

steadier long-term growth. They hold a

range of different investments and are

designed to reduce the worry of investing

by smoothing out the short-term ups and

downs of the investment markets.

For more information visit

standardlife.co.uk

A key part of our growth strategy

is leveraging the power of the

Standard Life brand which we utilise

across our products to support

customers as they save for, transition

to and secure income in retirement.

Retirement is one of life’s

biggest transitions and

securing good outcomes

lies at the heart of this.

Innovation in retirement

income product design

is key to tackling this

challenge, and we’re proud

to be delivering solutions

that meet this need.

Claire Altman

Managing Director of Individual

Retirement Solutions

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our growth drivers

There is a huge societal need to better

support people on their journey to and

through retirement and significant

growth opportunities are available

through the provision of retirement

savings and income solutions.

…which are accelerated by the current economic environment

Salary inflation

Higher salary inflation has accelerated growth from our

existing Workplace pension schemes. Despite cost-of-living

pressures the vast majority of consumers are not opting out of

making contributions into their workplace schemes.

Higher market flows

Through a combination of changes in inheritance

tax rules, market entrants stimulating pension consolidation

and the future implementation of Pensions dashboards,

people are being prompted to think more about what they

do with their long-term savings and therefore are more

likely to move their savings to seek better value from their

long-term savings provider.

We have clear structural growth opportunities in the market…

Our Pensions and Savings propositions help customers journey to and through retirement.

Workplace

The rapidly growing workplace pension scheme market

is primarily driven by automatic enrolment, an ageing

population, the shift to Master Trust schemes, and the

move from DB pension schemes to DC pension schemes.

Retail

As the responsibility for retirement planning has shifted

towards individuals away from corporates, people are seeking

an increasingly broad range of innovative retirement savings

and income products either directly or via advisers.

c.£100–120bn

of annual flows

1 Company estimate based on data from 2024 Broadridge Navigator report,

Fundscape, HMRC, ABI, FCA, and financial disclosures.

c.£70–80bn

of annual flows

1 Company estimate based on 2024 Broadridge Workplace

Provider Benchmarking report.

Why we will win

Leading and innovative propositions, excellent

customer service and a scale customer base

Read more about Retirement

Solutions on pages 24 to 25

See our Strategic priorities

section on pages 26 to 31

c.£40–60bn

of annual flows

1 Company estimate based on 2024 LCP pension risk transfer report.

c.£7–9bn

of annual flows

1 Company estimate based on publicly available information.

1-in-7

Only 1-in-7 DC pension savers are on track for a retirement

income that maintains their current living standards

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Pensions and Savings £187bn

Retirement Solutions £40bn

Europe and Other £29bn

With-Profits £36bn

Pensions and Savings £316m

Retirement Solutions £474m

Europe and Other £96m

With-Profits £41m

Introducing our divisions

Pensions and Savings

Helping our customers to and through retirement

Pensions and Savings is our capital-light fee-based business. Our Workplace

and Retail offerings are supported by Phoenix Asset Management as it partners

with the best-in-class asset managers and supports innovative fund solutions.

• Consolidate our top-3 provider

position by retaining our existing

schemes and attracting new ones

• Ambitions to be a top-5 player in the

retirement savings and income market

as existing customers stay and consolidate

with us and we attract new customers,

via the direct and intermediated channels

c.£70–80bn

annual market flows

1 Company estimate based on 2024 Broadridge Workplace

Provider Benchmarking report.

1 Fundscape 1Q24–3Q24, financial disclosures.

2 Company estimate based on data from 2024 Broadridge Navigator report,

Fundscape, HMRC, ABI, FCA, and financial disclosures.

c.£100–120bn

annual market flows

Top-10 player

Top-3 player

Workplace

Retail, direct and intermediated

Business areas

AUA APM IFRS Adjusted operating profit

APM

Strong market positions with

structural growth opportunities

Compelling strategy to

support our ambitions

1 Excludes £102m corporate centre costs.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

• Scale: 1-in-5 adults are customers ofPhoenix

• Innovative propositions available in the market

which meet customers’ evolving needs

• Great digital experience

• Leading employer proposition including

award winning Master Trust, underpinned

by investment solutions

• Excellent customer service underpinned

by digital-first member engagement

• Strong governance reflected in high

calibre Master Trust Board

• Cost efficient administration

Standard Life’s on-going

focus on digital developments,

member engagement and its

positive commitment to future

investment as well as development

of the Master Trust arrangement

reinforced our decision to make

this important appointment.

Jo Udall

EMEA Benefits Lead, Siemens plc

Growth in AUA

+11%

Average AUA vs 2023

Enhancing our operating margin

17bps

Operating margin, up 5bps in FY2024

Drives growing IFRS adjusted operating profit

£316m

66% growth year-on-year

Measuring our financial success

Read more on our Growth drivers on pages 20 to 21

Read more in our Strategic priorities section

on pages 26 to 31, KPIs on pages 34 to 35

and Business review on pages 36 to 42

What we’ve built to help us

win in growing markets

What our customers and

key stakeholders say

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Pensions and Savings £187bn

Retirement Solutions £40bn

Europe and Other £29bn

With-Profits £36bn

Pensions and Savings £316m

Retirement Solutions £474m

Europe and Other £96m

With-Profits £41m

Introducing our divisions continued

Retirement Solutions

Helping customers secure income certainty in retirement

Our Retirement Solutions business is our capital-utilising business and

includes our BPA and individual annuity offerings. These are supported

by Phoenix Asset Management’s asset-liability management capabilities.

Business areas

AUA APM IFRS Adjusted operating profit

APM

Bulk Purchase Annuities

Individual annuities

• Consolidate our top-5 position through

disciplined capital deployment and

ongoing proposition development

• Ambition to be established as a top-3

distributor of annuities and innovative

income in retirement solutions

c.£40–60bn

annual market flows

c.£7–9bn

annual market flows

12%

market share in 2024; the first full calendar year

of trading since re-entering the market

Top-5 player

Three-year average ranking based

on BPA annuity volumes

Strong market positions with

structural growth opportunities

Compelling strategy to

support our ambitions

1 Excludes £102m corporate centre costs.

1 Company estimate based on 2024 LCP pension risk transfer report.

2 Company estimate based on publicly available information.

1 Internal estimate based on publicly available information.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

• A high-quality member service proposition

• Leading employer proposition enabled through

comprehensive buy-in and buy-out capabilities

and a full suite of de-risking propositions including

combined DB and DC solutions

• Competitive pricing driven by our growing in-house

asset origination capabilities and expanding our

panel of reinsurance partnerships

• Fast guaranteed pricing and timely execution

with a digital-first approach

• Enhanced end-to-end customer experience

• Expanded our product range to meet more

of our customers’ needs, having re-entered

themarket in 2023

The BPA transaction represented a significant

step in our ongoing de-risking strategy, ensuring

long-term security for our members. Standard Life’s

expertise was instrumental in navigating this

stage of our journey and achieving our objectives.

We look forward to continuing our work together

to safeguard our members’ futures.

Kate Leigh

Client Director at Vidett and Trustee

of the Rolls-Royce and Bentley Pension Scheme

Reduction in new business strain to

c.3%

supported by improved capital efficiency

and gilt-heavy asset allocation in 2024

Supporting strong growth in Group CSM in 2024

+14%

Measuring our financial success

Read more on our Growth drivers on pages 20 to 21

Read more in our Strategic priorities on

pages 26 to 31, KPIs on pages 34 to 35

and Business review on pages 36 to 42

Pricing internal rates of returns (‘IRRs’) of

mid-teens%

demonstrating pricing discipline

With c.£200m capital p.a. enabling

c.£6.1bn

of annuity premiums written in 2024

What we’ve built to help us

win in growing markets

What our

customers say

Processing annuity applications is by far the

most important issue for annuity providers

(exceptfor rates) and whilst many providers

havehad challenges with service, on the many

occasions I’ve submitted annuity applications

withStandardLife, they have been efficient and

proactive. Standard Life are also brilliant with

helping advisers like me with technical queries.

Billy Burrows

Founder of Annuity Project and financial adviser,

Eadon & Co

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our strategic priorities

Grow

Our commitment to improving the online

experience for customers saw us deploy over

200 improvements last year and customers

responded – logging in over 27 million times

in 2024, up nearly 30% year-on-year. Our

market-leading app continues to drive high

customer engagement, with it making up 66%

of logins in 2024. Both our combined Group

customer satisfaction score for telephone and

digital increased by one percentage point

year-on-year to 88% and 94%, respectively.

We believe that managing the financial risks

associated with climate change can improve

member outcomes which is why we continue

to enhance sustainability characteristics

across solutions including Sustainable Multi

Asset and Future Advantage ranges. From

February 2025 we started aligning over £32

billion of regional equity and corporate bond

componentry to the “Sustainability Improvers”

label within the FCA’s new Sustainability

Disclosure Requirements (‘SDR’); in doing

so we believe we are the first pension

provider to broadly align their pension funds

to the SDR labels. This work is on track to

complete during the first half of 2025.

Providing tools to support

financial wellness and ease

the transition toretirement

Having acquired customers through our

Workplace offering, we are focused on

retaining them for longer as they transition

to and secure income in retirement.

With the average person having at least

11 jobs in their working lifetime

, the process

of tracking pensions down and managing

them simultaneously is proving a challenge

for many. Recognising the problem,

Standard Life has partnered with Raindrop,

a fintech offering innovative pension finding

technology, to help tackle the problem

Given the significant market opportunities

available to us (see our Growth drivers

on pages 20 to 21) we have consciously

chosen to invest in the propositions and

solutions that will better meet the evolving

needs of our customers. We are further

developing our successfully established

Workplace and Annuities businesses and

we have strong foundations from which we

can further develop our expanding range

of innovative Retail propositions. Together

this will improve Group net fund flows and

deliver strong growth in Operating Cash

Generation (‘OCG’) over the long term.

We also continue to engage people in

their financial futures, and to advocate

for broader societal action to tackle

undersaving and encourage financial

inclusion, which is a critical aspect of driving

positive impact through our purpose.

Enhancing our Workplace

proposition to further support

customers as they save for retirement

We see our Workplace proposition as one

of our key customer acquisition vehicles.

Within the workplace market, Master Trust

is the fastest growing segment. Testament

to the attractiveness of our proposition, our

Master Trust scheme assets have grown

significantly and in 2024 exceeded £11 billion.

In addition to the customer proposition

being key to attracting large schemes,

it is often important to be able to address

bespoke customer requirements. In 2024,

we made enhancements to our Master

Trust to support some of these needs.

These developments alone facilitated

the transfer of £1.1 billion of assets.

for pension savers throughout the UK and

allow customers to regain control of their

pensions savings. Standard Life’s pension

transfer and consolidation expertise

provides the ideal support for customers

looking to consolidate their pensions.

We are also reframing the way we talk to

savers about their retirement options given

the importance placed on both certainty

and flexibility of retirement income for our

customers. Our Mixed Income Builder tool

is a key part of our new framework, helping

members better navigate and understand

their spending needs in retirement – and

identifying the best way to deliver this income.

Launching new and

innovative Retail products

Our Retail business remains in net fund

outflow at present, but through better

supporting and engaging the 1-in-5 adults

who are already Phoenix Group customers

as they make retirement decisions and

access their retirement funds, we will be

able to make inroads into stemming the

annual outflows from our legacy products.

In response to increased customer demand

for flexible retirement income solutions

we have been investing to enhance our

existing propositions and we have launched

several new capital-light products in the

market. These launches have predominantly

focused on the intermediated market with

significant potential still to come from

broadening our direct capabilities.

We launched the Standard Life Smoothed

Return Pension Fund, exclusively through the

Fidelity Adviser Solutions platform. Take-up

from advisers has been encouraging and

in its first year the fund has performed

strongly, delivering 8.3% growth

. With that

demonstrable track record we anticipate

attracting additional funds to the product.

Meeting more of our existing

customers’ needs and

acquiring new customers

Priorities for 2025

• Expand our range of

attractive Retail market

propositions and innovative

retirement income solutions

• Develop our Retail advice

proposition

• Invest c.£200m p.a. intoannuities

• Shape thinking and influence

retirement income adequacy

through research and work

with UK policymakers

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

2022 2023

AUA

2024

£50.7bn

£57.5bn

£66 .5bn

£5.5bn

£45.2bn

£8.8bn

£48.7bn

£11.2bn

£55.3bn

Master Trust

Other Workplace schemes

We are also developing similar products

ondifferent distribution platforms

planned for launch in 2025 to expand

our reach tocustomers.

Following the successful launch of

the Standard Life Pension Annuity last

year, we launched the Standard Life

Guaranteed Fixed-term Income product

in September. We have had an extremely

encouraging response to this product.

The Annuity Desk is also now available

to Standard Life customers, providing

a seamless, personalised journey when

exploring annuity options. This service

offers tailored guidance and whole-of-

9-in-10

people say income certainty in

retirement is important to them,

while the same proportion say

it’s important to access all or

some of their money flexibly

1 Standard Life Retirement Voice 2024.

Fixed-term annuity product

The Standard Life Guaranteed Fixed-term

Income, a guaranteed income product designed

to offer more certainty for people approaching

or in retirement but with added flexibility to

adapt their plans once the fixed-term period

comes toan end.

This can help bridge an income gap, such as

retirement before state pension payments begin,

or to ensure the length of time a guaranteed

income will be paid.

Read more on our website

Growth in Standard Life Master Trust and Workplace assets

market comparisons, helping customers

make informed decisions as they plan

for their financial futures. Other Group

customers will be included in future phases.

Progressing our in-house

advicecapabilities

Alongside Phoenix Insights’ contribution to

the FCA’s consultation on Targeted Support,

we’re progressing the development of our

in-house advice capabilities to support

customers with their key financial decisions,

with a focus on the transitioning to and

in-retirement life stage. We’re committed

to offering customers the right support for

them and helping address the persistent

advice and guidance gap in the UK.

We are helping new and existing customers

on their journey to and through retirement.

Extending our BPA capabilities

We have made significant advancements

to our customer proposition in BPA including

the introduction of our buy-out capability,

completing our full-service market offering

and providing an additional customer

acquisition tool.

We offer all members access to our digital

self-service portal allowing more flexibility

to manage their policies including a facility

to go paperless from day one. Our BPA

policies covered over 200k members at the

end of 2024.

1 www.gov.uk/government/news/thousands-more-make-

contact-with-long-lost-funds

2 Performance net of fund charges from 31 January 2024,

when the fund was soft launched, to 31 January 2025.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our strategic priorities continued

Optimise

be linear as we may choose to refinance

some tranches of debt in the intervening

period. These levers include allocation of

excess cash to repay debt and continued

recurring Own Funds generation.

Delivering recurring

managementactions

In 2024 we delivered £537 million of recurring

management actions (2023: £313 million),

therefore exceeding our £400 million

recurring management actions target. In part

this over-delivery was because we brought

online planned capabilities in Phoenix Asset

Management earlier than we expected.

We have proactively invested in Phoenix

Asset Management talent and now have

over 400 full-time employees, up from

fewer than 50 in 2020, from investment

professionals to credit risk experts.

Our approach to asset management

has been to determine the optimal asset

allocation for each of our funds and then

leverage our relationships to partner with

the best asset manager in each asset

class that we want to operate across.

Going forward, with the scale and capabilities

now within the team we will selectively look

to manage some assets in-house. All of which

is underpinned by leading edge technology

with diligent and focused credit risk

management embedded.

These recurring management actions

are the small repeatable actions that we

take to optimise our in-force balance

sheet. They contribute to increase cash,

capital and earnings, whilst ensuring that

our risk profile remains unchanged.

They can be broadly categorised into three

buckets of annuity portfolio re-optimisation,

capital improvements and fund simplification.

To optimise our scale in-force business

and our balance sheet we are deleveraging

and further enhancing our strong existing

capabilities in asset and liability management

to deliver sustainable recurring management

actions over the long term.

We deploy a comprehensive approach to

risk management across our in-force business

and we hedge the majority of our market

risks including equity, interest rates and

inflation. As intended, this brings resilience

to our Solvency II capital position, specifically

our Solvency II surplus, but a consequence

includes higher volatility in IFRS shareholders’

equity. Our increased IFRS adjusted operating

profit target of c.£1.1 billion, a level of profit

which is sufficient to cover our recurring

uses and create an excess, will contribute

to improving IFRS shareholders’ equity.

We are embedding sustainability throughout

our business and across our strategic priorities.

As a result, investing in a better future is a key

part of optimising our in-force business, as we

look to protect our customers from the risks of,

and maximise the opportunities presented by,

climate change.

Deleveraging our balance sheet

In line with recent years we are continuing

our approach of repaying historic M&A-related

debt with surplus cash and we are targeting

a Solvency II leverage ratio of c.30% by the

end of 2026.

Our ratio at the end of December was

36% (2023: 36%). In June 2024 we repaid

£250 million of debt, which reduced the

leverage ratio by two percentage points,

however this was offset by the adverse

impacts on Regulatory Own Funds

including the With-Profit funds run-off.

We have a range of levers to support

us in achieving our Solvency II leverage

target although the development may not

Within annuity portfolio re-optimisation we

evolve our annuity backing asset portfolio

as market and economic conditions change,

evolving the holdings in the portfolio in-line

with our risk appetite. We are also increasingly

participating in new debt issuances.

Capital improvements are generated by

improving our capital and balance sheet

modelling as the investment universe

evolves. This is enabled by enriched asset

data and calculation granularity which in

turn provides greater accuracy of risk.

Lastly, we are increasing the simplification

of fund management as our asset base

grows, through fee reviews of investment

management agreements as well as

fund rationalisation.

The strong performance this year gives

us the confidence that this is repeatable

year in year out as the team has reached

an optimal scale with leading expertise.

Using our scale to

create abetterfuture

We continue to integrate decarbonisation

strategies into our portfolio. We see this

commitment as essential to managing the

risks and opportunities that climate change

poses to our customers and a key step

in meeting our interim 2025 and 2030

decarbonisation targets on our journey to

being net zero by 2050. We are on track

to achieve our 2025 targets under most

scenarios. We are, however, less certain

about meeting our 2030 and 2050 targets.

We will need to take further action, and will

be increasingly dependent on action by

others in the wider economy, including the

UK Government and regulators, to do so.

Optimising our scale in-force

business and balance sheet

Priorities for 2025

• Deleveraging our balance sheet

towards our c.30% Solvency II

leverage ratio target by the end

of 2026

• Continue to optimise our

portfolio for similar returns

and deliver recurring

management actions

• Continued diversification of

our asset portfolio and build-out

of our directly sourced illiquid

asset capability

• Continue work to deliver our

2025 and 2030 interimtargets

on our way to netzero by 2050

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

(6%) pts

c.30%

36%

20262024

In June we launched a bespoke Climate

Aware index alongside leading index

providers FTSE Russell. The index series will

enable Phoenix to introduce benchmarks

that aim to increase the resilience of

customers’ portfolios to climate change

related transition risks. The benchmark was

introduced to our North America equity

indices in June 2024 and will be rolled

out in other regions and across equity and

fixed income over 2025 and beyond, in

line with our Net Zero Transition Plan.

Separately, in July we announced that

Phoenix Group and Schroders had launched

Future Growth Capital (‘FGC’), the UK’s

first dedicated private markets investment

manager established to promote the

objectives of the Mansion House Compact,

£537m

recurring management actions

delivered in 2024 (2023: £313m) APM

Climate Aware equity benchmarks

The indices and benchmarks developed with FTSE Russell

aim to protect policyholder portfolios against the risks of

climate change by reducing exposure to companies which

might face negative impact for lacking well-developed

plans on how to successfully navigate the climate transition.

The construction follows core principles set by Phoenix

which include the pace of the decarbonisation trajectory and

the inclusion of forward-looking data, ensuring that climate

risk management and engaging for change are at its core.

Phoenix’s exclusion policy is embedded within the design,

removing companies engaged in products and business

practices that are not aligned to Phoenix’s principles.

Read more on their website

of which Phoenix is a signatory. FGC aims to

unlock investment opportunities in private

markets for pension savers to benefit from

the diversification and investment return

opportunities that these asset classes can

offer, and will play a major role in the future

design of our flagship default funds.

FGC has already made its first investments,

including £250 million into venture

capital as part of the UK government’s

Long-term Investment for Technology

and Science (‘LIFTS’) initiative, and will

look to scale up its investments both

in the UK and globally in 2025.

We are deleveraging our balance sheet and further enhancing

our strong existing capabilities in asset and liability optimisation.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our strategic priorities continued

Enhance

Transforming our finance function

As part of our finance transformation, our

newin-house capital model went live. This

willbe used within the scope of Phoenix’s

Internal Model, in our regulatory capital

reporting including the process to calculate

the Solvency II Solvency Capital Requirement

(‘SCR’) and various sensitivities used in

both internal and external reporting.

This represents a major process change for

the teams who are involved in these activities

and should simplify and accelerate processes

for them – with fewer manual interventions

and much faster processing capacity than

we had in our existing models.Amongst

other benefits it will provide the real time

data we need to improve the level of

sophistication around our hedging strategy.

Having developed this in-house, it opens

the door for Phoenix to do further capital

projects more easily and quickly in future.

Optimising our supplier relationships

The Group Procurement and Partner

Management function is a driving force for

adding value to our business – bringing

savings and superior supplier performance

through strategic relationships and

collaboration, ensuring quality services, and

promoting sustainability and risk mitigation.

In 2024 we embarked on a project to assess

its role as a critical enabler to the business

and to make improvements where needed.

One initiative within this project has seen

us implement a new Professional Services

Advisory and Consultancy Preferred Supplier

List, as we aim to optimise the way we

commission professional services from third

parties who provide us with expertise, advice,

analysis and recommendations. Through this

initiative we will be saving costs, simplifying

processes, and improving governance.

Transforming our operating model

and culture are key to our success. We

will do this by completing our planned

integrations and migrations, alongside our

transformation programmes, and through

driving simplification to an efficient, Group-

wide operating model that benefits both

our customers and our colleagues. This

supports us in delivering a seamless unified

customer experience and enables us to

further enhance our cost efficiency.

Alongside this, we are also committed

to being a leading responsible business,

which attracts and retains the best

talent, through a diverse and inclusive,

high-performance culture.

Progressing our planned

integrations and migrations

We continued to make good progress

in delivering our customer migrations,

with c.515k ReAssure annuity customers

migrated to the TCS Diligentaplatform

at the end of September.

Having already moved over 1.2 million

PhoenixLife customers from Capita to TCS

BaNCS, this year we completed the migration

of the remaining 450k customers. All our

Phoenix Life customers are now serviced

by Diligenta on TCS BaNCS, allowing us

to fully exit our contracts with Capita.

We are also making good progress with

the second phase of our Standard

Life policy migrations to Diligenta with

c.340k policies migrated to the TCS

BaNCS platform at the start of 2025.

Until now, our integration and migration

programmes have focused on moving

existing policies to TCS BaNCS. However,

we have now reached the point where

we are able to start writing selected new

business directly on TCS BaNCS for our

Standard Life customers and will be rolling

this out over the next 12 to 24 months. 

Simplifying and transforming

our organisation

We’ve made good progress in simplifying

our business through collapsing our

former Heritage and Open divisions into

an efficient, Group-wide structure, through

our Pensions and Savings and Retirement

Solutions businesses.

In doing so, we have fundamentally

redesigned our teams to partner into the

business units, providing the skills and talent

they need to deliver their growth ambitions

and therefore create a stronger Phoenix, and

we have brought teams together where they

deliver common objectives.

We always try to mitigate the need for

compulsory redundancies in any period

oftransformation. However, this is not

always practically possible; in 2024 c.300

colleagues left Phoenix as a result of our

transformation programme.

We have worked continually to keep

engagement and colleague experience at the

front of our mind as we worked to transform

our organisation. Although we’ve seen

decreases in our employee Net Promoter

Score (‘eNPS’), ending the year on a score

of +23 (2023: +32), we’ve continued to see

above-benchmark engagement.

We have continued to make progress against

our gender, ethnicity, and inclusion goals in

2024. We set ourselves a stretching gender

target of 40% women at Senior Leadership

level; we ended the year at 39.7% (2023: 39.1%).

In June we announced that we were exploring

a potential sale of our SunLife Limited business.

However, given the current uncertainty in the

protection market, the Board decided to

discontinue the sale process as it would not

maximise value for shareholders. Phoenix has

been exploring ways of enhancing the value

SunLife generates within the Group.

Transforming our operating

model and culture

Priorities for 2025

• Progress our ongoing integrations

and migrations to Diligenta’s TCS

BaNCS platform

• Further transform our Finance

function under our new

GroupCFO

• Continue to deliver cost

savingsaswe further simplify

ouroperatingmodel to

achieve our£250m

target run-rate by 2026

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

2024 run-rate cost savings £63m

2025 expected

run-rate savings c.£62m

2026 expected

run-rate savings

c.125m

The Big Three

We introduced The Big Three guiding principles

for how we all conduct ourselves as we deliver

our purpose-led strategy. They help guide us

as professionals, to behave effectively and act

with integrity.

Read more about The Big Three and how

the Board is monitoring our culture and

Workforce engagement on pages 96 to 97

and pages 101 to 102

Our transformation programmes are

focused on simplifying our operating

model, enabling us to further develop

and innovate our customers’ experience

and at the same time improve our

colleague experience.

Jackie Noakes

Chief Operating Officer

Driving scale efficiencies

Our focus on driving efficiencies and

better customer outcomes has supported

the delivery of £63 million of run-rate

cost savings in 2024. The progress we

are making means we are confident of

achieving our £250 million run-rate cost

savings target by the end of 2026.

Guiding principles to drive

commercial success

To deliver our strategy and fulfil our purpose

we knew we needed to be clear with our

colleagues on how we’re going to do this, and

where our priorities lie which culminated in

The Big Three. The Big Three are our guiding

principles through this stage of our evolution.

First we put our customers first, second we aim

high and third we work together. In this regard

the transformation we’re delivering is as much

about how we’re structured as how we work.

Progressing our migrations and integrations

alongside transforming our operating model

and culture are key to our success.

Driving scale efficiencies

On track to deliver our £250m cost savings target

by the end of 2026 (APM)

£250m

run-rate cost

savings target

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Investment case

Our strategic priorities

will strengthen our

competitive advantages

Enabling our financial framework

anddelivering a clear set of financial

outcomes for our shareholders

Customer access

With c.12 million customers, we have an exceptional

level of customer access. This gives us deep customer

insights that underpin our developing propositions,

enabling us to better meet our customers’ evolving

needson their journey to and through retirement.

Capital efficiency

As a genuinely diversified long-term savings and

retirementbusiness, we get greater diversification from

ourbreadth of products. Our capital position is also

highlyresilient, through our core capabilities in risk

management and capital optimisation.

Cost efficiency

We have a cost efficiency advantage, which is enabled

through our customer administration and IT partnership

with TCS. We are looking to further this advantage as we

continue to progress our cost savings programme.

Cash

Growing Operating Cash Generation

that more than covers our recurring

uses, including our progressive and

sustainable dividend and delivers

surplus cash

Capital

Resilient balance sheet that

supportsinvestment to grow,

optimise and enhance our business

Earnings

Growing IFRS adjusted operating

profit to cover our recurring uses

and create excess profits

For more information see our

Strategic priorities on pages 26 to 31

For more information see the

Business review on pages 36 to 42

Grow

Optimise

Enhance

How we generate

shareholder value

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

2023 2024 2024

Recurring

uses

Dividend

£1.1bn

£1.4bn

Excess

cash

+22%

Mid-single digit

percentage growth

Dividend

Debt

interest

Amortisation

Excess profit

2023 2024 2026

target

Illustrative

based on 2024

£629m

£825m

c.£1.1bn

+31%

Phoenix Group’s dividend policy

The Group operates a progressive and

sustainable ordinary dividend policy

Our dividend policy is supported by our strategy

to deliver sustainable, growing Operating Cash

Generation, which more than covers our uses and

generates excess cash.

Supporting our progressive

and sustainable dividend policy

Operating Cash Generation APM

IFRS adjusted operating profit APM

Strong growth in IFRS adjusted operating profit

1 The Group identified material corrections to previously reported results resulting

in a restatement of comparative information, including the restatement of the

FY2023 adjusted operating profit from £617 million reported to £629 million.

140–180%

Shareholder Capital Coverage

Ratio operating range APM

27.35p

2024 Final dividend per share

54.00p

2024 Total dividend per share

+2.6%

Increase in 2024 Final dividend

c.4%

14-year CAGR

c.30%

Solvency II leverage ratio target

by the end of 2026 APM

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

APM

APMAPM

REM APM

APM

£1,403m

£1,146m

2024

2023

2022

36%

34%

36%

2024

2023

2022

172%

189%

176%

2024

2023

2022

2024

2023

2022

£1,779m

£1,504m

£2,024m

£825m

£544m

£629m

2024

2023

2022

Key performance indicators

Measuring our progress

Financial KPIs underpinning our financial framework

year ended 31 December

Why we use this indicator

Introduced in 2024, OCG represents

the sustainable level of cash generation

in our Life Companies each and

every year, that is remitted from

our underlying business operations.

The measure provides the sources

of recurring organic cash generated.

It supports the Group’s dividend,

debt interest, allocation of c.£200

million per annum of capital into

annuities and central costs.

Why we use this indicator

The Group seeks to manage the

level of debt on its balance sheet by

monitoring its financial leverage ratio.

We choose to focus on Solvency II

leverage ratio on a regulatory basis as

that is consistently understood and

used by both equity and debt investors.

1 2022 data not included as the KPI

wasonly introduced in 2024.

Why we use this indicator

The SCCR demonstrates the extent

to which shareholders’ Eligible Own

Funds cover the Solvency Capital

Requirements. It therefore measures

the capital adequacy of the Group

from a shareholder perspective.

Why we use this indicator

Total cash generation represents

the total cash remitted from the

operating entities to the Group

and is made up of the OCG and

non-operating cash generation,

which includes non-recurring

management actions and the release

of free surplus. This cash generation

provides capacity for the Group’s

non-recurring uses including

investment across our strategic

priorities to support us in achieving

our vision.

Why we use this indicator

We use IFRS adjusted operating

profit as a measure of IFRS

performance based on long-term

assumptions. Adjusted operating

profit is less affected by the

short-term market volatility driven

by Solvency II hedging and non-

recurring items than IFRS profit.

Operating Cash Generation (‘OCG’)

£1,403m

Solvency II leverage ratio

36%

Group Solvency II Shareholder Capital

Coverage ratio (‘SCCR’) (estimated)

172%

Total cash generation

£1,779m

IFRS adjusted operating profit

£825m

In March 2024 we

outlined a new 3-year

strategy for 2024–26

which supports us in

achieving our vision and

delivers growing cash,

capital and earnings.

Our strategy is informed

by – and in support of –

our key ESG themes of

People and Planet.

1 The Group identified material corrections to

previously reported results resulting in a

restatement of comparative information, including

the restatement of the FY2023 adjusted operating

profit from £617 million reported to £629 million.

FY2022 has not been restated for this impact.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

REM REM

88%

87%

92%

2024

2023

2022

39.7%

39.1%

39%

2024

2023

2022

94%

93%

94%

2024

2023

2022

51tCO

e/£m

62tCO

e/£m

73tCO

e/£m

2024

2023

2021

+23

+32

+30

2024

2023

2022

REM REM

REM

Non-financial KPIs underpinning our ESG strategy

year ended 31 December

Why we use this indicator

This measure highlights how satisfied

our customers are with Phoenix Group’s

telephony servicing propositions across

our various brands.

Why we use this indicator

We set an interim net zero target of a

25% reduction in the carbon intensity

of our listed equity and credit portfolio

(where we have control and influence)

by 2025, relative to our 2019 baseline.

To date we have achieved a 52%

reduction in the carbon intensity of

our listed equity and credit portfolio

relative to our 2019 baseline.

1 In our Group Climate Report 2022, we calculated

climate metrics using data as at YE2021 (rather than

YE2022). This was due to data availability and nascent

carbon footprinting methodologies at that time.

^ ESG Assured statistic.

Why we use this indicator

At Phoenix we want to make sure

our colleagues represent our wider

community and so we are committed

to promoting diversity, equity and

inclusion across the business, which

enables colleagues to bring their

whole self to work.

Why we use this indicator

This measure highlights how satisfied

our customers are with Phoenix Group’s

digital service proposition across our

various brands.

Why we use this indicator

We are seeking to make Phoenix

‘the best place our colleagues have

ever worked’; and so getting regular

colleague feedback is important to

enable us to track progress and respond

to feedback as we deliver our ambition.

Employee Net Promoter Score (‘eNPS’)

is a broadly used and holistic metric that

indicates how colleagues feel about

working for the Group.

Combined Group customer

satisfaction score for telephone

88%

Sustainability – Decarbonising

our investment portfolio (%)

52%

Strategic prioritiesDiversity, Equity and Inclusion – Percentage

of Senior Leadership that are women^ (%)

39.7%

Combined Group customer

satisfaction score for digital

94%

Colleague engagement employee

net promoter score (‘eNPS’) score

+23

Grow

Optimise

Enhance

Remuneration and APMs

REM KPIs linked to Executive remuneration.

See Directors’ Remuneration report

on pages 134 to 165

APM All amounts throughout the report

marked with APM are alternative

performance measures. Read more

on pages 334 to 339

Read more about our sustainability

progress in our Sustainability Report

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Business review

The Group has had a positive first year

executing against its 3-year strategy

and financial framework targets, with

our strong operating momentum

delivering sustainable cash generation

and improved financial flexibility to

support our strategic priorities.

Delivering

cash, capital

and earnings

Nicolaos Nicandrou

Group Chief Financial Officer

The Group operates a

financial framework that

focuses on the delivery

of three key financial

outcomes for our

shareholders: cash,

capital and earnings.

I am delighted to have joined Phoenix

Group, a company with a strong purpose,

clear vision, and compelling growth

prospects in its chosen market segments,

all of which I passionately connect with.

The Group has made a positive start in

executing against its 3-year strategy

and financial framework targets, and

I look forward to working with Andy,

the broader management team, the

Board and our colleagues to build

the UK’s leading retirement savings

and income business, while delivering

growing returns to our shareholders.

Our operating momentum will

underpin our financial progress

In 2024 the Group has raised its operating

profitability levels, reporting a 22% increase

in Operating Cash Generation (‘OCG’)

and a 31% rise in IFRS adjusted operating

profit. This higher performance level was

supported by sustainable and profitable

growth in our Pensions and Savings and

Retirement Solutions businesses. We

have, therefore, made a positive start in

executing against our 3-year financial

framework targets and have built good

momentum in delivering sustainable cash

generation and improved financial flexibility

to support our strategic priorities.

These priorities involve attaining leading

positions in our chosen market segments of

workplace pensions and annuities, through

a c.£700 million investment over 2024–26

to enhance our capabilities and simplify our

business. Alongside this we aim to reduce our

Solvency II leverage ratio to c.30% from the

current 36% level, while operating in the top

half of our 140–180% Shareholder Capital

Coverage Ratio (‘SCCR’) operating range.

36 Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategic report

2024 financial summary

Financial performance metrics: 2024 2023 YOY change

Cash Operating Cash Generation

£1,403m £1,146m +22%

Total cash generation

£1,779m £2,024m -12%

Solvency II capital PGH Solvency II surplus £3.5bn £3.9bn -10%

PGH Shareholder Capital Coverage Ratio

172% 176% -4%pts

Solvency II leverage ratio

36% 36% –

IFRS Adjusted operating profit

£825m £629m

+31%

(Loss)/Profit after tax attributable to owners £(1,078)m £84m

n/a

Shareholders’ equity £1,213m £2,742m

-56%

Contractual Service Margin (gross of tax) £3,257m £2,853m +14%

Adjusted shareholders’ equity

£3,656m £4,882m

-25%

Assets Assets under administration

£292bn £283bn +3%

Dividend Final dividend per share 27.35p 26.65p +2.6%

Total dividend per share 54.00p 52.65p +2.6%

1 Denotes metrics that are alternative performance measures (‘APMs’) – further information can be found on pages 334 to 339.

2 The Group identified material corrections to previously reported results, leading to the restatement of 2023 adjusted operating profit from £617 million reported to £629 million, the 2023 loss after

tax from £88 million as reported to a profit of £84 million, the 2023 shareholders’ equity from £2,496 million as reported to £2,742 million, and 2023 adjusted shareholders’ equity from £4,636 million

as reported to £4,882 million. Further information on this restatement can be found in note A3 to the consolidated financial statements.

Upgraded financial targets

Our successful execution in 2024 has led us

to upgrade our 2024–26 cumulative total

cash generation target from £4.4 billion

to £5.1 billion and the 2026 IFRS adjusted

operating profit target from £900 million

to c.£1.1 billion. Delivery of this higher level

of performance will improve our financial

flexibility to support the execution of our

strategy and underpin our progressive

and sustainable dividend policy.

Delivering our financial framework

In 2024 we have delivered total cash

generation of £1,779 million, exceeding

the £1.4–1.5 billion target for the year, with

strong growth in OCG to £1,403 million, up

22% year-on-year. OCG more than covered

our recurring cash uses and dividend,

totalling £1,107 million in the period.

We have therefore achieved our 2026 OCG

target of £1.4 billion ahead of time, driven

by a higher contribution from recurring

management actions of £537 million,

exceeding both our c.£400 million per

annum target and the prior year contribution

of £313 million. The higher contribution

from management actions shows how the

faster than planned investment we made to

develop our in-house asset management

capabilities is bearing fruit. The balance of

the increase comes from cost efficiencies and

new business which have offset the impact of

the natural run-off of our in-force business.

Our resilient capital position with a Solvency II

surplus of £3.5 billion has enabled us to repay

£250 million of debt and invest £354 million

across our strategic priorities to grow, optimise

and enhance our business. Our growing

recurring capital generation means that our

SCCR has remained resilient at 172% and in

the top half of our target range of 140–180%.

The improvement in the Group’s operating

performance is also evident in the 31%

rise of our IFRS adjusted operating profit

to £825 million, with both of our Pensions

and Savings, and Retirement Solutions

businesses, reporting profit increases.

The higher IFRS adjusted operating profit

from Pensions and Savings reflected higher

revenues from a growing asset book and lower

operating costs. IFRS adjusted operating

profit for Retirement Solutions was supported

by strong growth in the Contractual Service

Margin (‘CSM’) and higher investment returns.

We achieved greater capital efficiency in

writing new annuities business, with the

capital strain in 2024 reducing to c.3%

(2023: c.5%), partly reflecting a gilts-heavy

pricing portfolio. This, in turn, enabled us

to limit the new business premiums decline

to just 10%, despite the one-third planned

reduction in allocated capital. The £6.1 billion

of new annuity premiums in 2024 generated

£203 million of new business CSM and a

mid-teens Internal Rate of Return (‘IRR’).

The statutory loss after tax of £1,078 million

in the period is primarily due to adverse

economic variances of £1,297 million,

reflecting the Group’s hedging programme,

which aims to protect cash and Solvency

II capital from volatility in equities and

interest rates. This gives rise to accounting

volatility, as several of the Solvency II capital

components covered by hedging are not

recognised on the IFRS balance sheet. We

accept the hedge-related volatility in our IFRS

results, as protecting cash and Solvency II

capital is a key capital framework objective,

underpinning the Group’s ability to deliver

a progressive and sustainable dividend.

Our Solvency II leverage ratio is unchanged

at 36%, despite repaying £250 million

of debt in June, which drove a 2%pts

reduction in the leverage ratio. The impact

of this repayment on the leverage ratio

has been offset by a decline in Regulatory

Own Funds due to a variety of factors,

including investment in our business, the

adverse economic effect on Own Funds

from the rise in interest rates during 2024,

and the impact of the With-Profits run-off.

As a result of our improved operating

performance, the Board is recommending

a 2.6% increase in the 2024 Final dividend

to 27.35p per share, taking the Totaldividend

for the year to 54.00p per share.

Alternative performance measures

With our financial framework designed

to deliver cash, capital and earnings, we

recognise the need to use a broad range

of metrics to measure and report the

performance of the Group, some of which

are not defined or specified inaccordance with

Generally Accepted Accounting Principles

(‘GAAP’) or the statutory reporting framework.

We use a range of alternative

performance measures (‘APMs’)

to evaluate our business, which are

summarised on pages 334 to 339

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Business review continued

Operating Cash Generation

OCG represents the sustainable level of

ongoing cash generation from our underlying

business operations that is remitted from

our Life Companies to the Group.

In 2024, OCG grew 22% to £1,403 million

(2023: £1,146 million). This was partly driven

by an increase in surplus emergence to

£866million (2023: £833 million). The growth

is supported by new business written and an

initial capitalisation benefit from our ongoing

cost savings programme, which have offset

the natural run-off of our in-force business.

The remaining £537 million was generated

through increased recurring management

actions (2023: £313 million). The majority

ofthese actions were portfolio optimisation

actions, contributing £323 million, with

a further £122 million representing the

capitalised effect of fee reductions

associated with fund simplification actions,

and an additional £92 million from capital

improvement actions. This level of recurring

management actions has exceeded our

target of c.£400 million in 2024 and beyond,

supported by the investment we have

made to accelerate the development of

our in-house asset management capabilities.

This strong performance gives us confidence

this is repeatable going forward.

Given the importance of this cash measure

in tracking the Group’s progress, in 2025

we intend to provide additional analysis of

the drivers of OCG by business segment.

In 2024, c.£850 million of OCG was from

Retirement Solutions and c.£350 million was

from Pensions and Savings. The remaining

c.£200million of OCG was from Europe,

With-Profits and Other.

Importantly, OCG of £1,403 million more

than covered recurring uses of cash in the

period of £1,107 million, which includes

dividends, operating costs, debt interest

payments and annuities new business capital.

The surplus operating cash generated of

£296 million was principally deployed to

retire debt in June 2024, delivering an

overall net debt reduction of £253 million.

In delivering £1.4 billion of OCG in 2024,

we achieved our 2026 OCG target ahead

of time and we now expect it to grow at a

mid-single digit percentage rate going forward.

Total cash generation

Total cash generation represents the

total cash remitted from the operating

entities to the Group, comprising OCG,

non-recurring management actions and

the release of free surplus above capital

requirements in the Life Companies.

In addition to the OCG generated this year,

we also delivered £376 million (2023: £878

million) of non-operating cash generation,

comprising non-recurring management

actions and the release of some of our Life

Company Free Surplus. This in turn covered

non-operating cash outflows of £314 million.

Total cash generated during the period

was therefore £1,779 million (2023:

£2,024 million) and exceeded the Group’s

2024 target range of £1.4–1.5 billion.

Having significantly outperformed our

2024 target, and with OCG now expected

to grow at a mid-single digit percentage

annually from the £1.4 billion delivered

in 2024, we have upgraded our existing

3-year total cash generation target across

2024–26 from £4.4 billion to £5.1 billion.

At £5.1 billion our total cash generation will

exceed both the 2024–26 expected recurring

uses of c.£3.3 billion and our planned

investment of c.£0.7 billion, and deliver an

expected excess cash level of £1.1 billion.

In line with our capital allocation framework,

this excess cash creates further financial

flexibility and enables us to commit to further

deleveraging as required to deliver the

c.30% SII leverage ratio target by end-2026,

with c.£250 million of debt repaid in 2024.

Recurring uses of cash

Operating expenses increased to £132

million (2023: £113 million) primarily due to

incorporating the annual running costs of

producing the IFRS 17 results. Debt interest

increased to £236 million (2023: £229 million)

due to the impact of refinancing activity in

2023 and 2024 at higher interest rates.

The £533 million shareholder dividend reflects

the 2.5% increase paid with the 2023 Final

dividend and 2024 Interim dividend.

We have also invested £206 million of

capital into our annuities business to

support the writing of £6.1 billion of new

business annuity premiums in the year.

Non-recurring uses of cash

Non-operating net cash outflows of £314

million (2023: £111 million) primarily relate to

£354 million of planned investment across

our strategic priorities to grow, optimise

and enhance our business. This was

partially offset by positive net collateral

cash receipts and hedge close-outs.

Net debt repayment of £253 million (2023:

£4 million net repayment) represent the £250

million Tier 2 note redemption in support of

the Group’s deleveraging programme and the

refinancing of US$500 million of Restricted

Tier 1 notes, both of which completed in June.

Cash

£1,403m

Operating Cash Generation APM

£1,779m

Total cash generation REM APM

Phoenix Group holding companies’ sources and uses of cash

£m 2024 2023

Cash and cash equivalents at 1 January 1,012 503

Operating Cash Generation 1,403 1,146

Non-operating cash generation 376 878

Total cash generation

1,779 2,024

Recurring uses of cash:

Operating expenses (132) (113)

Debt interest (236) (229)

Shareholder dividend (533) (520)

Support of annuities activity (206) (288)

Total recurring uses of cash (1,107) (1,150)

Non-recurring uses of cash:

Non-operating cash outflows (314) (111)

Debt repayments (643) (350)

Debt issuance 390 346

Cost of Sun Life of Canada UK acquisition – (250)

Total non-recurring uses of cash (567) (365)

Closing cash and cash equivalents at 31 December 1,117 1,012

1 Total cash generation includes £156 million received by the holding companies in respect of tax losses surrendered

(2023: £219 million).

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Group Solvency II capital position

Our Solvency II (‘SII’) capital position remains

resilient, with an estimated surplus of

£3.5 billion (2023: £3.9 billion) and is stated

after the accrual for the 2024 Final dividend.

Excluding the planned £250 million debt

repayment in the first half of the year, the

Group’s surplus was marginally lower

year-on-year due to planned investment. Our

SCCR reduced 4%pts to 172% (2023: 176%)

but has remained resilient and within the top

half of our target operating range of 140–180%.

Recurring capital generation

In 2024, recurring SII capital generation

pre-dividend totalled £0.7 billion, with £0.2

billion generated post-dividend which

increased the SCCR by5%pts.

In-force business surplus emergence and

release of capital requirements contributed

£0.8 billion to the SII surplus and 19%pts to

the SCCR. We also delivered recurring

management actions of £0.5 billion,

increasing the SCCR by 13%pts, which were

mostly Own Funds accretive reflecting

portfolio optimisation actions in the period.

Life Company Free Surplus

Life Company Free Surplus represents the SII

surplus of the Life Companies that is in excess

of their Board-approved capital management

policies. As at 31 December 2024, the Life

Company Free Surplus was £1.9 billion (2023:

£2.2 billion), with the £0.3 billion reduction

broadly reflecting the change in the Group’s

SII surplus and a small release of free surplus.

Leverage

As at 31 December 2024, the SII leverage

ratio was 36% (2023: 36%), despite the

£250 million debt repayment in June which

reduced the ratio by 2%pts. The impact on

the ratio of this repayment has been offset by

a £0.3 billion pre-debt decline in Regulatory

Own Funds due to the factors outlined above

and a further £0.2 billion decline reflecting

the impact of the With-Profit funds run-off.

Over the remainder of the 2024–26 period,

the additional excess cash created by our

upgraded total cash generation target

enables us to commit to further deleveraging

as is required to achieve our c.30% SII

leverage ratio target by the end of 2026.

The Group’s Fitch leverage ratio at end-

2024 is estimated at 23% (2023: 23%),

favourably below Fitch’s stated 25–30%

range for an investment grade credit rating.

Capital

£3.5bn

Solvency II surplus (estimated)

172%

Group Shareholder Capital Coverage Ratio

(estimated) APM

36%

Solvency II leverage ratio APM

Solvency II economic sensitivity analysis

Surplus

(£bn)

SCCR

(%)

Solvency II base 3.5 172

Equities: 20% fall in markets – 5

Long-term rates: 100bps rise in interest rates 0.1 7

Long-term rates: 100bps fall in interest rates (0.1) (5)

Long-term inflation: 50bps rise in inflation – (1)

Property: 12% fall in values (0.2) (4)

Credit spreads: 127bps widening with no allowance for downgrades (0.1) (1)

Credit downgrade: immediate full letter downgrade on 20% of portfolio

(0.3) (8)

Lapse: 10% increase/decrease in rates (0.1) (2)

Longevity: 6 months increase (0.4) (8)

1 Illustrative impacts assume changing one assumption on 1 January 2025, while keeping others unchanged, and that there is no

market recovery. They should not be used to predict the impact of future events as this will not fully capture the impact of economic

or business changes. Given recent volatile markets, we caution against extrapolating results as exposures are not all linear.

2 Impact of an immediate full letter downgrade across 20% of the shareholder exposure to the bond portfolio (e.g. from AAA to AA,

AA to A, etc.). This sensitivity assumes management actions are taken to rebalance the annuity portfolio back to the original average

credit rating and makes no allowance for the spread widening which would be associated with a downgrade.

Movement in Group SII capital during 2024

Recurring capital generation of

+£0.2bn surplus and +5%pts SCCR

Non-recurring capital utilisation of

£(0.3)bn surplus and (4)%pts SCCR

£bn 2023

Surplus

emergence

and release

of SCR

Recurring

management

actions

Operating

costs, debt

interest and

dividend

New

business

strain

Other

management

actions

Economics

and

temporary

strain

Investment

spend

and other

2024

(pre-debt

repayment)

Debt

repayment 2024

Own Funds 8.9 0.7 0.4 (0.9) 0.1 0.1 (0.3) (0.3) 8.7 (0.3) 8.4

SCR (5.0) 0.1 0.1 – (0.3) 0.1 0.1 0.0 (4.9) – (4.9)

SII surplus 3.9 0.8 0.5 (0.9) (0.2) 0.2 (0.2) (0.3) 3.8 (0.3) 3.5

SCCR

176% 19% 13% (19)% (8)% 7% (4)% (7)% 177% (5)% 172%

1 The Shareholder Capital Coverage Ratio excludes Solvency II Own Funds and Solvency Capital Requirements (‘SCR’) of unsupported With-Profit funds and unsupported pension schemes.

Operating costs, dividends and debt interest

totalled £0.9 billion, reducing the SCCR by

19%pts. New business strain of £0.2 billion

reduced the SCCR by 8%pts.

Non-recurring capital utilisation

Non-recurring capital utilisation, excluding

the debt repayment of £250 million, reduced

the SII surplus by £0.3 billion and the SCCR

by 4%pts. £0.2 billion of surplus generated

through other management actions partially

offset £0.3 billion of investment spend and

other, which reflects our planned non-

recurring investment to grow, optimise and

enhance our business over 2024–26.

We continue to be well hedged on an

economic basis under SII, and we therefore only

experienced a £0.1billion adverse economics

variance in the year, primarily related to rising

yields. Additionally, we recognised £0.1 billion

of temporary surplus strain on annuity new

business (a £0.2 billion Own Funds strain) due

to the impact of holding a gilts-heavy portfolio

on new business completed late in 2024 and

reflecting internal model improvements in

pricing assumptions which are expected to be

approved in 2025 and the strain unwound.

The size of the adverse non-recurring uses will

gradually decline over the 2024–26 period as

we complete our planned investment to grow,

optimise and enhance our business.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Business review continued

Earnings

IFRS adjusted operating profit

IFRS adjusted operating profit is an alternative

performance measure (see pages 334 to 339).

The Group generated a 31% year-on-

year increase in IFRS adjusted operating

profit to £825 million (2023: £629

million)

driven by profit uplifts in both of our

two main operating business units.

Our Pensions and Savings business

reported 66% growth in IFRS adjusted

operating profit to £316 million (2023:

£190million). This reflects the benefit of

growing our assets, with average Assets

under Administration (‘AUA’) increasing

11% year-on-year, coupled with delivery

of operating cost efficiencies across both

administration costs as well as investment

management fees driven by ongoing fund

simplification. AUA growth is supported by

higher gross inflows of £14.4 billion (2023:

£12.3 billion), with both Workplace and Retail

recording creditable increases, reflecting

new capabilities. Gross outflows also rose

to £18.1 billion (2023: £15.7 billion) reflecting

the run-off profile of our in-force business and

higher outflows due to consumer behaviour

in response to the UK budget uncertainty

in the year. The overall net outflow position

was more than offset by £15.8 billion of

positive market effects, driving Pensions

and Savings AUA 7% higher to £186.5 billion

at 31 December 2024. Based on average

AUA, the IFRS adjusted operating profit

represents an operating profit margin

of 17bps in 2024 (2023: 12bps).

Our Retirement Solutions business

delivered IFRS adjusted operating profit

of £474 million (2023: £378 million). The

25% year-on-year increase is supported

by a 16% increase in the CSM release to

£150 million (2023: £129 million) reflecting

ongoing growth in our annuities book.

Expected investment margin and portfolio

optimisation management actions also

rose strongly. AUA in Retirement Solutions

benefited by £6.1 billion of gross annuity

inflows, a decline from 2023 of £6.7 billion,

following our decision to reduce the annual

allocation of new capital to this segment

by one-third. AUA remained stable at

£40.3billion, as volumes were more than

offset by falling asset values as rates rose.

Europe and Other profit decreased to

£96million (2023: £144

million), primarily

due to prior period one-off experience and

assumption updates which did not repeat in

2024. With-Profits operating profit increased

to £41 million (2023: £10 million) driven by

one-off experience variances in 2024.

The Group’s Corporate Centre includes

net operating costs of £102 million

(2023: £93million). The increase reflects

the £10million annual impact of incorporating

the running costs of producing IFRS 17 results.

Upgrading our 2026 IFRS

adjusted operating profit target

Looking forward, in light of our strong

IFRS adjusted operating profit momentum,

we have upgraded our 2026 IFRS adjusted

operating profit target from £900 million to

c.£1.1 billion. This will be delivered through

a combination of business growth initiatives,

efficiency savings in line with our cost

savings targets, and ongoing deployment

of our asset management capabilities.

IFRS loss after tax

attributable toowners

The Group generated an IFRS loss after

tax attributable to owners of £1,078 million

(2023: profit of £84

million). The loss is

primarily driven by £1,297 million of adverse

hedging related economic variances.

Economic variances

Adverse economic variances of £1,297 million

(2023: £377

million favourable) reflected the

result of the Group’s hedging programme,

which aims to protect cash and Solvency II

capital from volatility in equities and interest

rates. This gives rise to accounting volatility, as

several of the Solvency II capital components

covered by hedging are not recognised on

the IFRS balance sheet, with the IFRS market

sensitivities shown on pages 234 to 237. We

accept the hedge-related volatility in the IFRS

result, as protecting cash and Solvency II

capital is a key capital framework objective,

underpinning the Group’s ability to deliver

a progressive and sustainable dividend.

In 2024, higher UK interest rates (15-year swap

rates up 83bps) and higher equity markets

(FTSE: +9.5%, S&P500: +25.0%), produced

net negative marks on the hedges, giving rise

to the reported losses. In 2023 lower UK

interest rates (15-year swap rates down 27bps)

and higher equity markets (FTSE: +7.9%,

S&P500: +26.3%), along with methodology

refinements, produced net positive marks on

the hedges, giving rise to the reported gains.

Amortisation and

impairment of intangibles

The previously acquired in-force business,

relating to IFRS 9 capital-light fee-based

business, is being amortised in line with the

expected run-off profile of the investment

contract profits to which it relates.

Amortisation during the period reduced to

£270 million (2023: £322 million) reflecting

the run-off of this acquired business.

Other non-operating items

Other non-operating losses in the period

totalled £520 million (2023: £439 million

loss), the majority of which reflects £372

million of planned investment spend across

£825m

IFRS adjusted operating profit APM

IFRS income statement

£m 2024 2023

Pensions and Savings 316 190

Retirement Solutions 474 378

Europe and Other 96 144

With-Profits 41 10

Corporate Centre (102) (93)

Adjusted operating profit 825 629

Economic variances (1,297) 377

Amortisation and impairment of intangibles (270) (322)

Other non-operating items (520) (439)

Finance costs attributable to owners (204) (195)

Profit before tax attributable to non-controlling interest 12 28

(Loss)/Profit before tax attributable to owners (1,454) 78

Tax credit attributable to owners 376 6

(Loss)/Profit after tax attributable to owners (1,078) 84

1 The Group identified material corrections to previously reported results that gave rise to a restatement

of comparative information (see note A3 to the consolidated financial statements for further details).

£3,257m

Contractual Service Margin (gross of tax)

£3,656m

IFRS adjusted shareholders’ equity APM

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

IFRS shareholders’ equity and adjusted shareholders’ equity

£m 2024 2023

Adjusted operating profit 825 629

Recurring uses:

Dividend (533) (520)

Debt interest (204) (195)

Amortisation of intangibles (270) (322)

Adjusted operating profit before tax, less recurring uses (182) (408)

Non-recurring uses and tax:

Non-operating items (520) (439)

Economic variances (1,297) 377

Tax and other items recognised in equity 470 (94)

Movement in shareholders’ equity (1,529) (564)

Opening shareholders’ equity 2,742

3,211

Movement in shareholders’ equity (1,529) (564)

Opening adjustments – 95

Closing shareholders’ equity 1,213 2,742

CSM (net of tax) 2,443 2,140

Adjusted shareholders’ equity 3,656 4,882

1 The Group identified material corrections to previously reported results that gave rise to a restatement

of comparative information (see note A3 to the consolidated financial statements for further details).

Movement in Group CSM during 2024, including segmental split

£m

Opening

CSM

(gross)

New

business

Interest

accretion

Assumption

changes,

experience

and

economics

Other, incl.

one-off

adjustments

Closing

CSM,

pre-release

(gross)

CSM

release

Closing

CSM

(gross) Tax

Closing

CSM

(net)

Retirement Solutions 2,145 203 57 26 25 2,456 (150) 2,306 (576) 1,730

Pensions and Savings 201 – – 99 (4) 296 (33) 263 (66) 197

Europe and Other 65 45 4 5 121 240 (44) 196 (49) 147

With-Profits 442 – 6 82 16 546 (54) 492 (123) 369

2024 Total Group CSM 2,853 248 67 212 158 3,538 (281) 3,257 (814) 2,443

2023 Total Group CSM

2,583 348 51 58 54 3,094 (241) 2,853 (713) 2,140

1 2023 restated to reflect corrections to errors and a change to accounting policy (see note A3 to the consolidated financial statements for further details).

our strategic priorities, with £42 million of

other one-off project expenses. The adverse

impact from the buy-out of our internal

PGL Pension Scheme in the year of £106

million is also included, with a partial £87

million offset in the Group’s CSM. Finance

costs of £204 million (2023: £195 million)

reflect interest borne on the Group’s debt

instruments and is higher in 2024 due to

the refinancing activity in 2023 and 2024.

Run-rate cost savings

The Group is targeting £250 million of

annual run-rate cost savings, net of inflation,

by the end of 2026, as we enhance our

business and move to a more efficient

Group-wide operating model. In 2024, the

Group’s cost savings programme delivered

£63 million of run-rate savings, with in-year

savings of £28 million, the majority of which

came from Pensions and Savings. Looking

forward, around two-thirds of the remaining

run-rate savings are expected to emerge

in 2026 from the completion of several key

migration and transformation initiatives.

These cost savings will primarily benefit the

Pension and Savings business segment, with

the remaining segments also benefiting

from lower shared function allocations.

Shareholders’ equity and

adjusted shareholders’ equity

In 2024, we have made significant progress

in raising the level of pre-tax adjusted

operating profitability to cover a greater

proportion of our recurring uses.

However, non-operating items remain high

at present, and, as previously signposted, are

primarily driven by the impact of our planned

3-year non-recurring investment spend on

migrations and transformation programmes.

The significant economic variances in

2024 reflect the outcome of our hedging

programme, which is designed to protect

our cash and Solvency II capital, and

supports our progressive and sustainable

dividend policy. The Board continues to

prioritise stable SII surplus capital and

predictable dividends, and accepts the

hedge-related volatility in the IFRS result.

The resulting IFRS loss after tax in the period

drove shareholders’ equity lower at the end of

2024 to £1,213 million (2023: £2,742

million).

Adjusted shareholders’ equity comprises

IFRS shareholders’ equity and the CSM

(net of tax), and stood at £3,656 million at

31 December 2024 (2023: £4,882

million).

In 2026, the higher level of targeted

IFRS adjusted operating profitability of

c.£1.1 billion is expected to be sufficient to

fully cover our recurring uses and create

excess to fund non-recurring uses.

Contractual Service Margin

The Group’s CSM (gross of tax) rose by

14% to £3,257 million at 31 December 2024,

(2023: £2,853 million) and represents a

sizeable stock of value that will unwind into

IFRS adjusted operating profit in future years.

The increase in the period was driven by a

£248 million contribution from new business

(2023: £348 million), principally from annuities

written in Retirement Solutions, with a further

£212 million contribution from assumption

changes, experience and economics (2023:

£58 million). In addition, there was a one-off

£87 million increase related to the internal

PGL Pension Scheme buy-out, and a

£71 million one-off benefit relating to

modelling refinements and adjustments.

The 2024 CSM release into the income

statement of 8% was in line with the prior

year, contributing £281 million to pre-tax

adjusted operating profit (2023: £241

million). With new business and assumption

changes, experience and economics

exceeding amortisation, the net of tax value

of the CSM increased to £2,443 million at

31 December 2024 (2023: £2,140 million).

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Business review continued

Dividend

Outlook

54.00p

2024 Total dividend per share

+2.6%

2024 Final dividend increase

+4%

14-year Total dividend CAGR

In March 2024, the Board outlined a

3-year strategy for 2024–26, which will

support the creation of a business which

delivers sustainable and growing cash,

capital and earnings. The Board also

adopted a progressive and sustainable

ordinary dividend policy, reflecting its

confidence in the Group’s strategy.

In operating this dividend policy the

Board will announce any potential annual

dividend increase alongside the Group’s

Full Year results and expects the Interim

dividend to be in line with the previous year’s

Final dividend. The Board continues to

prioritise the sustainability of our dividend

over the long term. Future dividends

and annual increases will be subject to

the discretion of the Board, following

assessment of longer-term affordability.

In operating the policy and assessing

longer-term affordability the Board

considers the quantum and trajectory of

the Group’s Operating Cash Generation,

SII surplus, Shareholder Capital Coverage

Ratio and the distributable reserves

at the Group’s holding company.

At 31 December 2024, distributable

reserves at Phoenix Group Holdings plc,

the Group’s holding company that pays

In March 2024 we reiterated our ambition

to become the UK’s leading retirement

savings and income business and set

3-year targets under our financial

framework of cash, capital and earnings.

The Group has made a positive start in

delivering against both its 3-year strategy

and financial framework targets, with

good operating momentum in 2024

enabling us to upgrade two of our financial

targets and reaffirm the rest for 2026.

Thank you

Our clear strategic progress and strong

operating financial performance are

testament to the hard work of our

dedicated colleagues. I would therefore

like to thank them for their contributions

in 2024, and for their warm welcome in

my first few months as GroupCFO.

Nicolaos Nicandrou

Group Chief Financial Officer

Phoenix Group’s financial targets

Cash

• Mid-single digit percentage growth

p.a. in Operating Cash Generation

• Total cash generation 3-year

target of £5.1 billion across 2024–26

Capital

• Operate within our 140–180%

Shareholder Capital Coverage

Ratio operating range

• SII leverage ratio of c.30%

by the end of 2026

Earnings

• c.£1.1 billion of IFRS adjusted

operating profit in 2026

• £250 million of annual run-rate

cost savings by the end of 2026

dividends to shareholders, stood at £5,571

million (2023: £4,632 million), supported by

sizeable distributions from its main operating

subsidiaries which continue to report under

UK GAAP and carry significant distributable

reserves. In 2024 the Group’s main operating

subsidiaries generated strong UK GAAP

net profits after covering hedging, which

supported the cash remittances to Group.

In the consolidated IFRS financial statements,

the Group is targeting a positive pre-hedge

post-dividend IFRS net profit contribution

to the IFRS shareholders’ equity. The Group

accepts the hedge-related volatility that

impacts IFRS shareholders’ equity, which

is a known consequence of our Solvency

II hedging strategy that is designed to

protect our cash, capital and dividend.

In this overall context and consistent with

previous guidance, the Board considers

that the Group’s consolidated IFRS

shareholders’ equity is not a constraint

to the payment of our dividends.

As a result of our improved operating

performance in 2024 and our ongoing

confidence in the Group’s strategy, the Board

is recommending a 2.6% increase in the 2024

Final dividend to 27.35p per share, taking the

2024 Total dividend to 54.00p per share.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Risk management

The Group has a system of governance that embeds

clear ownership of risk and has a Risk Management

Framework (‘RMF’) that supports the identification,

measurement, assessment, management and reporting

of risks against approved risk appetites.

Our Risks and Risk Management

We have an established ‘three lines of

defence’ model. Management (Line1)

is responsible for the risk ownership

and maintaining effective processes,

procedures and controls; the Risk Function

(Line 2) provides independent oversight

and challenge; and Internal Audit

(Line3) provides objective assurance.

Periodic review of the Risk Management

Framework is an integral part of the system

of governance in the Group, and in 2024, we

adopted ways to further promote individual

accountability. In 2025, we will look for further

opportunities to streamline and augment the

framework, including technology solutions

that might help further simplify its operation

across the Group. Any changes we choose

to make will be considerate of the 2024

Corporate Governance Code in helping the

Board to assess the effectiveness of the RMF.

All Non-Executive Directors receive an

induction to the RMF from the Group

CRO as part of their onboarding.

Risk environment

The Group continues to operate in an

uncertain risk environment with multiple

external factors requiring navigation to enable

the Group to deliver on its strategic priorities.

Adverse market movements can impact the

Group’s capital, solvency, profitability and

liquidity position, and influence the certainty

and timing of future cash flows and long-term

investment performance for shareholders

and customers. Regular monitoring of market

risk exposures in accordance with the Group

Market Risk Policy supported by a hedging

strategy helps to reduce the sensitivity of the

Solvency II balance sheet to market shocks.

Regional conflicts, an uncertain political

landscape and increased global economic

fragmentation increase the risk of disruption

to global supply chains and impacts to financial

markets and the economy. The Group’s Stress

and Scenario Testing programme continues

to consider a range of adverse circumstances

to inform the Group and its Life Companies

of the actions needed to respond to external

events and further enhance operational and

financial resilience.

Bringing our business together into an

efficient Group-wide operating model is

dependent upon execution of the Group’s

migration, transformation and cost efficiency

programmes. The Group has prioritised these

initiatives, underpinned by strengthened

governance to support controlled execution

and delivery of intended benefits.

Severe disruption or failure of important

business services exposes the Group

to increased risk of harm to its strategic

priorities, customer outcomes and if

prolonged increased operating costs.

The Group continues to implement measures

to improve and embed operational resilience

in-house and with its outsourced service

providers and critical third party suppliers.

This includes exploring opportunities and

emerging technologies whilst ensuring we

sustain appropriate focus on the Group’s

cyber defence capabilities.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Risk

strategy

and culture

Risk appetite

Risk Universe

Risk

policies

Governance and

organisation

Strategic risk

management

Risk and control processes and reporting

Emerging

risk

Risk and

capital

models

Governance and culture

The Group operates a three lines of

defence model that is supported by the

RMF. Risk accountability and ownership

are embedded in the First Line, with

First Line teams established to support

the business by providing substantiated

evidence that controls are fit for purpose.

Overall responsibility for approving

the RMF rests with the Board, with

maintenance and review of the effective

operation of the RMF delegated to the

Board Risk Committee. This delegation

also includes approval of the overall risk

management strategy and the review and

recommendation to the Board of the relevant

risk appetite statements, risk policies, risk

profile and any relevant emerging risks.

The RMF supports delivery of the Group’s

strategy against the Board-approved risk

appetite. This is supported by The Big Three

which sets out what the Group expects of

leaders and colleagues to build a culture

of trust, collaboration and constructive

challenge. Measures are in place during

each Framework refresh to allow for

continuous improvement in risk management

throughout the business by seeking input

from colleagues and industry bodies.

Oversight and challenge

Risk governance comprises the

Boards, organisational governance,

delegation of authority, a well-defined

three lines of defence model with

clear delineation between roles and

responsibilities, and the RMF.

The Group Risk function supports and

enables the Group to grow in a prudent

and sustainable way through oversight

and constructive challenge. This is

delivered through strong capability in the

Risk Leadership team who specialise in

financial risk, non-financial risk, conduct

risk and compliance and are proactive

in material initiatives for the Group.

Risk Appetite Framework

The Group’s Risk Appetite Framework

(‘RAF’) outlines the risks that the Group

is willing to take to meet our strategic

objectives and is a key tool in balancing

the interests of different stakeholders.

The RAF operates using a three tiers approach

to cascade the Board’s risk appetites through

to lower-level risk policies. It is reviewed on

an annual basis, and a set of Board-approved

risk appetite statements are adopted by the

Group for the following dimensions of risk:

Capital, Liquidity, Dividend, Shareholder

Value, Control, Conduct and Sustainability.

Risk appetites are supported by

quantitative and qualitative tolerances,

triggers and limits; and the Group

has systems, processes and controls

designed to manage risk appropriately.

Risk Management Framework

Risk Universe

A key element of effective risk management

is ensuring the business understands the

risks it faces. The Group’s Risk Universe

summarises the risks to which the Group

is exposed. The Risk Universe allows the

Group to deploy a common risk taxonomy

and language, allowing for meaningful

comparison to be made across the business.

The risk profile of each is an assessment

of the impact and likelihood of those

risks crystallising and the Group failing to

achieve its strategic objectives. Changes

in the risk profile are influenced by the

commercial, economic and non-economic

environment and are identified, measured,

managed, monitored and reported

through the Group’s RMF processes.

Risk management continued

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Risk Policy Framework

The Risk Policy Framework (‘RPF’) supports

the delivery of the Group’s purpose and

strategy by establishing the operating

principles and expectations for managing

the key risks to the Group’s business day-

to-day. Each of the risk policies defines:

• the individual risks the policy is intended

tomanage;

• the degree of risk the Group is willing to

accept, which is set out in the policy risk

appetite statements; and

• the control objectives that determine the

key controls required to manage each risk

to an acceptable level.

Risk policies are mapped to Risk Universe

categories to ensure complete coverage

of all material risks. The RPF further

supports the Group in operating within the

boundaries of its risk appetite statements

by seeking to limit volatility under a range

of Board-approved adverse scenarios.

The Group’s Conduct Strategy and Climate

Change Risk Management Framework

overarch all risk policies to provide a holistic

view of conduct and sustainability risks.

This provides a consistent and comprehensive

approach in the application of the RMF

to manage these risks across the Group.

Risk Management Cycle

Identification, measurement, assessment,

management, monitoring and reporting

of risks, including learning lessons from

incidents, is undertaken across the three lines

of defence, and is supported by a system of

governance and risk management tools.

The Group uses a partial Internal Model

for calculation of its solvency capital

requirement. A continuous process is followed

for identification and measurement of risk

types and the corresponding resilience of

the Group’s capital position. The Group

continually strives to enhance its internal risk

and capital models, and the related modelling

must be sufficiently accurate to enable

appropriate ranking and management of

risks. It is a requirement that all material risks,

and the interactions between them, are in

scope of the Group’s risk and capital models.

Three lines of defence

Management

Own and manage risk at source, with

end-to-end risk control aligned to Senior

Management Function Holders (within

overall Risk Management Framework).

Under Solvency II as modified by the

Prudential Regulation Authority’s 2024

reforms (‘Solvency UK’), the development

and production of any Internal Model

output contributing to regulatory capital

requirements must comply with validation

standards, supportedwith documentation

standards. This is supported by a Model

Governance policy, which sets out

the standards that must be satisfied

to demonstrate meeting Solvency

UK requirements. The Internal Model

output is used within the Group’s Own

Risk and Solvency Assessment (‘ORSA’)

process to provide insight into risks

associated with the Group’s objectives.

The Group’s Stress and Scenario testing

programme uses the Internal Model

to assess the capital impact of a range

of plausible and extreme stresses.

Risk Function

Define enterprise-wide frameworks,

policies and standards, providing

independent oversight and challenge

to the business on risk management,

and providing oversight of key risks using

a proportionate risk-based approach.

Internal Audit

Independently assure risk

management across the organisation.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Risk management continued

The Own Risk and Solvency Assessment (‘ORSA’) is the

ongoing process of identifying, measuring and assessing,

managing and controlling, monitoring and reporting the

risks to which the business is exposed.

Principal risks and uncertainties

facing the Group

The Group’s ORSA cycle brings together

interlinked risk management, capital

and strategic processes. The Group

has a robust system of governance for

assessing and analysing its principal

and emerging risk themes.

Impact Mitigating actions

Strategic risk

The Group’s ability to meet its external obligations is adversely impacted by failure to execute key strategic change programmes

Execution of migrations, transformation and cost efficiency

programmes is essential to bringing our business together into an

efficient Group-wide operating model. In some cases, the Group

is reliant on its strategic partnerships with third parties to deliver

these changes. These include, but are not limited to, investment

management services from Aberdeen Group plc (formerly abrdn plc);

custody and fund accounting services from HSBC plc and customer

administration from TCS Diligenta.

Failure to prioritise and have the right capability and capacity

(internally or at the third party) to deliver and execute these

programmes on time and within agreed costs could negatively

impactbenefits assumed in the Group’s business plan.

It could also cause significant disruption to the operation of necessary

business processes and controls; and the Group is exposed to the risk

of failing to deliver good outcomes for its customers, should failures

occur in key programmes relevant to its products, propositions or

service delivery.

Throughout 2024, the Group has continued to enhance its Change

Management Framework with strengthened governance to support

the safe and controlled mobilisation and delivery of change. The Group

has deprioritised some of our change initiatives to maintain focus on

delivering the key programmes that support a single Group-wide

operating model; and we have enhanced risk monitoring and

contingency planning.

The Supplier Management Model also has robust governance

and engagement arrangements to manage relationships with our

strategic partners. This includes change prioritisation, capability

and capacityplanning.

The Group continues to invest in its operating model to further

strengthen the capability required to deliver and execute

changeeffectively.

Risk appetite, policies and standards for guarding against increased

riskof potential harm to customer outcomes are embedded in the

RiskManagement Framework. As part of our work on Consumer

Duty,this includes enhanced customer experience metrics and

outcomesmonitoring.

A principal risk is a risk or combination

of risks that could seriously affect the

strategic objectives, future performance,

or reputation of the Group, including

risks that may threaten the Group’s

business model, solvency or liquidity.

The principal risks presented here

are aligned with the Group’s strategic

priorities and are kept under review by

the Executive Committee and the Board

Risk Committee. The view is dynamic and

reflects the ongoing prioritisation of risk

management activities across the business.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Impact Mitigating actions

Strategic risk continued

The Group is impacted by changes in customer behaviour, economic or political conditions including wider geopolitical instability

The Group’s strategic priorities are adversely impacted by

changing customer behaviours resulting from changes in the

political landscape, employment trends and rising cost of living

anxieties; and changing customer expectations on product

simplicity and technology-based service solutions.

The Group is exposed to disruption from geopolitical instability that

could impact the profitability of our products, the value and quality

of investments and the resilience of the Group’s operating model.

Escalation of regional conflicts and increasing protectionist policies

can result in increased cyber-attacks, drive inflationary pressures due

to global policy changes and supply-chain disruption, and impact the

macroeconomic environment which may impact our balance sheet

and new business.

The Group has a continuous programme of customer research,

customer outcomes monitoring and fair value assessments that

were augmented as part of the Group’s response to Consumer Duty.

The Group continues to explore innovative solutions to improve

and simplify the customer experience. This including partnering

with innovative start-ups, and providing user experience and

technical delivery insight for product and service offerings.

The Group continues to monitor activity in the global environment.

It regularly explores the impacts of potential scenarios informed by

its annual stress testing programme. This supports ongoing assessment

of business model resilience and effectiveness of the potential courses

of actions available to respond to events.

Further information on operational resilience is provided in the resilience

principal risk category below.

Sustainability risk

The Group fails to understand and respond to risks associated with climate change and other environmental,

social and governance (‘ESG’) factors

The Group does not effectively manage material sustainability

risks which could impede its ability to meet external commitments,

including those in its Net Zero Transition Plan, and undermine

its reputation.

Climate risk is significant for both the Group and our customers.

Toreduce the physical impacts of climate risk, the global economy

needs to transition to a low carbon economy.

Whilst we are on track to meet our 2025 targets under most scenarios,

there is a risk of not meeting our 2030 targets. The Group is taking

direct action but meeting our ambition to be a net zero business by

2050 is becoming increasingly dependent on action by governments

and the wider economy.

Anti-climate headwinds in major economies are being monitored by

Executive and Board Committees as they are likely to impact global

progress in relation to climate change in the medium to long term,

which makes the Group less certain about its ability to achieve its

2030 targets.

The Group has a clear sustainability strategy in place which

includes our response to climate change. This policy is reviewed

and refreshed annually.

Climate change risk is integrated in our Risk Management Framework.

The Group leverages qualitative and quantitative scenario analysis to

assess our risk exposure and has put in place a set of key sustainability

risk metrics which are regularly monitored.

There is ongoing focus on climate risk assessment by research and

professional bodies. The Group also engages in constructive dialogue

with both investee companies and asset management partners. The

Group continues to engage with policymakers and market participants

to inform our approach and actively drive the wider system change

needed to address systemic climate and sustainability risks.

In the short term, anti-climate headwinds are not expected to

materially impact the Group’s management of investment portfolios

as sustainability expectations are incorporated within investment

management agreements.

Operational risk

The Group or its partners are not sufficiently resilient

Severe disruption or failure in the provision of important business

services exposes the Group to increased risk of harm to strategic

priorities, including delivering good customer outcomes.

This increases the risk of reputational damage, regulatory

censure and, if prolonged, increased operating costs.

Such disruptions could occur in-house or at one or more of our

strategic partners or third parties on whom the Group is reliant for

services and can be trigged by a range of factors (such as cyber,

geopolitical or environmental).

The Group’s Supplier Management Model has robust governance and

engagement arrangements to manage relationships with its strategic

partners and suppliers; and its Operational Resilience Framework is

designed to prevent intolerable harm and supports compliance with

the regulatory outcomes.

The Group has implemented solutions to further protect customers from

harm in the event of severe but plausible scenarios. The Group is also

continually exploring ways to strengthen its cyber security, IT disaster

recovery capabilities and to better equip the incident response teams.

The Group continues to work closely with its outsource partners,

thirdand fourth party suppliers to ensure alignment of risk appetite

onimpact tolerances for operational resilience.

The Group regularly reviews important business services to ensure

theapproved levels of resilience are maintained.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Risk management continued

Impact Mitigating actions

Operational risk continued

The Group is impacted by significant changes in the regulatory or legislative environment

Changes in the regulatory or legislative environment could impact

the products we write, our distribution channels and the Group’s

capital requirements.

Material new regulatory change or late identification of new

regulations can compromise execution of key change programmes

essential to the Group’s strategic priorities which could negatively

impact customer outcomes, the balance sheet and cause

reputational damage.

Incoming Solvency UK looks to better align prudential regulations with

the UK’s regulatory objectives post-Brexit. We expect further post

implementation guidance as the PRA evaluates the outcomes in 2025,

the impact of the further guidance on the balance sheet is uncertain.

The Group operates a Regulatory Change Management Framework

to ensure we have an effective oversight of all regulatory developments.

The Framework ensures that there is proactive horizon scanning,

awareness of and ownership for any change required at an early stage;

that an impact assessment is completed; and appropriate governance

is in place to oversee the execution of the change.

The Group regularly engages with regulators and policymakers to

listenand contribute to discussions on a wide range of matters, including

those that could have market-wide and systemic risks. We will continue

to monitor developments across the political and regulatory environment

during 2025 and use our voice and experience to influence thinking.

Sensitivity testing and scenario analysis of the Group’s business model

and balance sheet is used to consider potential strategies to respond

to changes in regulations.

In its 2023 Annual Report, the Group recognised the significant

undertaking to achieve compliance with IFRS17. During 2024, the Group

continued its Finance transformation programme to further improve the

IFRS17 processes and investment will continue in 2025.

Operational risk continued

The Group fails to retain or attract a diverse and engaged workforce with the skills needed to deliver its strategy

The Group requires talented, diverse and engaged people with

the right skills and capability to deliver the strategy.

In 2024, the Group transitioned to a new operating model aligned

tobusiness operations, supported by fully integrated finance, risk,

human resources and change functions. Uncertainties emanating from

this and any future refinements to the operating model may increase

the risk of unplanned losses in critical skills and corporate knowledge.

There is a risk that it will be harder to recruit the right capability for

specialised or business-critical roles in a competitive market.

This could increase the risk of disruption to business and customer

processes and could adversely impact the delivery of such critical

business change programmes (such as migrations or transformation).

There is ongoing monitoring of the capability and capacity required

tosupport key programme delivery and to ensure the operating

environment remains stable.

To attract and retain colleagues from all backgrounds, the Group has

created a shared sense of purpose and commitment to our strategy.

The Group offers competitive terms and conditions, benefits, and

flexibility to foster colleague engagement which is monitored regularly

through employee engagement surveys that track colleague sentiment

and enable prompt intervention on areas of concern.

Financial markets risk

The Group is exposed to adverse movements in the value of assets or liabilities caused by economic forces,

downgrades or counterparty failures

Adverse market movements, downgrades and deterioration in the

creditworthiness, or default of investments, derivatives, reinsurers

or banking counterparties can affect certainty and timing of future

cash flows and long-term investment performance for the Group

and its customers.

It increases the risk of immediate financial loss, and/or reduced

capital, solvency, and liquidity positions that could affect our

strategicpriorities.

The Group has a well-defined risk appetite with appropriate risk limits

and undertakes regular monitoring activities in relation to its market

andcredit risk exposures.

It closely monitors and manages its excess capital position, and

makesuse of hedging, strategic asset allocation, portfolio trading

andreinsurance to limit the risk sensitivity of our Solvency II balance

sheet and surplus to market movements.

The Group regularly monitors its counterparty exposures and has

specific limits in place relating to individual counterparties, sector

concentration, geographies and asset class.

The Group operates a suite of controls over customer funds to ensure

exposure to market risk is maintained within the customer’s risk appetite.

These controls include monitoring of investment manager and external

fund performance, reviewing customer funds and making changes as

required to manage market and investment risk.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Emerging risks and opportunities

Impact Mitigating actions

Artificial Intelligence (‘AI’)

AI presents opportunities for process efficiency, betterunderwriting

and pricing and improved customer services. However, it presents

a range of risks, most notably a change in the competitive landscape;

customer and reputational harm and compounding of external cyber

threats through AI-fuelled attackvectors.

There are new vulnerabilities from the rapid adoption of AI

and increased data confidentiality and bias challenges.

The Group continues to develop and enhance its AI Framework to

support safe adoption of AI to deliver business benefits. This includes

appropriate stage gates as new technology and processes are deployed

to ensure controls are fit for purpose given the novel nature of some

of the risks associated with AI.

Nature risk

The natural world is under pressure from global trends in consumption,

structural inequalities and economic growth. The World Economic

Forum ranks biodiversity loss as the second largest global risk over

the next ten years.

Nature loss is a systemic risk which can manifest in different ways.

It is complex, interconnected with other global trends and risks and

difficult to assess and quantify.

The Group is developing its assessment of nature risk to support

investment portfolio decisions for both customers and shareholders.

The Group became a signatory to the Finance for Biodiversity pledge

in 2023 and continues to refine assessment methodologies and has

begun taking action in line with pledge signatory requirements.

UK Pensions Investment Review

The government is reviewing the pension system to deliver major

pension consolidation, with the aim of increasing investment into

moreproductive assets to provide better retirement incomes and

economic growth.

Whilst the Group is well placed to benefit from these changes and

supports the delivery of improved customer outcomes, there remains

significant uncertainty as to the outcome of the review, which could

impact our business.

The Group continues to engage with political parties and industry

bodies to foster collaboration.

The Group is well placed to support deployment of savings into

productive assets through Future Growth Capital (‘FGC’) – a UK

dedicated Long-Term Asset Fund in partnership with Schroders.

The Group maintains a comprehensive library

of emerging risks, which are distinguished

from the current risks by amount of available

information resulting in a higher level of

uncertainty as to how and when the risk will

crystallise and its impact to the Group.

The Group’s Senior Management and Board

take emerging risks and opportunities into

account when considering potential

outcomes. Thisdetermines if appropriate

management actions are in place to manage

the risk or take advantage of the opportunity.

Examples of key risks andopportunities

discussed by Senior Management and

the Board during 2024 are:

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Viability statement

In accordance with Provision 31 of the 2018

UK Corporate Governance Code, the Board is

required to conduct an assessment of the viability

of the Group over a specified time horizon.

Assessment process

In assessing the future viability of the Group,

the Board has defined ‘viability’ as maintaining

the capability to satisfy mandatory liabilities

and meet the recurring uses of capital.

In doing so, the Board considered whether

the definition of viability should reflect the

success of the Group in delivering against

its strategic priority to invest in the growth

of the business on an organic and inorganic

basis. It concluded that any such investment

needs to comply with the Group’s capital

allocation framework and risk appetite, and

that the Board retains flexibility to manage

the level of investment to support the Group’s

strategic priorities. In the absence of new

business growth, the Group maintains a

significant cash generation capacity from

its in-force business which remains resilient

under stress, supporting longer-term viability.

The Board has determined that the three-

year time horizon to December 2027 is an

appropriate period for the assessment which

aligns to the period covered by the Group’s

latest Board-approved Strategic Financial

Business Plan (‘the Plan’), and which includes

the 2025–2026 period for which theGroup

has established its external targets.

In making its assessment and assessing

the prospects of the Group over the

short, medium and longer term,

the Board considered a large range

of information including:

• The Group’s strategic and operational

plans as set out in the Plan, approved

by the Board in December 2024;

• The latest financial results for the Group;

• Financial projections of the Group’s capital,

liquidity and funding positions over the

viability assessment period. These

projections have considered both base

assumptions and severe but plausible

stress scenarios, reflecting the major risks

to which the Group is exposed;

• The results of wider stress and scenario

testing activity, including reverse stress

testing, capturing non-financial risks

as well as more onerous scenarios with

a low likelihood of occurrence;

• The operation of the Group’s Risk

Management Framework, including

any breaches of risk appetite;

• The principal risks and uncertainties

impacting the Group, together with an

assessment of emerging risks that may

impact on the Group’s future performance;

• The Own Risk and Solvency Assessment

(‘ORSA’) process which provides a

forward-looking assessment of the Group’s

risk and capital profile as a result of its

business strategy, the Plan and the overall

risk environment; and

• An assessment of the wider operating

environment for the Group, including

legal, regulatory, political, climate and

competitive factors.

Assessment of viability

The Phoenix Group Plan is reviewed and

approved by the Board on an at least annual

basis and results in a set of strategic priorities,

detailed financial forecasts across multi-year

periods, risk assessments and associated

resilience, and available contingent actions.

Those strategic priorities are outlined in

the Strategic Report of the Group’s Annual

Report and Accounts, and progress against

the Plan is reviewed monthly by the Board.

The Board reviewed the results of stress

testing to assess viability under severe

but plausible scenarios, including four

adverse stresses as follows, which are

deemed to be representative of the

key financial risks to the Group:

1. Market stress – a combined market

stress broadly equivalent to a 1 in 10-year

event, calibrated to the Phoenix Group

Internal Model, incorporating a fall in

equity, property values and yields,

with a widening of credit spreads;

2. Plausible downside stress – a more

onerous combined market stress reflecting

tighter credit conditions and a deep

recession driven by a further short-term

increase in inflation and cost-of-living

crisis, falls in equities, properties, increased

credit spreads, a UK sovereign downgrade

and credit asset downgrades;

3. Lower than planned levels of cash

and capital generated by recurring

management actions, aimed at assessing

execution risk; and

4. A two-year delay in the planned key

migration programmes, also aimed

at assessing execution risk.

The calibration and assessment of the stresses

is informed by the Group’s Solvency II Internal

Model. The projections take into account

the impact of any appropriate Solvency II

recalculation of transitional benefits and allow

for refinancing of certain of the Group’s debt

obligations. In considering the projections,

the Board has assessed the availability of

mitigating actions to increase resilience.

The scenarios were applied to the

Solvency II capital, liquidity and funding

positions of the Group, and demonstrated

that the Group could continue to meet

its mandatory obligations, maintaining

sufficient headroom and without any breach

to regulatory capital requirements, while

continuing to track towards the delivery

of the Group’s strategic priorities.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Additional stress testing

In addition, through the ORSA, Business

Plan stress and scenario testing and wider

financial resilience processes during the

year, the Board has reviewed a wide range

of stress and scenario testing which has

provided additional insight with regard to

the defined viability assessment period. The

scope of this testing covers the Group’s risk

universe and includes scenarios such as:

• Additional severe downside

economic scenarios with a low

likelihood of occurrence;

• Operational disruption or failure

of key third party service providers;

• Cyber-attack, and resultant denial of

service to key systems or applications;

• Failure to execute and deliver key

change activities within the Group; and

• Climate-related risks, including those

related to a disorderly climate transition.

In doing so, the Board has considered the

results of reverse stress testing that has been

performed to analyse scenarios that have a

low probability but where, if they occurred,

have the potential to render the business

model unviable. Reverse stress testing

validates and improves, where necessary,

mitigating actions in place to deal with

threats to the Group’s viability by starting

at the point of business failure and working

backwards to identify the sequence of

events that would lead to that outcome.

It supports the development of actions that

can be implemented now to avoid the failure.

The scenarios assessed under both ORSA

(including reverse stress testing) and the

stress and scenario testing for the Business

Plan demonstrated that the Group had

the ability to withstand severe events as

a result of robust risk management and

a range of mitigating actions, thereby

maintaining its viability over the Plan period.

Risk assessment

The Board reviewed the Group’s

principal risks and uncertainties as set

out on pages 43 to 49 of the 2024 Annual

Report and Accounts and considered

the impacts of changes in the related

impact assessments and the mitigating

actions implemented. This included an

assessment of the potential impacts of

emerging risks on the Group’s business

during the viability assessment period.

As noted in the Risk Management section

of the Annual Report and Accounts, the

Group identifies, assesses and manages

risk through the operation of its Risk

Management Framework (‘RMF’). The

Board approves the RMF and monitors its

operation against established risk appetites

through regular reporting that comes

from across the three lines of defence.

Whilst noting continued macroeconomic

uncertainty and an evolving political

and regulatory landscape, the Board will

continue to monitor risk exposures relative

to risk appetites to ensure the risks are

proactively managed and do not present

a material threat to the Group’s viability.

2024 financial results

The latest financial results for the Group as

included within the 2024 Annual Report

and Accounts have been considered as part

of the assessment. Key factors included:

• The Group’s strong capital position with

a Solvency II surplus of £3.5 billion and

a Shareholder Capital Coverage Ratio

of 172%, providing significant headroom

above regulatory minimum capital

requirements and the Group’s risk appetite;

• The resilience of the Group’s capital

position and cash generation to movements

in market factors, as indicated in the

sensitivity analysis included on page 39,

which is reflective of the Group’s hedging

approach; and

• Holding companies’ cash of £1,117m at

the end of 2024, as well as access to the

Group’s undrawn £1.5 billion unsecured

revolving credit facility, provides assurance

over the Group’s ability to meet mandatory

obligations as they fall due.

The impact of losses on an IFRS basis

were considered as part of the assessment.

It was noted that the Group’s hedging

approach prioritises the protection of the

Solvency II capital position and therefore

the dependable delivery of future cash

generation. It is accepted that this results

in volatility in the IFRS metrics but as the

Board considers that IFRS metrics only

partially reflect the underlying cash potential

of the business – which is captured more

fully under the Solvency II cash and capital

metrics – this was not considered to represent

a material threat to the Group’s viability.

Concluding statement on viability

Based on the factors outlined above, the

output of the Group’s financial projections

and its resilience under severe but plausible

stressed conditions, and the management

of the Group’s principal risks and associated

mitigating actions, the Board has a reasonable

expectation that the Group will be able to

continue in operation and meet its liabilities

as they fall due over the three-year period

of assessment ending 31 December 2027.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review

The Sustainability review provides an overview of the Group’s approach to

sustainability. It also includes the Group’s Task Force on Climate-related Financial

Disclosures (‘TCFD’) reporting, Streamlined Energy and Carbon Reporting (‘SECR’)

statement and Non-financial and Sustainability Information (‘NFSI’) statement.

Sustainability review

In this section

52 Responding to current and upcoming regulation

53 Our approach to sustainability

54 TCFD compliance summary

56 Governance

59 Strategy

61 Scenario analysis

66 Risk management

68 Metrics and targets

76 TNFD progress summary

80 SECR statement

82 NFSI statement

Our reporting

You can find out more about our activities, financial

performance, sustainability strategy and our progress

towards becoming a net zero business by 2050 by

visiting our website:

www.thephoenixgroup.com

Responding to current

andupcomingregulation

We support the regulatory agenda for more efficient,

improved non-financial disclosures and recognise

the need for transparency about our impacts and

dependencies on people and the planet. We have

commenced preparatory work to meet upcoming

standards that will affect the Group and our entities,

including the International Financial Reporting Standards

(‘IFRS’) issued by the International Sustainability Standards

Board (‘ISSB’), the Sustainability Disclosure Standards,

and the EU Corporate Sustainability Reporting Directive

(‘CSRD’). This work is reflected in the format of this year’s

sustainability disclosures, with the integration of our

TCFD-aligned reporting into this Annual Report

andAccounts.

Read more on pages 54 to 75

Sustainability Report

Our Sustainability Report covers our social and environmental

sustainability progress in the People and Planet sections,

including progress against our Net Zero Transition Plan

(‘NZTP’) and targets. Broader disclosures including Human

Rights and Modern Slavery, Diversity, Equity and Inclusion

(‘DEI’), and a summary of Governance topics are included

in the Building a sustainable business section.

ESG Data Appendix

Our Environmental, Social and Governance (‘ESG’) Data

Appendix summarises our ESG metrics and Sustainability

Accounting Standards Board (‘SASB’) disclosures.

The Group has appointed KPMG to provide limited independent assurance over

selected disclosures within this report marked with ^. The assurance engagement

was planned and performed in accordance with the International Standard for

Assurance Engagements (‘ISAE’) (UK) 3000 Revised, Assurance Engagements

Other Than Audits or Reviews of Historical Financial Information. A limited

assurance opinion was issued and is available in the ‘Independent Practitioner’s

Limited Assurance Report’ section on pages 2 to 3, which is available here.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our approach to sustainability

2024 highlights

People

c.1.4m

Motivated c1.4m people to

act by checking in on their

retirement savings, or finding

out more about living and

working longer through our

Group brand campaign

Innovative

products

Launched new products to better

meet the needs of our customers,

such as the Standard Life

Smoothed Return Pension Fund

c.£1.8m

Total value of community

contributions excluding

management costs

1,2

We want to help people live

better longer lives. This means

tackling the pensions savings gap

and supporting people to have

better financial futures through

promoting financial wellness and

the role of good work and skills.

We want to help shape a better

future. This means delivering

good outcomes for our customers,

playing a key role in delivering a

net zero economy by 2050 and

understanding and taking action

to manage our impact and

dependency on nature.

1 This includes cash donations, employee volunteering time, in-kind products/services per the B4SI framework.

2 Previously reported as ‘Total Donations by Phoenix Group (£)’. See 2023 ESG Data Appendix for figures.

3 Reduction in the economic emissions intensity (scope 1 and 2) of our listed equity and credit portfolio

(where we have influence and control) vs 2019 baseline.

4 Reduction in operational emissions intensity (scope 1 and 2 per FTE, market-based) vs 2019 baseline.

5 FCA’s Sustainability Disclosure Requirements (‘SDR’). Standard Life expects to implement this approach in early 2025.

94%

Our combined Group customer

satisfaction score for digital

Our colleague engagement

employee net promoter

score (‘eNPS’)

39.7%

Our percentage of Senior

Leadership that are women^

We are committed to

embeddingsustainability and

best practice governance to

maintain high standards of

oversight, integrity and ethics.

Planet

Building a sustainable business

We are committed to embedding sustainability throughout

our business by integrating our sustainability strategy and best

practice governance to maintain high standards of oversight,

integrity andethics.

Read more in our Sustainability Report

Our purpose is helping people secure a life of possibilities. We want to

help people journey to and through retirement while shaping a better

future, and our sustainability approach focuses on two key areas:

People and Planet.

First

Believed to be the first pension

provider to proactively align

to the FCA’s Sustainability

Improvers™ label

for eight

funds invested in our Sustainable

Multi Asset default pension

solution, improving outcomes

for c.2m customers

52%

Achieved a 52% reduction

in emissions intensity of our

investment portfolio

80%

Achieved an 80% reduction

in the emissions intensity

of our operations

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

TCFD compliance summary

We continue to disclose in line with

the recommendations of the TCFD,

in compliance with the FCA Listing Rule

6.6.6R(8). The Group has obtained limited

assurance on certain figures presented

in this report and in the Sustainability

Report – further information on page 52.

Given the progress we have made with

embedding the recommendations of the

TCFD across the business and the increasing

need for transparent reporting, we have

opted to integrate our TCFD disclosure into

our Annual Report and Accounts. The table

below provides a summary of how we have

complied with each of the recommendations

of the TCFD framework. We have included

references to other sections of the Annual

Report and Accounts or the Sustainability

Report, where further information relating

to our compliance with each of the TCFD

recommendations can be found.

In response to FCA Listing Rule 6.6.12G,

we have also published a standalone

Net Zero Transition Plan which sets out

our approach to achieving net zero across

our business by 2050. We recognise

that there has been slow progress towards

achieving the goals of the Paris Agreement

globally and that there are a range of

dependencies upon which our net zero

by 2050 ambition relies, many of which

are outside of our direct control. We

continue to face challenges spanning data

quality and coverage, action by others,

and the geopolitical environment.

For more information see our

Sustainability Report

The Group has prepared the following summary and subsequent sections in line

with the recommendations and recommended disclosures of the TCFD to provide

stakeholders with information about how the impact of climate-related risks and

opportunities are being managed by the Group.

Governance

Disclose the organisation’s governance around climate-related risks and opportunities

Recommended disclosure Summary of progress Further information

a. describe the board’s

oversight of climate-

related risks and

opportunities

• The Board has oversight of the Group’s overall approach to climate change including the Net Zero Transition Plan;

the Board Sustainability Committee monitors performance against the Group’s sustainability strategy, including climate;

and the Group Board Risk Committee has oversight of climate-related risks and opportunities.

• Climate risks continue to be identified and monitored via the Group’s established Risk Management Framework.

• A dashboard covering key climate risks is integrated into regular risk reporting for the Life Companies (‘LifeCo’)

and Group Board Committees.

• The responsibility for discussion of specific climate-related topics is delegated to Board Committees. The Committees

provide a summary of discussion and challenge to the Board following each meeting. The Board met seven times in 2024.

Pages

56–57

b. describe

management’s role in

assessing and managing

climate-related risks

and opportunities

• Management has clearly defined roles and responsibilities relating to the management, oversight and reporting

of climate-related matters.

• The Group’s Chief Executive Officer, Andy Briggs, is the Executive Board Director responsible for implementation

and delivery of the Group’s overall strategy (including climate).

• Senior Management Function holders (‘SMFs’) have been assigned responsibilities for climate-related financial risk

under the Senior Managers and Certification Regime.

• SMF responsibility for ensuring the appropriate identification, assessment, management and reporting of climate-related

financial risks and opportunities that could impact the Group sits with the Group’s Chief Financial Officer (‘CFO’) and the

Group’s Chief Risk Officer (‘CRO’).

Pages

57–58

Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses,

strategy, and financial planning where such information is material

Recommended disclosure Summary of progress Further information

a. describe the

climate-related risks

andopportunities

the organisation has

identified over the short,

medium and long term

• The Group undertakes quantitative and qualitative analysis to identify and assess the climate-related risks and

opportunities, both physical and transition, which could materially impact different areas of the business over short-,

medium-, and long-term time horizons.

• Short term: 0–1 year – this is consistent with the liquidity monitoring time horizon for setting capital requirements under

Solvency UK; Medium term: 1–5 years – this is consistent with the Group financial planning process which considers

the medium-term plans and strategy for the business; and Long term: over 5 years – this captures the long-term nature

of the business and the risks that may emerge beyond the financial planning process.

• The material risks and opportunities identified as likely to crystallise over the short, medium and long term are: climate

risk exposure in the investment portfolio; emerging government policy, regulatory and legal changes; reputational damage

if climate risks are not appropriately managed; disruptions to business operations from climate impacts; and changing

demand for products, funds and solutions.

Pages

59–60

b. describe the impact

of climate-related risks

and opportunities

on the organisation’s

businesses strategy,

and financial planning

• The Group has assessed the impact of climate-related risks and opportunities on the business, strategy and financial planning.

• The management of material climate-related risks and opportunities has been embedded into the business’s strategy and

financial planning process, recognising that this is an important process in delivering the Group’s strategic ambition to meet

more of the long-term savings and retirement needs of existing and new customers.

• The Group’s medium to long-term strategic planning incorporates the consideration of the financial impacts of climate-related

risks and opportunities. This includes: the increased operational costs associated with regulatory compliance; the impact of

physical and transition risk on Group assets; and shifts in consumer behaviours driven by changing preferences.

• Our Net Zero Transition Plan sets out the strategic actions that the Group is taking across the three core pillars of our Climate

Action Model: Invest, Engage, Lead to manage climate-related risks and opportunities across the business and deliver our net

zero targets. Our customers are at the heart of our plan and our actions are aligned with delivering good customer outcomes.

Pages

59–60

Net Zero

Transition Plan

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategy continued

Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses,

strategy, and financial planning where such information is material

Recommended disclosure Summary of progress Further information

c. describe the

resilience of the

organisation’s strategy,

taking into consideration

different climate-related

scenarios including a

2°C or lower scenario

• Both quantitative and qualitative scenario analysis are used to model the impact of different temperature pathways

on the business to gain insight into how climate-related risks may materialise over time.

• The three quantitative scenarios are from the Network for Greening the Financial System (‘NGFS’) Phase IV: an orderly

transition to net zero by 2050 which starts immediately, a delayed transition to net zero, and a fragmented world which

has a mixture of high transition and physical risks.

• Physical risk exposure is also assessed in sub-sections of the investment portfolio and qualitative scenarios used to

assess the impact of potential extreme events on the business that are not easily quantifiable through financial modelling.

• The analysis indicated no significant threat to the Group’s business strategy or processes in the near term. However,

they do indicate a potential reduction in investment returns and disruption to the operations and strategy of the business

if action does not continue to be taken to manage and mitigate the risk.

• There are a number of limitations/assumptions to the Group’s scenario analysis approach, including the changing asset

mix of the Group and the quality/coverage of data. Only a subset of climate outcomes have been assessed and there

remain infinite possible pathways that could emerge and pose new possible risks to the Group.

Pages

61–65

Risk management

Disclose how the organisation identifies, assesses, and manages climate-related risks

Recommended disclosure Summary of progress Further information

a. describe

the organisation’s

processes for identifying

and assessing

climate-related risks

• A number of tools are used to understand our climate risk exposures, including: annual stress testing; carbon footprinting exercises

for our assets and operations; horizon scanning; and monitoring and reporting progress against climate risk metrics and targets.

• The materiality of climate risks is assessed qualitatively on an ongoing basis, building on the processes noted above.

Individual business areas ensure strategies are in place to manage climate risk given the materiality.

• Climate-related risks continue to be monitored via the Group’s established risk management processes.

Pages

66–67

b. describe the

organisation’s processes

for managing

climate-related risks

• Examples of how key components of our strategy and wider business processes are considering and actively reducing

material climate risks include: decarbonising our investment portfolio; investing in climate solutions; stewardship; engaging

with our customers; engaging with policymakers and regulators; decarbonising our operations and supplier base; scenario

analysis; and the monitoring and measurement of climate metrics.

Pages

66–67

c. describe how

processes for identifying,

assessing and managing

climate-related risks

are integrated into the

organisation’s overall

risk management

• The Group Risk Management Framework (‘RMF’) sets out how we identify, assess, control, monitor, manage and report

on the risks to which the Group is, or could be, exposed. This includes climate-related risks.

• The RMF supports the identification of risks both quantitatively and qualitatively, and from both top-down and bottom-up

perspectives at the Group-level.

• The Group continually reviews the forward-looking landscape to ensure it sufficiently identifies, assesses, controls,

monitors, manages, and reports on emerging risks.

• The Group continues to develop its internal climate risk reporting to reflect market best practice and enable effective

measurement of climate risk and tracking of progress made against the Group’s net zero targets.

Pages

66–67

Metrics and targets

Disclose the metrics and targets used to assess and manage relevant climate-related risks

and opportunities where such information is material

Recommended disclosure Summary of progress Further information

a. disclose the metrics

used by the organisation

to assess climate-related

risks and opportunities in

line with its strategy and

risk management process

• A number of metrics are used across the Group’s investment portfolio and operations to help measure and manage

exposure to climate risk. The following metrics are used to understand how aligned the Group’s investment portfolio is

to a net zero economy and how resilient it is to transition risk: absolute portfolio emissions; economic and revenue intensity;

percentage of listed asset portfolio exposed to high-transition risk sectors; proportion of investee companies that have set

science-based targets.

• Operational emissions are tracked through intensity metrics per full time employee (‘FTE’) and the Group reports both

market-based performance as well as location-based performance. In addition, a location-based per floor area metric

is used to track the impact of efficiency initiatives undertaken within Group buildings.

• Our Scope 3 (purchased goods and services and capital goods) have been modelled using spend data alongside average

industry emissions factors and enhanced with supplier data.

Pages

68–75

b. disclose Scope 1, 2, 3

GHG emissions and the

related risks

• The Group’s absolute Scope 1, 2 and 3 emissions calculated at year-end 2024 are as follows:

– Investment portfolio emissions: 12.4 MtCO

e^ (Scope 3 category 15 – Scope 1 and 2 of our investee companies).

– Operational emissions: 11,011 tCO

e (Scopes 1, 2 and Scope 3 categories 3, 6, 7, 8, 13 only).

– Supplier base emissions: 57,000 tCO

e^ (Scope 3 category 1 and 2).

– Total indirect Scope 3 emissions, excluding investments: 65,798 tCO

e^ (Categories 1, 2, 3, 6, 7, 8, 13)

• A phased approach has been taken to measuring the emissions baseline of the Group’s investment portfolio. Total AUA

covered in our baseline is £198 bn, which is 70% of our total AUA. The baseline will continue to be expanded to cover

the assets in scope of our 2030 interim target.

Pages

68–75

c. describe the

targets used by the

organisation to manage

climate-related risks

and opportunities

and performance

against targets

• Targets have been set across the Group’s investment portfolio, operations and supplier base to help navigate progress

towards meeting the Group’s net zero by 2050 ambition.

• Interim net zero targets include:

– Investments: 25% reduction in investment portfolio emissions intensity by 2025; and at least a 50%

reduction by 2030 (where we have control and influence) relative to 2019 baseline

– Operations: net zero operations by 2025 relative to 2019 baseline

– Supplier base: 50% reduction in the carbon intensity of the supplier base by 2030 relative to 2022 baseline

• We believe we will be on track to achieve our 2025 interim targets for listed equity and credit assets and our own

operations under most scenarios, if we implement the actions to which we have committed.

• Our ability to meet our 2030 and 2050 targets is less certain. It is likely we will need to take further action and will

become increasingly dependent on decarbonisation in the wider economy and actions by others, in particular

government, regulators and companies in high transition risk sectors.

Pages

68–75

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Direct reporting

Indirect reporting/engagement

Sustainability review continued

Climate-related financial disclosures

We have a clear governance framework in place to ensure a foundation

for action and accountability on climate-related risks and opportunities. The

framework continues to evolve to reflect the growing significance of climate

change and the increasing sophistication of the way we manage its impact

on our business. To an increasing extent, the Group’s governance framework

also integrates the governance of nature-related risks and opportunities.

Governance

Our climate governance framework

* These are the individuals accountable for climate assisted by Management Committees and working groups

in making day-to-day climate-related decisions and escalating and reporting upwards as and when required.

Phoenix Group Holdings plc Board

Audit

Committee

Phoenix Life

Companies’

(‘LifeCo’) board

LifeCo board

investment

committee

Remuneration

Committee

Risk

Committee

Sustainability

Committee

Nomination

Committee

Chief

Executive

Officer*

Chief Risk

Officer*

Chief

Financial

Officer*

Stewardship

Working Group

Enterprise Asset

Management

Committee

Enterprise

Sustainability

Committee

Sustainable

Investment Research

Forum

Portfolio

& Credit

Committee

Policyholder

Investment

Performance Forum

Reporting and

Disclosures

Working Group

Board oversight to Committees & Management

Management Committees & Working Groups

Boards and Committees

Committee, management accountability and performance measuring

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Group Board oversight

The Board recognises that managing

the impact of climate-related risks and

opportunities on the business is a strategic

priority. As such, the consideration of climate

change is embedded within our governance

framework and processes. The Board has

oversight of the Group’s strategic approach

to climate change (including risks and

opportunities) and setting the Group’s risk

appetite. The Board has a robust governance

structure to assist in the discharge of

its responsibilities through delegations

within approved terms of reference.

The Board and its Committees have defined

roles and responsibilities relating to the

management, oversight and reporting of

climate-related matters. Cross-committee

membership and engagement between the

Committees is key to driving consistency with

how climate-related matters are addressed

across the Group’s governance framework.

Board of Directors’ skills

and competencies

See page 117 for details of the

Board’s skills and expertise relating

to sustainability, including climate

Board Committees with climate-

related governance responsibilities

The following Board Committees have

defined roles and responsibilities relating to

the management, oversight and reporting

of climate risk and opportunities:

• The Group Board Sustainability Committee

has oversight of the Group’s sustainability

strategy, including monitoring performance

against climate-related targets.

• The Group Board Audit Committee has

oversight of the adequacy and

effectiveness of the systems of internal

control, of climate-related and non-

financial reporting and external disclosures.

• The Group Board Risk Committee has

oversight of climate-related risks and

opportunities, by assessing the

effectiveness of our Risk Management

Framework, strategy, risk appetite, risk

profile and compliance with prudential

regulatory requirements, including

transition, litigation and physical risk

and other relevant sustainability risks.

• The Group Audit, Risk and Sustainability

Committees established joint bi-annual

meetings from 1 January 2024 to ensure

a more harmonised and collaborative

approach in relation to sustainability

reporting. The main focus of these

meetings is to review sustainability

reporting, internal and external assurance,

climate risk and the implementation of

newregulation.

• The Group Board Remuneration

Committee ensures appropriate ESG

elements (including climate-related targets)

are included within the Group

remuneration framework.

• The Phoenix LifeCo board approves the

investment, asset and liability management

strategies for all Life Company assets, and

seeks to include ESG considerations such

as climate change where applicable. A

nominated Non-Executive Director from

the Life Companies Board is also a standing

attendee at Group Board Sustainability

Committee meetings.

• The Phoenix LifeCo board investment

committee discusses sustainable

investment, stewardship and ESG policies.

It engages with the Group Board

Sustainability Committee in relation to

execution of the Group’s Sustainable

Investing strategy to drive a consistent

approach to the execution of the

sustainability strategy across the Group

and to ensure appropriate ESG reporting

on material investment matters.

Key Group Board and Group

Board Committeeclimate-related

activityand outcomes

Number of meetings, key areas

offocus andoutcomes

See pages 118 to 160 for details

on the work of each Group Board

Committee and the key areas of

focus and outcomes

Training activity

Deep-dive sessions were provided to Group

Board Committees on a range of topics

including in relation to the Group’s Net Zero

Transition Plan; risks of greenwashing; climate-

related reporting in financial disclosures;

Taskforce on Nature-related Financial

Disclosure (‘TNFD’); sustainable, transition

or productive investments; as well as climate

litigation and associated potential risks.

Management oversight

Key individuals and Committees at the

management level play an important role

in our climate governance framework.

They support the Board with decisions

relating to assessing and managing

climate-related risks and opportunities.

Individual accountability

The Group’s Chief Executive Officer (‘CEO’),

Andy Briggs, is the Executive Board Director

responsible for implementation, delivery

and reporting to the Board on the Group’s

overall sustainability strategy, including

climate change, which forms part of the

Group strategy. As delegated by the CEO,

the Director of Corporate Affairs and Brand

is accountable for defining and overseeing

delivery of the Group sustainability strategy

as agreed with Group and Life Co boards; and

ensuring appropriate accountabilities and risk

and controls oversight are in place to achieve

the business’s sustainability objectives.

Individual responsibility for ensuring the

appropriate identification, assessment,

management and reporting of climate-

related financial risks and opportunities

that could impact the Group sits with the

Group’s Chief Financial Officer (‘CFO’) and

the Group’s Chief Risk Officer (‘CRO’), both

appointed as Senior Managers responsible

for climate-related financial risk under

the UK Prudential Regulation Authority’s

and Financial Conduct Authority’s Senior

Managers and Certification Regime. As part

of wider financial reporting responsibilities,

the Group CFO is responsible for reporting

metrics and targets and external disclosures.

As part of wider risk responsibilities, the

Group CRO is responsible for ensuring that

climate-related risks are incorporated into

the existing Risk Management Framework.

As delegated by the Chief Investment Officer,

the Chief Credit Officer is accountable for

the sustainable investment management

of Phoenix Group assets in accordance

with sustainable investing governance, and

responsible for the delivery of the Sustainable

Investing Programme in line with regulatory

requirements and items aligned to the Group’s

Net Zero Transition Plan in accordance

with the delivery timescale approved with

the programme/Board as appropriate.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

Climate-related financial disclosures

Management-level forums with climate-related responsibilities

Forum Climate-related responsibilities

Enterprise Sustainability Committee To support effective decision making by Executive and Senior Management in relation

to the implementation andoversight of the Group’s sustainability and climate strategies

and associated initiatives.

Enterprise Asset Management Committee To support effective decision making by Executive and Senior Management in relation to

the direction and oversight of the Group’s investment strategy (including thestrategic asset

allocation framework and sustainable investment and asset liability management strategies)

and asset management activities undertaken for policyholder and shareholder funds,

ensuring alignment with sustainability strategies and relevant risk appetites.

Portfolio and Credit Committee To support effective decision making by Executive and Senior Management in the oversight

of the credit portfolio and execution of the Group’s investment strategy through oversight

of ESG investment decisions and credit risk management activities.

Policyholder Investment Performance Forum To review the investment performance of policyholder assets to ensure it is transparent and

in line with customers’ reasonable expectations. This includes consideration of sustainable

investment data, metrics and analytics to support the delivery of sustainability objectives,

where this is built into the investment case.

Sustainable Investment Research Forum To support effective decision making by Executive and Senior Management in relation to

sustainable investment research, frameworks and standards, including risk and opportunity

analytics, sustainability data, scenario analytics, evolution of investment targets, and thematic

research (including nature).

Other working groups A number of working/steering groups (as shown on page56) operate to support

on matters in relation to climate, nature, sustainability and stewardship of the Group’s

investment portfolio.

The CEO of Pensions and Savings, is

responsible for effectively overseeing

and embedding sustainability within our

customer servicing, communications

and propositions in line with the Group

sustainability strategy, ensuring accuracy

and transparency of disclosures as we

transition and evolve to mitigate the risk

of greenwashing. They also have the

responsibility to ensure the continued

delivery of good customer outcomes as the

Group transitions and evolves in line with

the sustainability strategy and objectives.

Other individuals within the Group’s

Executive team have accountability for other

aspects of the wider sustainability strategy

which interact with the climate strategy.

Climate-related performance measures

form a component of the Group’s

Executive Directors’ variable pay.

See Directors’ Remuneration report

on page 144 for more detail

Management-level forums

Executive management is assisted in

making day-to-day decisions and/or

reporting to the LifeCo and Group-level

Boards and Committees on climate-related

matters by a number of Management/

operational-level governance forums and

working groups which do not have decision-

making authority within the business.

The climate-related responsibilities of

these forums are set out in the table.

Key Management forum climate-

related activity and outcomes

Key areas of focus and outcomes

The climate-related activity undertaken

by our key Management forums supports

and feeds directly into the activity and

outcomes at a Board level.

See pages 118 to 160 for details of

activity and outcomes at Board level

Training activity

See reference to Board

deep dives on page 132

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

We have identified and assessed the impact of climate-related risks and

opportunities on our business, strategy and financial planning over short-,

medium- and long-term time horizons. Our Net Zero Transition Plan defines

our approach to meeting our climate targets and mitigating climate risks.

Strategy

Identifying climate-related

risks andopportunities

As a long-term savings and retirement

business, our customers can be invested

with us over many years to and through

retirement. As such, we recognise our

fiduciary duty to identify and manage

the potential climate-related risks and

opportunities that may impact the business

and our customers over time. We undertake

quantitative and qualitative analysis to

identify and assess how climate-related

risks and opportunities could materially

impact the Group’s strategy and financial

resilience over the following time horizons:

• Short-term: 0–1 year. This is consistent

with the liquidity monitoring time horizon

that we use for setting capital requirements

under Solvency UK.

• Medium-term: 1–5 years. This is consistent

with our financial planning process which

considers the medium-term plans and

strategy for the business.

• Long-term: over 5 years. This captures the

long-term nature of our business and the

risks that may emerge beyond the financial

planning process.

The identification and management of

climate-related risks is embedded in the

Group Risk Management Framework.

This includes the identification of risks

from both a top-down and bottom-up

perspective. Recognising that risks and

opportunities evolve and emerge over

time, we continue to review and improve

our approach to managing climate risk in

our Group Risk Management Framework.

Further details are included in the Risk

management section on page 66.

Scenario analysis

We use quantitative and qualitative

scenario analysis to model the impact of

different temperature pathways on our

business to gain insight into how climate-

related risks may materialise over time.

The output of this modelling, alongside

research and analysis, informs our strategic

response to transfer, accept, control

or mitigate our exposure to the risk.

1 Our climate risk analysis uses different time frames from those used in financial reporting. Accordingly, the references to short,

medium and long term here are not indicative of the meaning of similar terms used in our other disclosures.

We also analyse the opportunities that

the transition to a net zero economy

presents (over the short, medium and long

term) to ensure that we are equipped to

maximise these opportunities to support

good outcomes for our customers

and shareholders. The outputs of this

analysis are set out on pages 62 to 65.

We have developed a set of metrics to help

us measure, track and manage the potential

financial impact of climate-related risks and

opportunities. These are set out in the Metrics

and targets section on pages 68 to 75.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

Climate-related financial disclosures

Overview of material climate-related risks and opportunities

and impact on our business, strategy and financial planning

The following table summarises the material climate-related risks and opportunities faced by the

business over short-, medium- and longer-term time horizons, and the impact on our strategy.

Material risk/

opportunity

identified

Relevant

strategy

pillar

Potential impact of risk/opportunity on

our business, strategy and financial planning

Impact over

time horizon

Climate risk

exposures within

our investment

portfolios

Invest /

Engage

Risk

• Investments in sectors or companies which are adversely exposed to a transitioning

economy lose value or are downgraded, and investments prove ineffective resulting in loss.

• Increased frequency and/or severity of extreme weather events impact the value of physical

assets or the value of companies with high exposures to these risks.

• The systemic impacts of climate change play out across the global economy leading

to widespread market losses and devaluations.

Opportunity

• Introducing decarbonising benchmarks provides an opportunity to deliver good customer outcomes.

• Investing in climate solutions to reduce emissions and increase climate change resilience

supports good customer outcomes.

Short

Medium

Long

Changing

demand for

products, funds

and solutions

Invest /

Engage

Risk

• Loss of market share should investment solutions be perceived as not meeting evolving

customer needs.

Opportunity

• Innovating to create low carbon products for our customers drives growth.

• Attracting and retaining customers by supporting their needs to decarbonise their investment

portfolios, for example through net zero-aligned investment products and funds.

Short

Medium

Long

Emerging

government

policy,

regulatory and

legal changes

Invest /

Engage

Risk

• A breach of evolving legislative or regulatory requirements may expose us to litigation

or regulatory sanction and damage our brand.

• Governments fail to act in line with net zero by 2050 which impacts our ability to meet

our 2030 and 2050 net zero targets.

Opportunity

• Engaging with companies and governments to drive the transition to net zero by 2050 can

help support the business’s commercial objectives and deliver good customer outcomes.

Short

Medium

Long

Reputational

damage if climate

risks are not

appropriately

managed

Invest /

Engage /

Lead

Risk

• Reputational damage leads to loss of trust among customers. Customers decide to leave,

leading to loss of market share.

Short

Medium

Disruptions to

our business

operations and

supplier base

Lead Risk

• High delivery costs of implementing low carbon solutions for premises.

• Disruption to our suppliers from climate-related impacts affect the services provided to the Group.

Opportunity

• Implementing energy efficiency measures and low carbon solutions can reduce

exposure to volatile energy prices and lead to cost savings for the business.

Short

Medium

Long

Our strategic approach to managing

climate-related risks and opportunities

We believe that embedding the management

of material climate-related risks and

opportunities across our business helps us

to deliver our core purpose: to help people

secure a life of possibilities by supporting our

customers’ journey to and through retirement,

while investing in a better future for us all.

We consider the financial impacts of

climate-related risks and opportunities in

our medium to long-term strategic business

Further detail on our Net Zero

TransitionPlancan be found here

See page 4 for more information

on the Group’s business strategy

For more information see our

Sustainability Report

planning and on our annual operating

costs, by taking into account increased

operational costs associated with regulatory

compliance, or shifts in customer preferences

driven by environmental concerns.

The management actions that we are taking

to ensure the Group remains resilient to the

impacts of identified material climate risks

and opportunities are set out on page 67 of

the Risk management section. We maintain

an ongoing focus on improving how climate

risk analysis informs business decisions.

Our Net Zero Transition Plan sets out

the strategic actions that the Group is

taking across the three core pillars of our

Climate Action Model: Invest, Engage,

Lead to manage climate-related risks and

opportunities across the business and deliver

our net zero targets. Our customers are at the

heart of our plan and our actions are aligned

with delivering good customer outcomes.

Our Sustainability Report provides an

overview of our progress against our

Net Zero Transition Plan, as well as the

actions taken in 2024 to support the

delivery of the Group’s climate strategy.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Scenario analysis is a critical tool for stress-testing our strategy and the

resilience of the business to climate risks. We assess how climate-related risks

and opportunities may play out over a range of possible climate scenarios to

understand our potential exposure to risks and to identify the management

actions available to manage the risks over time.

Scenario analysis

Scenario analysis helps us to assess the impact

of the following risks and opportunities

identified in our risk analysis on page 60:

• Climate risk exposures within

our investment portfolios.

• Changing demand for products,

funds and solutions.

• Emerging government policy,

regulation and legal changes.

• Reputational damage if climate risk

is not appropriately managed.

• Disruption to our business operations

and supplier base.

Scenario analysis use across the Group

We continue to build on our progress in

developing our approach to climate scenario

analysis with a focus on producing decision-

useful outputs, noting there remain material

challenges experienced across the industry.

We use both quantitative and qualitative

climate-related scenario analysis to meet

different business needs across the Group:

• Stress testing our investment portfolio:

We use scenarios which consider both

transition and physical risk to assess

the potential quantitative impacts on

different assets classes, model possible

decarbonisation pathways, and support

the design of investment strategies and our

stewardship activities. Due to the uncertain

and long term nature of climate change,

such modelling is subject to a wide variety

of limitations (see page 65). In order to

support decision making and improve

the robustness of the results, qualitative

judgement is required to supplement the

quantitative analysis, whilst taking caution

given limitations remain.

• Own Risk and Solvency Assessment

(‘ORSA’): We use both quantitative and

qualitative scenario testing to assess the

potential financial implications of different

climate pathways on the ongoing viability of

the business and on resilience of the

balance sheet, and to provide insight into

risks associated with the Group’s objectives.

• Business resilience: We stress test the

ability of the Group to continue to operate

under extreme weather events such as

heatwaves and floods.

During 2024 we performed a range

of scenario analysis which considered

various climate pathways both

quantitatively and qualitatively.

External providers are used in the

production of quantitative analysis.

These providers offer a restricted list of

scenarios, which is therefore a key factor

in the choice of scenarios for the Group.

It is important to note these scenarios

represent a small set of possible climate

outcomes and there remain infinite

possible pathways that could emerge.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

Climate-related financial disclosures

Transition risk analysis

Three scenarios from the NGFS Phase

IV were chosen to represent a possible

range of climate outcomes with varying

pace of global transition to a low carbon

economy. These range from a transition

to net zero starting immediately and

unfolding in an orderly fashion to achieve

a temperature rise of below 1.5°C by

2050, to a delayed transition with globally

misaligned climate ambitions leading to

emissions growth causing irreversible

climate change and high physical risk.

The analysis was performed on the Group’s

investment portfolio, testing the impact

on each asset class, and our exposure

across geographies, sectors and holdings

across individual counterparties. For

illustrative purposes, this report shows

the quantitative results for our equity

portfolio under an ‘Orderly transition

– Net zero 2050’ scenario only.

The analysis assumes a static asset

allocation throughout the projection

period 2025–2050 and does not take

into account actions to manage climate

risk, or adaptation and abatement actions

to reduce climate change impacts.

The scenario analysis results highlight

potentially material exposures to transition

risks across each of the three scenarios,

indicating the impacts of climate change

have the potential to materially reduce

investment returns and increase volatility for

customers and shareholders, if the Group

does not continue to take action to manage

and mitigate the risk. These actions include

decarbonising our investment portfolio,

ensuring effective stewardship of our assets

and investing in climate solutions. Further

details of the actions taken are outlined in

the Risk management section on page 67.

The analysis also highlights that the

impact of climate risk on asset values

can differ significantly between regions,

sectors and individual counterparties

within each asset class for each scenario.

Regional deep dive

The chart below illustrates the impact of an ‘Orderly transition – Net zero 2050’

scenario on the Group’s equity portfolio, with the greatest impact seen in our Asia

Pacific equities. The modelling assumes that due to greater GHG emissions in the

Asia Pacific region our holdings become increasingly exposed to carbon prices and

require more abatement actions to reduce emissions in line with an orderly transition.

This implies that mitigating actions should consider the exposure to highly impacted

regions, however, given known limitations care should be taken with the results.

Indicative impact from transition risk on the Group’s equity portfolio by region

Scenario

Orderly transition –

Net zero 2050

Asset value impact by region 2025 2035 2050

North America

Europe

Asia Pacific

Indicative climate change impact

Positive Above 0.5% Low -0.5% to -2.5%

Very Low Below 0.5% Moderate -2.5% to -5%

Medium -5% to -10%

High Below -10%

Note: Results are based on the NGFS Phase IV Net zero 2050 scenario, and adaption

and abatement actions have not been allowed for in the scenario.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sectoral deep dive

The chart below illustrates the impact of an ‘Orderly Transition – Net Zero 2050’ scenario on

a sample of sectors within the Group’s equity portfolio. The results show there are a number of

sectors materially impacted by climate change, with energy and materials being the most negatively

impacted and the utilities sector most positively impacted over the long term. This implies that

mitigating actions should consider our exposure to high impact sectors, however, given known

limitations care should be taken with the results. In addition, individual counterparty analysis

shows a wide level of variability in individual asset returns within sectors, of -100% up to +550%.

This highlights the importance of not divesting from whole sectors and looking through to

individual holdings to better understand potential climate impacts within sectors.

Indicative impact from transition risk on the Group’s equity portfolio by sector

Scenario

Orderly transition –

Net zero 2050

Asset value impact by sector 2025 2035 2050

Energy

Industrials

Materials

Utilities

Real estate

Consumer staples

Indicative climate change impact

Positive Above 0.5% Low -0.5% to -2.5%

Very Low Below 0.5% Moderate -2.5% to -5%

Medium -5% to -10%

High Below -10%

The Group has introduced decarbonising

benchmarks that aim to proactively identify

and tilt towards companies operating

across all sectors which are better-placed to

manage the risks and opportunities from the

transition to net zero. These use a range of

forward-looking metrics including projected

carbon performance, an assessment

of the quality of management of GHG

emissions and of risk and opportunities

related to the low carbon transition.

Across the less orderly transition

scenarios we expect the impact on the

investment portfolio to be more material

and accelerated however, it is important

to highlight that the scenarios do not

account for the significant limitations

of the external scenario models used

by providers in capturing physical risks,

tipping points and the cascading effect

of these tipping points. As such, the

following physical risk scenario analysis

was performed to assess the impacts on

sub-sections of the investment portfolio.

Note: Results are based on the NGFS Phase IV Net zero 2050 scenario, and adaption

and abatement actions have not been allowed for in the scenario.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

Climate-related financial disclosures

Physical risk analysis

Analysis has been performed to assess

the potential physical risk to our real estate

portfolio (both directly held real estate

assets and real estate loans) from different

climate scenarios, using S&P’s Climanomics

platform. The platform makes use of four

scenarios underpinned by climate change

projections used by the Intergovernmental

Panel on Climate Change. These range from

a low emissions scenario with a pathway

to 1.5°C, to a high emissions scenario with

no changes to climate policies leading to a

greater than 4°C global mean temperature

rise (relative to pre-industrial levels).

The assessment measures the potential future

cost of a response to different risk hazards

over the short, medium and long term on

our real estate assets. The risks considered

cover both chronic and acute physical risks

including the impact of flooding (fluvial,

pluvial and coastal), temperature extremes,

drought, wildfire and tropical cyclones.

The impacts of these hazards can differ

according to the type of building at each

location. For example, there may be increased

future cost through clean-up or repair,

interruption to business, or increased cooling

or heating costs. The potential future costs

calculated are the cumulative cost in each

decade, i.e. ten years of aggregated costs.

The results below show the aggregated

impact across c.£4 billion of directly held

real estate and c.£1 billion of real estate loans

under the four scenarios in each decade from

2030 through to 2050. The results for the real

estate loans portfolio reflect our participation

in the financing of the underlying properties

and capture our attributed share of emissions,

which will typically be a smaller percentage

than directly held assets. As such the scale of

possible future costs for real estate loans is

lower than the directly held real estate assets.

The overall results indicate there is an

increasing relationship between the cost

and severity of risk factors over time. In later

decades, physical risks are more severe than

historic levels which increases potential future

costs. Similarly in higher emissions scenarios

physical risks further increase in severity

leading to potentially higher future costs.

For other parts of our portfolio such as listed

equity and credit we have begun to explore

the potential physical risk impacts to those

asset classes. We plan to continue developing

this analysis during 2025 and beyond.

Cost from physical risk on directly held corporate real estate assets

Scenario

Estimated cost from physical

risk in each decade

Low-high physical risk 2030 2040 2050

Low (RCP2.6)

Medium (RCP4.5)

Medium-High (RCP7.0)

High (RCP8.5)

Representative Concentration Pathways (RCPs) are trajectories of greenhouse gas concentrations used for climate modelling in the

IPCC Fifth Assessment Report (IPCC 2013).

Approximate cost

Lower 0% to 5% Higher 10% to 15%

Medium 5% to 10% Highest 15% to 20%

Cost from physical risk on corporate real estate loans

Scenario

Estimated cost from physical

risk in each decade

Low-high physical risk 2030 2040 2050

Low (RCP2.6)

Medium (RCP4.5)

Medium-High (RCP7.0)

High (RCP8.5)

Approximate cost

Lower 0% to 1% Higher 2% to 3%

Medium 1% to 2% Highest 3% to 4%

Note: The assessment of potential future cost does not currently consider our ability to manage or mitigate these costs and does not

include any view of future action which may be taken to do so. The analysis assumes the current mix of assets remains constant and

holds both property and loan values constant over the time horizon. Further work will be completed in 2025 to analyse the underlying

risks in more detail, and to consider how to integrate any emerging information into our ‘Strategy’ and ‘Risk management’.

Qualitative scenarios

Qualitative scenarios are used to assess

the impact of potential extreme physical

risk events on the Group’s investment

portfolio that are not easily quantifiable

through financial modelling. The following

qualitative scenario was assessed in 2024:

Major flooding

A major flooding scenario was chosen to

represent an extreme physical risk event. This

scenario explores the potential impacts and

scenario responses that could be taken if

the Group is exposed to an extreme physical

climate event whereby major flooding is

caused by rising sea levels. It focused on

understanding the potential exposure to the

Group’s investment portfolio and how this

might impact the Group’s investment strategy.

The qualitative impacts and scenario

responses were assessed through a series

of workshops involving subject matter

experts in Risk, Asset Management and

Sustainability teams. The analysis highlighted

that the Group expects flooding risk to be

more material to assets held within the Asia

Pacific region, relative to North America

and the UK, and at a sector-level real estate

and industrials were deemed to be most

materially impacted. We recognise that

further work is required to understand the

Group’s exposure to physical climate risk and

therefore what the implications are for the

Group’s strategy which currently primarily

focuses on managing transition risk.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Limitations in scenarios and modelling

We are conscious of the limitations related

to scenario analysis and we take these

limitations into account when assessing what

the implications of scenario analysis are for

the business. We will continue to ensure

that actions taken to manage climate risk

are implemented at the appropriate pace

and support the delivery of good outcomes

for our customers and shareholders.

Scenarios

• How climate risk will emerge, the speed

at which it will emerge, and when it will

emerge are all highly uncertain. Only a

subset of possible climate outcomes have

been assessed and we acknowledge an

infinite range of possible climate pathways

could emerge, each of which could impact

the Group’s business model, balance sheet

resilience and our customers in a range

ofways.

• There are limitations to how physical risks

are captured within quantitative modelling,

particularly relating to the impacts of

tipping points and the systemic effects of

climate risk events on the wider economy.

• The scenarios used are not considered

to be upper or lower limits for potential

climate outcomes and impacts could

be far in excess those estimated.

Impacts

• The impacts of the climate scenarios on

our investment holdings do not account for

potential abatement and adaptation actions

that companies and governments may take

as the scenarios unfold. If and how these

actions may emerge are highly uncertain

so they have been excluded to allow an

assessment of more extreme versions

of thepathways.

• The impacts of the scenarios are highly

sensitive to the underlying assumptions,

including the future trajectory of carbon

prices which are inherently uncertain.

Data

• The Group has sourced scenario data from

a leading data provider, however data is

more readily available for investments in

listed counterparties than private markets.

• Look-through data has been used to

identify the underlying investments in

respect of some of our funds invested

in collective investment vehicles. Data

coverage in the climate models used for

scenario analysis currently stands at c.70%.

Our ability to increase the coverage further

is limited by the granularity/functionality

of data providers.

Other limitations

• Asset modelling assumes the asset

mix of the Group remains constant

throughout the projection period.

• The modelling does not account for

possible management actions that may

be taken to decarbonise the portfolio.

Conclusions and next steps

The results of the scenario analysis performed

this year were not deemed to significantly

threaten the strategic objectives of the

Group. However they do indicate that climate

change has the potential to materially reduce

investment returns and increase volatility

for customers and shareholders over time,

if the Group does not continue to take

action to manage and mitigate the risk.

In certain asset classes we have levels of

flexibility as to how and where to invest and

could, theoretically, decarbonise certain parts

of our investment portfolio in a short period.

However, we recognise that narrowing the

investable universe in this way is unlikely to

be aligned with delivering good customer

outcomes and managing other risks (such

as concentration risk), and nor would it

contribute to real economy decarbonisation.

The Group will continue to assess the impact

of possible climate pathways. This will help

inform the appropriate pace of actions

taken in managing climate risks and assess

the implication on the Group’s strategic

decisions if the global transition does not

follow a net zero 2050 pathway, considering

external factors including the impact of the

United States’ anti-climate headwinds.

Climate stress and scenario testing will

continue to be developed and performed

to identify and manage further potential

exposures and identify possible mitigating

actions. Given the uncertainty with the

materialisation of physical risks and modelling

limitations, the Group is developing a climate

physical risk roadmap to better identify

and understand the impact of physical risks

(flooding, subsidence, sea level rise, wildfire,

etc.) on our investment portfolio in order

of materiality. As part of this development,

we plan to explore extending our physical

risk analysis to other asset classes, such

as illiquid credit. We will also review data

providers to seek enhancements to the

physical risk data points within the scenario

modelling, whilst continuing to build

on our own qualitative judgements.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

Climate-related financial disclosures

Our Risk Management Framework (‘RMF’) supports the identification,

measurement, assessment, management and reporting of the impact

of climate risk and is fundamental to achieving our climate ambition.

We continue to enhance our risk management approach to reflect both

our increased understanding of climate risks and evolving market practice.

Risk management

Our developing approach

to managing climate risk

Climate risk is considered a subset of wider

sustainability risk, which is defined as the

risk of financial failure, poor customer

outcomes, reputational damage, loss of

earnings and/or value arising from a failure

to manage the impacts of environmental,

social and governance matters on the

Group’s customers, financials and strategy.

The Group’s understanding of climate

and wider sustainability risks continues to

evolve as new risks emerge. This has led

to an evolution of the RMF to consider

climate risk as part of wider sustainability

risk management instead of on a standalone

basis. Climate risk is a key sustainability risk

to the Group and is therefore a material

component of this new sustainability risk

approach. The Group is conscious of

other sustainability risks, including nature,

and will continue to evolve components

of the RMF to appropriately manage the

impact of these material emerging risks.

To reflect this approach, a Sustainability Risk

category has been established in the Risk

universe. Within this category, risk policies

have been developed and implemented to

cover key sources of climate and sustainability

risk across the business and strategy.

Sustainability-related enhancements have

also been made to the suite of quantitative

and qualitative tolerances and triggers which

support the monitoring of risk appetites.

For more detail on the Group’s Risk

Management Framework see page 44

Risk identification, assessment,

management and reporting

Identification and assessment

ofmaterialrisks

The identification of climate-related risks has

been embedded into the components of the

RMF which support the identification of risks

both quantitatively and qualitatively, and from

top-down and bottom-up perspectives.

The materiality of climate risks are assessed

on an ongoing basis, and differs between

business areas. Individual areas must ensure

their strategies suitably allow for climate risk

proportionately to the materiality of other risks

they face. This will inform how and when to

make climate risk-driven decisions over time.

We use the following tools, which have

a combination of internal and external

inputs, to understand our climate risk

exposures and assess materiality:

• Annual stress and scenario

testingprogramme

• Carbon footprinting exercises

for our assetsand operations

• Horizon scanning

• Monitoring and reporting progress

against climate risk metrics and targets

The key material climate risks are listed

in the Strategy section on page 60

Specific capital is not currently held for

climate risk, but we assess the appropriateness

of our capital held via scenario analysis.

In addition, the Group’s Internal Model

Governance Policy requires that the impact

of climate-related risks is given specific

consideration when developing and

reviewing Solvency UK methodology and

assumptions. This approach to capital will

continue to evolve as internal and industry

approaches become more established.

Limitations

As the availability of tools and systems

develop, the Group is mindful of several

limitations when utilising this information

to make informed decision such as:

• Data quality

• Data coverage

• Sophistication of models for scenario

analysis and modelled climate outputs

• Methodology differences between

the different data sources and tools

• Changing regulatory landscape

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Risk management within the business

In addition to incorporating climate risk into the Group’s RMF, the management of climate risk has been embedded into a variety

of key processes to ensure effective day-to-day management of the risk. The mitigating actions that the Group is taking to address

material climate risks are set out in the table below. Our Net Zero Transition Plan sets out the Group’s overall strategic approach

to managing climate risks across the business.

Material risks Mitigating actions

Risk

Climate risk exposures within

our investment portfolios

• We use scenario analysis to stress test our investment portfolio against a range of scenarios.

This help us to understand our exposure to transition and physical risks.

• We aim to decarbonise our investment portfolio to mitigate our customers’ exposure to

climate risk, with the objective of improving portfolio resilience to potential climate-driven

market shocks and reducing the risk of assets within the portfolio becoming stranded.

• We use stewardship approaches to engage and support investee companies to transition

their businesses in line with net zero by 2050. This helps reduce our exposure to climate risk.

We also engage with our asset management partners on climate change, seeking alignment

with our objectives.

• By investing in climate solutions, we ensure our customers’ and shareholders’ funds have

exposure to assets that will support and be resilient to the transition to net zero by 2050.

Risk

Emerging government policy,

regulatory and legal

• We engage with decision makers, collaborate with peers and deliver thought leadership

to overcome barriers and play our part in addressing systemic climate risk. This also informs

our own decision making and management of climate risks.

Risk

Reputational damage if climate risks

are not appropriately managed

• We ensure the ongoing monitoring and measurement of climate metrics. This informs the

management actions we take to manage climate risk.

• We have set net zero targets and ensure that the actions we take to deliver them support

good customeroutcomes.

• We ensure the implementation of anti-greenwashing controls across the business.

• We have a supplier risk management and oversight process in place. Suppliers must

be able to demonstrate that they operate/provide services that satisfy the Group’s risk

appetite to be onboarded and must continue to demonstrate this on an ongoing basis.

Risk

Disruptions to our business

operations and supply chain

• We are taking action to decarbonise our own operations to mitigate our exposure

to transition risks.

• We assess the business’s resilience to physical climate risk on an ongoing basis to ensure that

the Group can continue to operate under extreme weather events.

Risk

Changing demand for products,

funds and solutions

• We engage with our customers to understand their changing needs and preferences and

to help them understand the impact of their investments.

• To meet the majority of customers’ needs and to ‘take care of responsible investing for them’ we

offer easy, sustainable investment options, such as our Sustainable Multi Asset default workplace

solution, focused on growing customers’ money over the long term while investing to support

more positive sustainability outcomes.

For more information on specific actions that the Group has taken in 2024 read our Sustainability Report

The Group continues to develop its internal

climate risk reporting to reflect the evolution

of market best practice, and to enable

effective measurement of climate risk and

tracking of progress made against the Group’s

net zero targets across our operations,

supplier base and investment portfolio.

Industry methodology and guidance on

climate risk measurement is evolving and the

Group continues to evaluate the changing

landscape and how this will impact ongoing

climate risk assessment and reporting against

external targets.

Risk reporting

Climate risk reporting is an evolving process

and a key priority for the Group to ensure all

stakeholders are taken along on the journey

and that risk is managed effectively over the

coming years.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

Climate-related financial disclosures

We have set near-term targets and developed a suite of metrics to help us to navigate

our progress towards meeting our net zero by 2050 ambition

. We believe we are on

track to achieve our 2025 interim targets under most scenarios if we implement the

actions we have committed to. Our ability to meet our 2030 and 2050 targets is less

certain and it is likely we will need to take further action and we will become increasingly

dependent on decarbonisation in the wider economy and action by others.

1 Third-party assurance is provided for a subset of

our climate-related metrics, the scope of assurance

is determined by regulatory requirements and

market best practice. See our ESG Data Appendix

for a full list of our metrics.

Metrics and targets

Investment portfolio

targets framework

We believe science-based targets are

vital if we are to respond to the climate

challenge and have engaged with a wide

range of standards and framework setting

initiatives including Glasgow Financial

Alliance for Net Zero (‘GFANZ’), Net Zero

Asset Owner Alliance (‘NZAOA’), PCAF

and Science-Based Targets initiative

(‘SBTi’). Our targets are aligned with the

target-setting protocol developed by the

NZAOA and we are not currently seeking

validation of our targets by the SBTi.

We will not use carbon offset credits to

achieve our 2025 and 2030 investment

portfolio decarbonisation targets.

Key progress in 2024

• Achieved a 52% reduction in the carbon

intensity of our listed equity and credit

portfolio relative to our 2019 baseline.

This indicates we are on track to achieve

our 2025 target under most scenarios if we

implement the actions we have committed to.

• Expanded our carbon emissions baseline

to include equity release mortgages

(accounting for c.2% of our total AUM),

which are responsible for 0.01 MtCO

at YE2019, <0.1% of our baseline portfolio

emissions. Our carbon emissions baseline

at YE2019 remains at 24.6 MtCO

e and now

covers 92% of the assets within the scope

of our 2030 target.

Our investment portfolio

Investment metrics framework

We use the financed emissions methodologies

developed by the Partnership for Carbon

Accounting Financials (‘PCAF’) insofar as

possible. PCAF is a partnership of financial

institutions that work together to develop and

implement a harmonised approach to assess

and disclose greenhouse gas (‘GHG’)

emissions associated with their loans and

investments. Our 2024 position reflects asset

values as at YE2024, and carbon emissions

largely from calendar year 2023 (the latest

year for which emissions data is readily

available). Our primary metrics to analyse our

investment portfolio emissions are absolute

financed emissions and economic emissions

intensity. Economic emissions intensity is

used as the basis for our externally reported

investment portfolio targets. To support

the interpretation of these metrics, we also

disclose data quality scores and data

coverage at an asset class level. In addition,

we have a suite of investment metrics which

help us to better understand our exposure to

transition risk, and to determine how aligned

our investment portfolio is to net zero.

Information on our exposure to

climate risk is in the Scenario analysis

section on pages 62 to 64

Investment portfolio targets

2025

25%

reduction in the carbon intensity of

our listed equity and credit portfolio

(where we have control and influence)

2030

50%

reduction in the carbon intensity

of all assets (where we have control

and influence)

2 Our investment portfolio decarbonisation targets

relate to the Scope 1 and 2 emissions of our investee

companies relative to a 2019 baseline.

3 See glossary for definition of control and influence.

2050

Net zero

across our investment portfolio

• Broadened the scope of reporting to

consider the Scope 3 emissions of all

investee companies in our listed asset

portfolio. The Scope 3 emissions of our

investee companies is 88 MtCO

e at

YE2024, 70% of which is from four sectors:

industrials, energy, financials andmaterials.

• Developed our suite of forward-looking

climate investment risk metrics to form a

more detailed picture of net zero alignment

across the investment portfolio.

• Conducted the first stages of a formal

review of progress against our 2030 target,

to evaluate our strategy’s ongoing alignment

to our fiduciary duties by referencing the

status of the global transition.

Next steps

• Extend our carbon emissions baseline to

include alternative assets, increasing our

portfolio coverage towards 100% of the

scope of our 2030 decarbonisation target.

• Finalise our review of progress against

our 2030 target, and potentially set more

granular sub-portfolio internal targets

to drive decarbonisation activity.

• Further enhance the reporting of

the Scope 3 emissions of investee

companies in our listed asset portfolio,

and understand where we could drive

further decarbonisation activity.

• Continue to develop our suite of climate

investment risk metrics, with a particular focus

on forward-looking measures which help us

to better understand our decarbonisation

performance against a net zero glide path.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

MtCO

2019

4.6

9.2

24.6

18.1

12.4^

10.4

2023

2.7

7.0

7.9

6.1

2021

4.0

7.6

9.0

2024

1.5

4.3

Real estate

Illiquid credit

Equity release mortgages

Listed credit

Listed equity

Sovereign debt

-50%

-32%

250

200

150

100

tCO

e/£m

Listed

credit

51^

105

72^

24^

Listed

equity and

credit (total)

(scope of

2025 target)

Listed

equity

Sovereign

debt

Real

estate

Illiquid

credit

Equity

Release

Mortgages

Total

portfolio

(scope of

2030 target)

2023

2024

2019

2021

-52%

-19%

Measuring our carbon

footprint baseline

We have selected YE2019 as our baseline

position against which we measure progress.

As a pre-COVID-19 pandemic year this

reflects a more comparable level of global

economic activity emissions. Our primary

source of counterparty carbon emissions

data is Institutional Shareholder Services

(‘ISS’), an established sustainability data

vendor. Our analysis captures the Scope

1 and Scope 2 emissions of our investee

companies, and we have separately

conducted analysis to consider the Scope

3 emissions of our investee companies.

Expanding our carbon footprint baseline

to include equity release mortgages leaves

absolute emissions at YE2019 24.6 MtCO

unchanged. The total AUA (as at YE2024)

now covered in our carbon footprinting

results is £198 billion, which is 70% of our

total AUA. Our carbon footprint results

cover 100% of the scope of our 2025 target,

92% of the scope of our 2030 target, and

70% of the scope of our 2050 target.

Analysing our investment

portfolio emissions

Absolute emissions

We have experienced a 32% reduction in

total absolute emissions across the investment

portfolio in 2024, from 18.1 MtCO

e (YE2023)

to 12.4 MtCO

e^ (YE2024), and a 50%

reduction relative to the baseline, from 24.6

MtCO

e (YE2019) to 12.4 MtCO

e^ (YE2024).

The reduction in absolute emissions for

our investment portfolio is driven by both

decarbonisation activity undertaken by our

investee companies and a result of investment

allocation changes from the introduction

of decarbonising benchmarks in our equity

portfolio. We have also observed a fall in

actual data coverage for our listed credit

portfolio due to process automation which

has an affect on reported emissions, see

further details on page 70. We are therefore

prudent in the inference we can draw from

this year’s reduction in absolute emissions.

The absolute emissions profile of our

investment portfolio is primarily driven

by sovereign debt (c.49%), listed equity

(c.35%) and listed credit (c.12%). Other

asset classes that we have footprinted

(illiquid credit, real estate, and equity

release mortgages) collectively make up

less than c.4% of our absolute emissions.

We will continue to expand the baseline to cover remaining assets as the quality and coverage

of data improves and best practice frameworks evolve. The table below shows the coverage

of our carbon footprint baseline at YE2024.

Asset class

AUA as at YE24

(£bn)

Included in carbon

footprinting results

Listed equity and credit 135

Sovereign debt 37

Real estate 5

Illiquid credit 8

Equity release mortgages 5

Cash 9

Currently not included in

carbon footprinting results

Collectives outside of influence and control 69

Alternatives 18

Total 284

1 This represents Total Life Company assets excluding amounts classified as held for sale. Adjustments for off-balance sheet

AUA, assets held in Wrap Self-Invested Personal Pension products, and onshore bond products enable a reconciliation

to the Group AUA of £292bn.

Economic emissions intensity of our baselined investment portfolio

Absolute emissions of our baselined investment portfolio

Note: Due to the time-lag in sourcing climate data, prior

disclosures reported investment portfolio GHG emissions from

earlier financial periods. Since the YE2023 reporting cycle,

reporting capability was upgraded to enable investment

portfolio emissions disclosures to relate to the latest financial

year. The result is that there hasn’t been reporting against

YE2020 and YE2022.

Note: We have not included figures for equity release

mortgages for years 2021 and 2023 on the charts given the

proportion of emissions associated with this asset class is so

small it would not have a material impact on these years.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

100

2019 20232021 2024

Industrials

Other

Energy

Utilities

Materials

Emissions intensity

Economic emissions intensity is an important

measure for portfolio investors as this

enables comparison between portfolios

of different sizes and between different

time periods. We observe a 19% reduction

in the economic emissions intensity of our

listed asset portfolio between YE2023 and

YE2024, which brings the total reduction

observed since the baseline YE2019 position

to 52%. This is driven by a fall in absolute

emissions combined with an increase in the

Enterprise Value Including Cash (‘EVIC’)

component of the intensity calculation,

which is a measure of a company’s capital

base. An increase in company value since

YE2023 is in line with expectations given

market performance over this period.

In 2024 we enhanced our processes to

automate the production of climate metrics for

our listed asset portfolio, resulting in a more

robust and mature production environment

that leverages other reporting and disclosure

processes. One of the observed implications

of this enhancement is a reduction in data

sourced from investee company’s actual

data (and an increase in estimated data)

for our listed credit portfolio (compared to

YE2023), which we will look to improve in

2025. We recognise therefore that future

movements in climate metrics (including

economic emissions intensity) could be

impacted by improving actual data coverage,

and so we are prudent with what inference

we can draw from the YE2024 results.

We are on track to meet our decarbonisation

target of a 25% reduction in economic

emissions intensity for the listed asset

portfolio by 2025, however we recognise that

there are scenarios in which the target may

still not be achieved. We also recognise that

the economic emissions intensity metric may

change year-on-year, primarily due to volatility

in the EVIC component of the calculation

and evolution of methodology and process.

We also calculate emissions intensity on a

revenue basis for our listed asset portfolio in

line with TCFD guidance. Revenue emissions

intensity provides insight into a company’s

carbon efficiency per dollar of revenue

earned and is a particularly useful metric

for comparing companies within sectors.

We observe a 18% reduction in revenue

emissions intensity for listed credit from

YE2019 to YE2024, and a 41% reduction

for listed equity over the same time period.

Revenue emissions intensity increased

between YE2023 and YE2024 due to the

partial unwind of the increased sales revenues

that our investee companies in the energy

sector experienced during the energy crisis.

Analysis of the Scope 3 emissions

of investee companies

We believe that considering the Scope 3

emissions of our investee companies enables

a more complete view of the carbon profile

of our investment portfolio. We use ISS as our

primary source of Scope 3 emissions data.

Our share of the Scope 3 absolute emissions

of all investee companies in our listed asset

portfolio is 88 MtCO

e as at YE2024, based

on reported numbers (where available) and

estimated data. Almost three quarters of this

is from investee companies in four sectors:

industrials, energy, financials and materials.

This far exceeds the financed emissions

for which we are responsible under Scope

1 and 2. This is because Scope 3 emissions

capture the upstream and downstream

activities of the company. As this is our first

year of reporting this metric, we will explore

drivers of change in subsequent reporting

periods. Whilst methodologies continue to

improve, we recognise that there are still

significant limitations to Scope 3 emissions

data, which is dependent on high-quality and

transparent reporting by investee companies.

Understanding our exposure

to climate risk

Our exposure to high transition risksectors

We identify four industry sectors as being

particularly vulnerable or susceptible to

transition risks due to policy, technology

or market changes – energy, utilities,

materials and industrials. c.17% of our

listed asset portfolio (by AUA) is invested

in these high transition risk sectors, and

collectively they account for c.65% of

listed asset portfolio emissions. Whilst lower

than the YE2023 position our exposure

remains elevated, indicating that the high

transition risk sectors we have identified

continue to be responsible for a significant

proportion of our portfolio emissions.

In addition to our analysis of high transition

risk sectors, we have applied a screen to our

listed asset portfolio to identify investee

companies which generate greater than 20%

of their revenues from the fossil fuel value

chain, including production, exploration,

distribution and services. The proportion

of our listed asset portfolio exposed to

the fossil fuel industry has decreased

from 10% at YE2023 to 9% at YE2024.

Analysis of our top ten emitting

counterparties

The profile of our listed asset portfolio’s

top ten emitting counterparties is similar

between YE2023 and YE2024. They

make up 4% of listed asset AUA but 35%

of listed asset absolute emissions. Two of

our top ten emitting investee companies

have approved science-based targets.

Sector exposure as % of listed asset absolute emissions

Sustainability review continued

Climate-related financial disclosures

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our exposure to physical risk

Whilst our current analysis indicates we

are more materially exposed to transition

risk in our investment portfolio, we do have

exposure to sectors and geographies which

are materially susceptible to physical risk. We

have conducted analysis to assess potential

physical risk within our real estate portfolio,

using the S&P Climanomics platform.

See Scenario analysis section

on page 64 for more detail

Measuring the alignment

of our investment portfolio

to net zero by 2050

We measure the ‘climate alignment’ of our

investment portfolio to track whether it

is aligning with net zero by 2050, and to

support our engagement with investees

on their net zero targets and transition

plans. As at YE2024, 53% of our listed

asset portfolio is invested in counterparties

that have committed to set or already set

approved science-based targets (based

on their affiliation with the SBTi).

Whilst evaluating an investee company based

on whether it has affiliated itself with the SBTi

gives a useful sense of alignment to net zero

by 2050, it is one of several metrics that could

be used. We recognise that SBTi may not be

an appropriate methodology to follow for

some companies in some sectors, particularly

where a standardised methodology may

not provide the flexibility required. We

continue to develop our suite of forward-

looking climate investment risk metrics to

form a more detailed picture of net zero

alignment across the investment portfolio.

Data quality and coverage

Change in data coverage

Our data coverage metric represents the

proportion of our investments that we have

been able to successfully calculate financed

emissions for. We calculate a data coverage

metric for each asset class included in the

baseline and expect this to improve over

time as data availability continues to improve.

In 2024 we automated the production of

climate metrics for our listed asset portfolio,

resulting in a more robust and mature

production environment that leverages

other reporting and disclosure processes.

We observed a reduction in data coverage

for our listed credit portfolio (compared

to YE2023), however, processes will be

further enhanced in 2025 to improve data

coverage for this asset class. As at YE2024,

total portfolio data coverage is 89%.

Change in data quality score by asset class

Our ability to report accurate emissions

information is dependent on the quality and

transparency of the reporting of our investee

companies. We use the PCAF data quality

hierarchy to assess the quality of emissions

data of individual companies, where a score

of 1 represents the highest standard of

disclosed and verified emissions and a score

of 5 represents the lowest standard based

on industry estimates. Our total data quality

score is broadly unchanged from last year.

Whilst reported climate data is generally of a

higher standard than modelled data, there are

challenges with the consistency, transparency

and coverage of reported climate data which

limits the true accuracy of the carbon profile

of the portfolio. Climate reporting is still

relatively nascent and even high-quality data

has its limitations. As a result, whilst our total

data quality score (for assets included in our

Data quality score by asset class

Date

Listed

equity

Listed

credit

Sovereign

debt

Real

estate

Illiquid

credit

Equity release

mortgages Total

2019 1.5 1.9 2.0 3.6 2.6 5.0 1.8

2021 1.4 2.3 2.0 3.4 – – 1.9

2023 1.3 1.3 2.0 3.0 2.8 – 1.7

2024 1.4 1.5 2.0 3.0 2.7 5.0 1.7

baseline analysis) is relatively high, we are

prudent with what inference we can draw.

The metric results reported are best estimates.

There remain limitations in the quality and

coverage of climate data and best practice

methodologies are still evolving across all

metrics. We also recognise the inherent

challenge with double counting financed

emissions and emissions in the real economy.

Decarbonisation actions

We have taken several actions in 2024

to decarbonise our investment portfolio

to support good customer outcomes.

For more information see our

Sustainability Report and

Net Zero Transition Plan

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our operations

Key progress in 2024

• We have achieved a 80% reduction in our

emissions intensity (Scope 1 and 2 per FTE

(market-based)) against our 2019 baseline.

This represents a slight increase compared

to 2023 due to a reduction in FTE numbers.

• We are on track to achieve our 2025

target; however, we recognise that high

integrity carbon offsets will be required

to offset hard-to-abate residual emissions

in the short term.

• Building electricity and gas consumption

was reduced in real terms by 14%.

• Absolute Scope 1 and 2 emissions

(market-based) reduced by 14% from

2023 and 73% from 2019.

• We updated our methodology for

calculating business travel emissions to

include hotel emissions data.

Next steps

• We are taking steps to reduce our business

travel emissions through better access

to real time data, improving colleagues’

understanding of the impact of different

forms of travel through our multi-year

business travel emissions reduction

programme, and incentivising lower

emission travel options.

• We will continue to review opportunities

to reduce our operational emissions

through our Eliminate-Reduce-Substitute-

Compensate model.

Measuring our operational emissions

Emissions intensity

The Group’s chosen operational intensity

metrics are GHG emissions per occupied

floor area (m

) and per FTE in occupied

premises. The metrics only cover Phoenix

Group occupied areas of buildings where

emissions are considered Scope 1 and 2,

and where 12 months of data is available in

the current reporting year, meaning some

sites were excluded from this calculation.

To calculate the intensity for both occupied

floor area and FTE per occupied premises,

the total Scope 1 and 2 emissions for these

buildings are divided by the occupied

floor area and FTEs respectively.

For more information see

our SECR on page 81

Operational metrics and

targets framework

We continue to align our operational metrics

and targets with best practice in evaluating

exposure to climate-related risks and

opportunities. We review and enhance our

metrics as data, methodologies, industry

guidance and best practice develop.

We track our operational emissions through

market-based

intensity metrics per FTE

as this accounts for renewable energy

purchasing as a carbon reduction method.

We also report location-based performance

for completeness and it also helps us to

track the impact of efficiency initiatives

undertaken within our buildings. Our 2025

operational emissions targets cover Scope 1

and 2 emissions from occupied premises and

Scope 3 emissions from our business travel.

1 Refer to Assured Data Methodologies and

Assurance Statement 2024 for definition

of market-based vs location-based.

Absolute emissions

We use the GHG Protocol Corporate

Accounting and Reporting Standard together

with International Energy Agency (‘IEA’)

and DEFRA UK Government Conversion

Factors as the basis to report on any GHG

emissions in tonnes of carbon dioxide

equivalent (‘tCO

e’). We have now included

hotel data in our calculations of business

travel emissions, which increases data quality

and allows us to take more targeted action

to reduce our emissions in this category.

For more information see

our SECR on page 80

Analysing our operational emissions

Operational emissions intensity

(market-based approach)

Our Scope 1 and 2 emissions market-based

intensity metric per FTE intensity has

increased from 0.29 tCO

e (YE2023) to

0.34tCO

e^ (YE2024). This is primarily due to

the reduction in FTE numbers for the Group.

Despite this the Group has still achieved a

80% reduction in emissions intensity since

YE2019 and is therefore within the target

reduction range for 2024.

Operational emissions intensity

(location-based approach)

The emissions intensity per floor area (m

)

(location-based) increased from 51 tCO

in YE2023 to 59 tCO

e/m

in YE2024. The

driver of this change has been a decrease

in the occupied premises in scope. The

emissions intensity per FTE (location-based)

remained largely the same at YE2024

compared to YE2023. The Group has

achieved overall reductions from the 2019

baseline of 42% and 67% respectively.

Absolute emissions

Absolute Scope 1 and 2 emissions (market-

based) have reduced by 14% against 2023,

whilst Scope 3 category 6 (business travel)

emissions have decreased by 16%.

For more information see

our SECR on page 80

2024

75–85%

Maintain 75–85% intensity reduction vs 2019

baseline in operational carbon emissions

– Scope 1 and 2 per FTE (market-based)

2025

Net zero

Achieve net zero absolute operational

emissions – Scope 1, Scope 2 and Scope 3

category 6 (business travel) emissions

(market-based)

Sustainability review continued

Climate-related financial disclosures

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

2.0

1.5

1.0

0.5

tCO

e/FTE

1.7

0.29

0.34^

1.23

0.98

0.79

0.63

0.50

2019 2020 2021 2022 2023 2024

-80%

+17%

120

100

kgCO

e/m

101

2019 2020 2021 2022 2023 2024

-42%

+16%

-67%

-6%

2.0

1.5

1.0

0.5

tCO

e/FTE

1.7

0.63

0.59

2019 2020 2021 2022 2023 2024

Target

Decarbonisation actions

We continue to operate our certified

environmental management system to ISO

14001 standards, which require evidence

of continual improvement. We have taken

a strategic approach to energy reduction

by developing company-wide policies to

eliminate carbon emissions were possible. We

do this by prioritising the most cost-effective

and impactful solutions. Our biggest impact

has been achieved through the introduction

of a comprehensive comfort policy which

standardises settings such as the temperatures

and timings across our entire estate.

We also continue to invest in building system

improvements such as replacing lighting,

lifts and ventilation equipment, as well as

improvements to building technology such

building management system components.

For more information see

our SECR on page 81

Developing our approach

tooffsetting

We are developing our approach to offsetting

our residual operational emissions to meet

our target of net zero operational emissions

by 2025. Our approach follows the mitigation

hierarchy set out by the Oxford Offsetting

Principles, prioritising emissions reductions

first. To offset any residual emissions, we will

procure carbon credits from high integrity

nature-based removal projects that meet the

highest industry standards. These standards

include the International Carbon Reduction

and Offset Alliance’s (‘ICROA’) Code of Best

Practice and the Core Carbon Principles

(‘CCP’) developed by the Integrity Council

for the Voluntary Carbon Market (‘ICVCM’).

Emissions intensity metric for Scope 1 and 2 emissions from

occupied premises per floor area (location-based)

Emissions intensity metric for Scope 1 and 2 emissions

per FTE (market-based) – accounting for renewable

energy purchasing as a carbon reduction method

Emissions intensity metric for Scope 1 and 2 emissions per FTE

(location-based)

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our supplier base

Supplier base metrics and

targets framework

We continue to review and enhance

our supplier metrics taking into account

examples of emerging best practice

in evaluating exposure to climate-

related risks and opportunities.

We have developed a controls and

methodology framework that ensures

a robust approach to the calculation

and monitoring of progress against our

key metrics. The framework is reviewed

annually and, if appropriate, updated.

The Group has refined its supplier targets to

give greater clarity on how we are measuring

and communicating our progress towards

achieving a net zero supply chain by 2050,

as set out in our Net Zero Transition Plan.

Key progress in 2024

• Achieved our target of 90% of material

suppliers committed/aligned to SBTi

or Race to Zero campaign.

• Our supplier base absolute emissions

(tCO

e) have decreased by 21%

from the 2022 baseline year.

• The carbon intensity of our supplier

base has decreased by 28% from 2022.

• We completed our first climate

risk assessment of the material

supplier population.

• We repositioned our ESG Supplier

Standards to support the delivery

of our 2030 target.

Next steps

• We will engage the top ten highest

emitting suppliers by spend to work with

them on creating their own science-based

targets and supporting their progress

towards net zero.

• We will communicate our ESG

Supplier Standards to the material

supplier population.

• We will embed ESG throughout the

procurement process and upskill our

category teams to consider material

ESG factors, in line with our Standards,

during supplier selection.

1 Our ten highest emitting suppliers in 2024 accounted for

35% of the supplier base’s absolute emissions.

2 The supplier base is the composition of suppliers that

directly provide the Group with goods and services. It does

not include fourth parties or sub-contractors. The Group’s

baseline year is 2022.

3 The supply chain, otherwise known as the value chain, is the

series of stages involved in producing a product or service

that is sold to and consumed by the Group. To achieve a net

zero supply chain by 2050, the Group will work with its direct

suppliers on their net zero journeys and targets. The Group is

dependent on its suppliers, their supply chains and the global

economy as a whole decarbonising in line with net zero by 2050.

2025

Top 10

highest emitting suppliers to have set

science-based targets, in line with a

net zero trajectory

2030

50%

reduction in the carbon

intensity of the supplier base

2050

Net zero

supply chain

Measuring our supplier

baseemissions

The Group undertook an exercise to enhance

the underlying primary data sources and

emission factors that feed into the calculation

of the supplier base’s carbon emissions.

Data was integrated from multiple sources

to calculate the supplier base’s emissions,

including: supplier Scope 1, 2 and 3 emissions

data from public disclosures (upstream

only); supplier revenue; invoiced spend

reports; supplier carbon data collected by

the Group’s ESG third-party data collection

partner; and UK Government Standard

Industrial Classification (‘SICS’) codes and

the associated emission factors provided

by DEFRA (and the University of Leeds).

These inputs are combined in an Extended

Environmental Input-Output (‘EEIO’) model,

where spend is multiplied by emission

factors to calculate supplier emissions.

The Group has revised its methodological

approach to the calculation of Scope 3

category 1 and category 2 emissions resulting

in restated emissions for YE2022 (69,861

tCO

e as restated, 91,673 tCO

e as published

in the 2023 Climate Report) and YE2023

(60,100 tCO

e as restated, 124,943 tCO

as published in the 2023 Climate Report).

While the Group has made significant

improvements in its methodology used to

calculate its Scope 3 categories 1 and 2

emissions, as described in our Assured ESG

Data Methodologies and Independent

Practitioner’s Limited Assurance Report,

there are some limitations in the availability

and quality of underlying spend data used

to calculate these emissions and we have

only included spend data from sources we

consider reliable. We recognise that Scope 3

categories 1 and 2 emissions are not based on

our complete spend data and are working to

improve this data coverage for future years.

Sustainability review continued

Climate-related financial disclosures

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

120

tCO

e/£m

2022

2024

101^

74 74^

2023

Emissions intensity (Scope 3 – category 1 and 2)

-28%

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

tCO

Total absolute emissions (Scope 3 – category 1 and 2)

Absolute emissions (Scope 3 – category 1)

Absolute emissions (Scope 3 – category 2)

2022

20242023

70^

57^

-21%

Analysing our supplier

base emissions

The Group achieved a 28% reduction

in the supplier base emissions intensity

(tCO

e/£m), relative to the baseline, from

101 tCO

e/£m^ (YE2022) to 74tCO

e/£m^

(YE2024); and a 21% reduction in the absolute

supplier base total emissions (tCO

e),

relative to the baseline, from 69,861 tCO

(YE2022) to 57,000 tCO

e^ (YE2024).

These reductions are primarily driven by

decarbonisation in the real economy and

our suppliers making progress against their

individual net zero goals and aspirations.

The Group’s supplier base emissions are

concentrated within our Business Process

Outsource, Technology and Professional

Services categories. Our top 50 highest

emitting suppliers account for c.69% of

all emissions across the supplier base,

which comprises c.1,300 active suppliers,

and our ten highest emitting suppliers

in 2024 accounted for c.35% of the

supplier base’s absolute emissions.

1 According to the GHG Protcol, category 1 refers to emissions from purchased goods

and services, and category 2 refers to emissions from our capital goods purchases.

Absolute emissions of supplier baseEmissions intensity of supplier base (location-based)

Data quality and coverage

The Group has a 76% coverage by spend

of supplier-specific emission factors.

The Group’s carbon accounting of category

1 and category 2 emissions only covers the

supplier base (our direct suppliers). The

Group does not measure or report the

emissions arising from the suppliers of our

suppliers or our suppliers’ support partners.

Decarbonisation actions

The Group revised its ESG Supplier

Standards in 2024. The standards require

suppliers to make a number of climate-related

commitments, including the adoption of

a decarbonisation target aligned to best

practice. Prior to onboarding, suppliers

must confirm if they comply with the ESG

requirements outlined in the Standards.

Read the Group’s ESG

Supplier Standards here

Our actions to reduce our supplier base

emissions will focus on the suppliers that

materially impact our net zero targets and

broader ESG aspirations. We have set a

target for the ten highest emitting suppliers

to have set science-based targets by 2025,

in line with a net zero trajectory by 2050 at

the latest. We will engage with those suppliers

on creating their own science-based targets

and support their progress towards net zero.

For more information see our

Sustainability Report and

Net Zero Transition Plan

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

This section summarises the Group’s position against the recommendations

of the Taskforce on Nature-related Financial Disclosures (‘TNFD’), providing

stakeholders with an initial view of how the Group is starting to measure

and manage nature-related dependencies, impacts, risks and opportunities.

These disclosures have been provided on a voluntary basis and have not been

subject to external third-party assurance. This preparatory work builds on the

pilot of the TNFD beta framework v.0.3 that the Group completed in 2023.

Governance

Disclose the organisation’s governance of nature-related dependencies, impacts, risks and opportunities.

Recommended disclosure Summary of progress

a. Describe the board’s oversight

of nature-related dependencies,

impacts, risks and opportunities.

• The Board Sustainability Committee has oversight of the Group’s sustainability strategy, including its nature ambitions.

• The Board Risk Committee has oversight of the Group’s Risk Management Framework, including emerging sustainability

risks such as nature-related risk.

b. Describe management’s role in

assessing and managing nature-

related dependencies, impacts,

risks and opportunities.

• The Group’s CEO is the Executive Board Director responsible for the implementation of the Group’s sustainability strategy,

including nature.

• As delegated by the CEO, the Director of Corporate Affairs and Brand is accountable for defining and overseeing delivery

of the Group sustainability strategy as agreed with Group and Life Company Boards; and ensuring appropriate accountabilities

and risk and controls oversight are in place to achieve the business’ sustainability objectives.

• Management is assisted in making decisions on nature-related matters by a number of Management-level forums, including

the Enterprise Sustainability Committee and Enterprise Asset Management Committee.

c. Describe the organisation’s human

rights policies and engagement

activities, and oversight by the board

and management, with respect to

Indigenous Peoples, Local

Communities, affected and other

stakeholders, in the organisation’s

assessment of, and response to,

nature-related dependencies,

impacts, risks and opportunities.

• The Group’s Human Rights Policy aligns with the United Nations Guiding Principles on Business and Human Rights (‘UNGPs’).

The Policy ensures that the rights of all stakeholders are taken into account, including in the Group’s assessment of, and response

to, nature-related dependencies, impacts, risks and opportunities.

Sustainability review continued

TNFD progress summary

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Strategy

Disclose the effects of nature-related dependencies, impacts, risks and opportunities on the organisation’s business model,

strategy and financial planning where such information is material.

Recommended disclosure Summary of progress

a. Describe the nature-related

dependencies, impacts, risks and

opportunities the organisation has

identified over the short, medium

and long term.

• Using the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (‘IPBES’) drivers of nature loss

framework and inputs from Exploring Natural Capital Opportunities, Risks and Exposure (‘ENCORE’) and the Science Based

Targets Network (‘SBTN’) sector materiality tools we have assessed aggregate listed equity and listed credit portfolios, where

we have control and influence, for nature-related impacts, dependencies and associated risks.

• Outputs from our initial top-down analysis supported additional qualitative and judgement-based assessment to

identify land-use change and freshwater withdrawal and use as priority impact pressures for further impact exposure

and risk assessment.

• The impact pressure of land-use change extends across multiple different biomes (defined as large-scale ecosystems

characterised by specific climatic conditions, vegetation types and associated wildlife). Our assessment work has focused

on tropical forests as a priority biome due to their importance for carbon sequestration, biodiversity, global weather patterns,

water cycles and links to a number of human rights issues. We also see regulatory requirements increasing in response to

tropical deforestation.

b. Describe the effect nature-related

dependencies, impacts, risks and

opportunities have had on the

organisation’s business model, value

chain, strategy and financial planning,

as well as any transition plans or

analysis in place.

• We recognise that the continued loss of nature and the need to restore natural systems represent both potentially significant

risks and opportunities for our investment portfolios and supplier base. Alongside climate change and human rights,

nature-related factors are considered to be part of a range of existing and emerging sustainability risk factors being integrated

into our Risk Management Framework.

• We have leveraged the Network for Greening the Financial System (‘NGFS’) transmission channels framework to assess risk

transmission mechanisms for financial institutions and develop our understanding of how nature-related factors pose different

risks to the business. We see nature-related factors having potential implications across multiple categories of risk. Looking

forward, further analysis and assessment is required to develop our understanding of the extent of potential implications of

these risks within different contexts including investment strategy and risk and opportunity management processes.

• We have identified emerging potential transition risks associated with policy and regulatory changes for both deforestation (for

example, EU Deforestation Regulations) and freshwater withdrawal and use. Looking forward, outputs from further exploratory

portfolio assessment on priority nature topics, taking into account transition and physical risks, will inform the integration of

nature across existing organisational frameworks and strategies, including the Group Risk Management Framework and

Sustainable Investment Strategy.

• We will consider how nature should be integrated into our Net Zero Transition Plan update planned for 2026.

c. Describe the resilience of the

organisation’s strategy to nature-

related risks and opportunities, taking

into consideration different scenarios.

• We are continuing to develop our approach to assessing nature-related risks and opportunities and to better understand the

implications for the Group and its investment strategy. We are continuing to monitor the availability, evolution and potential

application of nature scenarios.

d. Disclose the locations of assets

and/or activities in the organisation’s

direct operations and, where

possible, upstream and downstream

value chain(s) that meet the criteria

for priority locations.

• As part of our initial exploratory assessment of listed equity and listed credit investment portfolios we have explored potential

definitions for priority geographic areas for both freshwater withdrawal and use as well as tropical deforestation. For example,

The World Resources Institute (‘WRI’) Aqueduct tool provides a useful definition of water stress and maps global regions to

current and future water stress assessments under different scenarios, which we may use to help identify priority locations for

water risk assessments. We have also considered different approaches to identification of countries of elevated deforestation

risk that can provide an initial long list of priority countries of interest.

• In 2024 we carried out initial assessments of available asset location data for our investee companies. Work to continue this

assessment is ongoing and we will continue to consider different data providers to better identify assets in priority locations

within our investment portfolio. In addition, we continue to assess tools that support integration of state of nature, ecosystem

service and impact and dependency data layers with asset location and other asset-specific data.

• Early insights from this work indicate that asset location data is becoming more widely available across a number of different

data providers and that we are able to link geospatial locations of assets to priority areas such as areas experiencing increasing

water stress. However, there are still limitations regarding data coverage and quality, necessitating further work to better

understand how we can systematically integrate asset location data and what use-cases can be supported from further analysis.

• We do not currently have any direct operations in priority locations but recognise that we do have exposure through our

investment portfolios and suppliers.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Risk & impact management

Describe the processes used by the organisation to identify, assess, prioritise and monitor nature-related dependencies,

impacts, risks and opportunities.

Recommended disclosure Summary of progress

a. (i) Describe the organisation’s

processes for identifying, assessing

and prioritising nature-related

dependencies, impacts, risks and

opportunities in its direct operations.

a. (ii) Describe the organisation’s

processes for identifying, assessing

and prioritising nature-related

dependencies, impacts, risks and

opportunities in its upstream and

downstream value chain(s).

• Through 2024 we have taken exploratory steps to build upon our TNFD pilot testing of the Locate, Evaluate, Assess and Prepare

to act (‘LEAP’) framework. LEAP is an assessment framework developed by the TNFD to support entities looking to adopt the

TNFD disclosure framework with carrying out assessments of their exposure to nature-related impacts, dependencies, risks

and opportunities. A key conclusion from our pilot is that the locate step of LEAP is not an appropriate entry point for our

nature-related assessments due to the very large number of counterparties in investment portfolios and in turn the potentially

large number of business assets that portfolio counterparties own and operate. As a consequence, we have added an initial

evaluation step before asset location, in effect creating an ELEAP assessment framework. An overview of our approach to

portfolio assessment is set out below:

Initial evaluation

• Top-down prioritisation: Development of a method for priority nature impact pressure and ecosystem service dependency

identification using ENCORE and SBTN sector materiality tools in combination with qualitative judgement overlay. The method

was applied to listed equity and listed credit portfolios and provided a map of investment exposure of aggregate portfolios

to all impact pressures and ecosystem dependencies as defined by ENCORE.

• While a high-level assessment of listed equity and listed credit portfolio exposure to nature-related dependencies has been

conducted using ENCORE, we recognise that there is a very close alignment of both physical climate and physical nature risk

assessment. We are exploring options for integrated climate and nature physical risk assessments for our investment portfolios

and so the disclosures below relate to impact pressure and risk assessments only.

• Land-use change and freshwater withdrawal and use were identified as initial priority impact pressures for further assessment.

Within these priority topics we identified the most exposed sub-industry groups to determine priority sub-industries and

aggregate portfolio investment value at potential risk within these.

Locate

• Bottom-up asset location: Within priority sub-industry groups we explored different data available to allow us to identify

investee company links to priority areas, such as areas of water stress and priority deforestation risk countries through use of

asset location data for direct operations and revenue exposure/trade flows data where available. (Note that exploratory work

on asset location data availability and use of input/output models within impact and risk assessment is early stage and ongoing.)

Second evaluation

• Bottom-up evaluation: This stage involved development of an assessment methodology for both tropical deforestation and for

freshwater withdrawal and use to identify potential scale and severity of aggregate portfolio impacts across listed equity and

listed credit holdings within prioritised sub-industry groups drawing on publicly available guidance, for example provided by

TNFD, Deforestation Free Finance and Ceres’ Investor Water Toolkit.

• In addition to impacts exposure evaluation we also considered indicators linked to investee company risk mitigation

actions. For example, the number of companies classified in sub-industries associated with high water withdrawal and use

and with assets located in areas of water stress was determined, providing an indication of investment value at potential risk

to this impact pressure. We then applied a company response rating for freshwater withdrawal and use risk mitigation. Impact

exposure and risk mitigation assessment in this way provided aggregate portfolio-level evaluation but can also be used for

ranking investee companies.

• Data and tools availability and quality are still being assessed and so outputs from portfolio evaluation and analysis covered

by the above steps are considered to provide supporting information for emerging risk identification and prioritisation.

Assess

• Risk measurement and financial materiality: Progress on the Assess phase is very early stage due to limitations that we identified

from the previous locate and evaluate steps of portfolio exposure and risk identification. At this stage risk measurement and

financial materiality assessment at the asset or parent company level have not been possible. We will continue to develop our

approach and methods in 2025 and have set out some key elements of our 2025 workplan and ambitions in the Metrics and

targets section c.

Prepare to act

• Nature integration: The qualitative disclosures contained in this 2024 TNFD aligned report are intended to be an initial step

to inform stakeholders of our progress on assessing nature-related factors to date. Further understanding the implications of

nature-related impacts, dependencies, risks and opportunities will be the focus in the near term. Findings and insights from our

work and from future work will continue to feed into decision making across all relevant aspects of the business and will support

identification of appropriate and value-accretive integration with investment and supplier management processes.

Sustainability review continued

TNFD progress summary

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

b. Describe the organisation’s

processes for managing nature-

related dependencies, impacts,

risks and opportunities.

• We are in the identification and assessment phase of nature-related impacts, dependencies and risks across the business.

Initial steps linked to adapting our processes include but are not limited to:

– Risk Management Framework: integrating nature-related risks into the Group Risk Management Framework

– Engagement: engagement with our asset management partners to better understand their evolving approach to

nature-related impact, dependency, exposure and risk assessment and how they are managing risks and opportunities

within our portfolios

– Continued engagement with investee companies on nature-related themes through Nature Action 100

– Integration of nature-related factors where relevant within priority companies for climate engagement

– Exclusions: inclusion of nature-related factors in annual review of high-impact business activities for potential exclusion

and restriction

– Investment due diligence: integration of emerging nature factors within in-house credit investment due diligence

c. Describe how processes for

identifying, assessing, prioritising

and monitoring nature-related

risks are integrated into and inform

the organisation’s overall risk

managementprocesses.

• We continually review the forward-looking landscape to ensure we sufficiently identify, assess, control, monitor, manage,

and report on emerging risks. As such, nature risk has been identified as a key emerging sustainability risk for the Group and

is being integrated within our Risk Management Framework.

Metrics and targets

Disclose the metrics and targets used to assess and manage material nature-related dependencies, impacts, risks and opportunities.

Recommended disclosure Summary of progress

a. Disclose the metrics used by the

organisation to assess and manage

material nature-related risks and

opportunities in line with its strategy

and risk management process.

• Development of metrics to measure the Group’s exposure to key nature-related risk and opportunities is ongoing. We have

completed an initial exploratory assessment of listed equity and listed credit portfolios based on metrics that are supported

by currently available data. The metrics selected are broadly aligned with TNFD assessment metric guidance where possible.

b. Disclose the metrics used by the

organisation to assess and manage

dependencies and impacts on nature.

• To date metrics used have been based on high-level indications of potential impact exposure and company risk management

responses to provide initial insights into portfolio investment value at potential risk for initial priority nature impact pressures.

• We recognise that additional metrics will be developed as data availability improves. For example, we anticipate that disclosure

of standardised quantitative freshwater withdrawal and use volumes will improve in terms of comparability and coverage with

increased mandatory and voluntary reporting on this topic by investee companies, particularly in areas of high water stress.

To date we have developed metrics linked to the number of assets located in areas of water stress for companies operating in

high-priority sub-industry groups along with assessments of the quality of risk management in place. In time, impact exposure

metrics linked to quantitative measures of volumes of freshwater withdrawn and used may be developed that allow us to

overcome limitations linked to estimated volumes data.

c. Describe the targets and goals

usedby the organisation to manage

nature-related dependencies,

impacts, risks and opportunities and

its performance against these.

• Looking forward we will look to build upon the exploratory portfolio assessment activities summarised above. In line with

Finance for Biodiversity Pledge requirements, the Group has established priority nature ambitions that aim to identify further

feasible and viable options for integrating nature within investment decision making. These include to:

– Develop initial investment position statements in relation to priority nature topics by YE2025.

– Develop initial sovereign debt asset class portfolio exposure and risk assessment methodology by YE2025.

– Continue with and further develop ongoing monitoring and assessment of asset manager partners’ integration of nature

factors into investment decision making and stewardship activities across listed equity, credit, sovereign debt and private

markets strategies.

– Conduct horizon scan for emerging nature-related risks for potential inclusion within in-house credit investment due

diligence by YE2025.

– Deliver periodic education and training sessions with relevant Board and Management-level governance forums.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Streamlined Energy and Carbon Reporting (‘SECR’) statement

This is the Group’s SECR statement

on its UK and global energy consumption

and GHG emissions for the financial year 1 January 2024 to31 December 2024,

and the 2023 comparative year.

Methodology

The Group has used the GHG Protocol

Corporate Standard (revised edition) and

emissions factors from the International

Energy Agency (‘IEA’), DEFRA UK

Government Conversion Factors, and

Association of Issuing Bodies (‘AIB’)

European Residual Mix as the basis to

report on any GHG emissions in tonnes

of carbon dioxide equivalent (‘tCO

e’).

This expresses multiple greenhouse gases

in terms of carbon dioxide based on

their global warming potential (including

methane, nitrous oxide, hydrofluorocarbons,

perfluorocarbons, and sulphur hexafluoride).

Emissions considered relate to activities both

in the UK and globally for which the Group

is responsible and include as applicable:

combustion of any fuel and operation of its

facilities; fugitive emissions released from

refrigerants purchased (based on refrigerant

top-ups); and annual emissions from the

purchase of electricity, heat, steam or cooling

by the Group for its own use. In addition,

the Group estimates Scope 3 emissions

associated with employee homeworking

(using the EcoAct Homeworking Emissions

Whitepaper 2020) and employee

commuting, as well as business travel

from other third-party owned/operated

sources, including air, taxi and rail travel.

Emissions from hotel stays have also been

reported from 2024 for completeness.

Reported data relates to occupied premises

in the UK, Ireland, Germany, Austria, and

Bermuda, where the Group is responsible

for energy consumption. The operational

control approach has been used to define

our reporting boundary (Scope 1 and 2),

as described in the GHG Protocol, to our

GHG emissions. Therefore, the businesses

we report on are the Group, and its wholly

owned and operated subsidiaries, and

exclude joint ventures and associates. We

consider all locations where the Group is

responsible for the utility costs and able to

tangibly influence our energy supplier to

be within our ‘operational control’ as Scope

1 and 2. For locations that fall out with this

boundary, emissions are reported under

Scope 3 (category 8 or 13, depending on

whether the Group is the end user of energy).

The Group reports Scope 2 emissions

using the GHG Protocol dual-reporting

methodology, stating two figures:

• A location-based method that reflects the

average emissions intensity of the national

electricity grids from which energy is drawn.

• A market-based method that reflects

emissions from electricity specific to each

supply/contract. Where electricity supplies

are known to be from a certified renewable

source, a zero emissions factor is used.

Otherwise, residual mix factors are used,

or location-based factors where residual

mixes are unavailable.

Sustainability review continued

SECR

Market-based emissions remain the primary

measure of GHG emissions for the Group,

above location-based, to focus on the actual

carbon impact of energy consumption.

This recognises the organisation’s actions

to promote sustainable procurement and

improve environmental outcomes.

Energy consumption and

greenhouse gasemissions

Table 1: Absolute energy consumption

inGWh

Consumption (GWh)

from: 2024 2023

Building electricity 19.0 22.6

Building natural gas 14.4 16.2

Business travel

0.2 0.1

Homeworking electricity 1.4 1.6

Homeworking natural gas 21.7 24.3

Total consumption 56.7^ 64.8

1 Energy Units: 1 GWh = 1,000,000 kWh.

2 GHG emissions and energy consumption statement

pursuant to the Companies (Directors’ Report) and

Limited Liability Partnerships (Energy and Carbon

Report) Regulations 2018 (the SECR Regulations).

3 Business travel (GWh) only includes direct energy that

is the Group’s direct responsibility (corporate cars), and

not any indirect travel (e.g. air, taxi, rail, etc.) due to lack

of applicable conversion factors for this data. However,

emissions from these sources are still included in Table 2.

Table 2: Absolute GHG emissions in tonnes of CO

Emissions

(tCO

e) from: 2024 2023

(Market-based) (Location-based) (Market-based) (Location-based)

Scope 1 – Combustion of fuels, business travel (in company owned and operated vehicles),

and fugitive emissions of refrigerant gases 2,111^ 2,111 2,433 2,433

Scope 2 – Electricity purchased for landlord shared services and own use (heat, steam and

cooling not applicable) 0^ 2,457^ 23 3,856

Scopes 1 + 2 – Mandatory carbon footprint disclosure 2,111^ 4,568 2,456 6,289

Scope 3 – Category 3: Fuel and energy related activities (T&D) 290 290 310 310

Scope 3 – Category 6: Business travel

2,310 2,310 2,746 2,746

Scope 3 – Category 7: Employee commuting (incl. homeworking emissions) 4,507 4,309 5,083 4,884

Scope 3 – Category 8: Upstream leased assets 951 722 762 1,579

Scope 3 – Category 13: Downstream leased assets 842 1,058 0 242

Scopes 1 + 2 + 3 – Voluntary carbon footprint 11,011 13,258 11,357 16,050

Carbon offsets purchased 2,039 2,039 1,870 1,870

1 Emissions factors – IEA (for location-based Scope 2 and Scope 3 T&D losses), AIB (for market-based residual mix factors for

non-renewable electricity), and DEFRA (fuels, refrigerants and travel). There is a significant time lag in the availability of IEA factors

– 2024 factors will not be published until late 2025. Therefore all 2024 consumption data are converted using the factors arising

in 2020 (except business travel which uses DEFRA factors as published in 2024).

2 Business Travel – Hotel stays have been reported for the first time in 2024 to provide a complete view of business travel; not reported for 2023.

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Commentary on the

Group’sperformance

In 2024, the Group consumed 33.4 GWh

of energy globally (the sum of building

electricity, building natural gas and business

travel, as shown in Table 1), approximately 98%

of which was from UK operations. This is a

slight decrease in global energy consumption

compared with 2023. Furthermore, 23.1

GWh of energy consumption from employee

homeworking has been estimated in

2024, of which 90% occurred within the

UK. This is a slight decrease compared

to 2023, which has been primarily driven

by a small increase in office attendance

and a decrease in the number of FTEs.

The Group’s GHG emissions (location-based

Scope 1 + 2) have continued to decrease

year-on-year, by 27% in 2024. The Group

has consolidated its occupied areas further

by sub-letting spaces within a number of

sites. The associated emissions for these

sites have been apportioned into Scope 3

category 13, resulting in a significant increase

Decarbonisation actions

The Group aims to prioritise its spending

based on the potential carbon impact of

projects across the operational estate. As our

offices need to stay operational throughout

the year, work is phased over a number of

years, meaning that energy and carbon

savings fluctuate depending on the extent

of works conducted in any particular year.

of 337% for this category. Moreover, the

Group has further reviewed and clarified

its operational boundary, shifting some

additional sites and emissions from Scopes 1

and 2 into Scope 3 category 8. However, this

has been offset by historical estimations in

previous reporting being revised upwards,

resulting in a decrease of 54% for this

category in 2024. Business travel has also

seen a small decrease of 16% largely due

to a reduction in air travel emissions. This is

despite the addition of hotel stay emissions

toour Scope 3 category 6 emissions in 2024.

The Group continues to procure

approximately 100% of its directly obtained

electricity from certified renewable sources,

which is why market-based Scope 2 emissions

are zero in Table 2. Our supplier of natural

gas continues to purchase gold standard

certified carbon offsets. Whilst exact data

is unavailable, this is estimated as 2,039

tCO

e in 2024. These offsets do not count

towards the Group’s emissions reductions.

The following is a selection of key projects and

actions undertaken by the Group in 2024:

1. Introduced a comfort policy, which

included adjustments to our building

management systems (‘BMS’) to alter

thetemperatures and timing of

operations,across our entire estate.

2. Upgraded our BMS to improve the

sensors and valves, which will

improveenergy efficiency, across

ourfollowing three sites: Wythall,

Telford,Glenogle Road (Edinburgh).

3. Continued to expand lighting

improvement through replacing and

installing more LEDs across our flagship

office, Standard Life House.

4. Reviewed office equipment and

replaced poor performers with more

efficient alternatives. This included

some buildingservices, such as lifts

and heating, ventilation and air

conditioning equipment, as well as

softer interventions such as kitchen

equipment,across two sites (Standard

LifeHouse and GlenogleRoad).

Energy intensity metrics

The Group’s chosen operational intensity

metrics detail GHG emissions per occupied

floor area (m

) and per FTE in occupied

premises (Table 3). The methodology to

establish whether buildings should be

included in the intensity metric only covers

occupied areas of buildings where emissions

are considered Scope 1 and 2, and where

12 months of data is available in the current

reporting year, meaning some sites were

excluded from this calculation. To calculate

the intensity for both occupied floor area and

FTE per occupied premises, the total Scope

1 and 2 emissions for these buildings were

divided by the applicable occupied floor

area and FTEs respectively. In 2024, both

the m

and FTE intensities have increased,

largely due to a decrease in the total FTEs

and floor occupied areas in scope, which

arethe denominators for these calculations.

We continue to review opportunities

on an ongoing basis to achieve carbon

savings through the Group’s Eliminate-

Reduce-Substitute-Compensate model.

Table 3: Phoenix Group’s chosen intensity measurement

Emissions (kilogrammes and tonnes) of CO

e per chosen intensity metric: 2024 2023

(Market-based) (Location-based) (Market-based) (Location-based)

Scope 1+2 emissions from occupied premises per floor area (kg CO

e/m

)

34^ 59 24 51

Scope 1+2 emissions from occupied premises per full-time equivalent employee

(tCO

e/FTE) 0.34^ 0.59 0.29 0.63

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Sustainability review continued

NFSI

Non-financial and sustainability

information statement

As required by the Companies Act 2006

sections 414CA and 414CB, this table

outlines our non-financial and sustainability

information statement with a reference to

relevant policies and additional documents.

This section primarily covers our non-financial information as required

by the regulations, other related information can be found as follows:

For further details on our Business model see pages 16 to 19

For further details on our climate-related financial disclosures

seeour TCFD compliance statement on pages 54 to 55

For further details on our principal risks and how they are

managed see pages 46 to 49

Environment Colleagues

Our policies Our policies

The Group aims to reduce the impact on the environment from our operations,

and our Environmental Management System certified to ISO 14001 is intended

to help us achieve this. We aim to minimise emissions that contribute to climate

change, including our direct emissions and working collaboratively with

our suppliers. We are taking steps to decarbonise our investment portfolio,

ensuring effective stewardship of our assets, and investing in climate solutions.

We are collaborating with decision makers and peers to driver wider system

change, and engaging customers and colleagues on climate action.

In our Environmental Policy we commit to:

1. Compliance with relevant environmental regulations and standards

and other obligations.

2. Protection of the environment.

3. The prevention of pollution and the management of our environmental impacts.

4. Continual improvement regarding our environmental performance.

We have a range of additional policies including:

• our Environment Risk Policy

• our approach to ESG integration

• our sustainability strategy

• our sustainable investing risk policies.

In addition, we review all Group risk policies on an annual basis to consider

sustainability matters and ensure high standards are maintained.

The Group’s People Policy defines risk as the risk of reduction in earnings and/or

value, through financial or reputational loss from inappropriate staff behaviour or

industrial action issues. Loss can also be incurred through failure to recruit, retain,

train, reward or incentivise appropriately skilled staff to achieve objectives and/or

through failure to take appropriate action as a result of staff under performance.

Our Group approach to support the health and wellbeing of colleagues is a key

enabler to build an inclusive, attractive, and safe working environment that can

adapt and respond quickly to change. A key priority for our business is to create a

workplace that is diverse, inclusive and reflective of our customers and communities,

where colleagues can bring their whole selves to work.

The table below outlines our gender diversity metrics at 31December 2024

Board members

Female 5 38%

Male 8 62%

Senior managers

Female 25 42%

Male 35 58%

All employees

Female 3,449 49%

Male 3,531 51%

Senior managers and their direct reports

Female 52 47%

Male 58 53%

1 Companies Act 2006, s.414C(8)(c)(i).

2 Companies Act 2006, s.414C(8)(c)(ii).

3 Companies Act 2006, s.414C(8)(c)(iii).

4 Provision 23, UK Corporate Governance Code, see page 112.

Due diligence Due diligence

Andy Briggs, Group CEO, is responsible for embedding sustainability within the

Group, in line with the strategy set by the Group Board. The Group CEO reports

directly to the Board on all sustainability activity across the business including the

Environmental Policy. We will monitor and review our environmental performance

against our environmental commitments set out in our policy and the net

zerorequirements.

We report on our environmental performance annually and review the policy

to ensure it remains relevant and appropriate. Our goal is to achieve a net zero

supply chain by 2050, and assess our material suppliers on climate-related risk.

Adherence to the People Policy is managed by the Group People Function

via quarterly control assessments. Control testing is integrated as part of the

Risk Management Framework and People controls are currently tested on a

quarterly basis, over 36 months. There were no material issues raised during the

year. All colleagues are required to complete annual computer-based health and

safety training. Arrangements are in place to manage on-site facilities across all

sites, ensuring the working environment is compliant and fit for purpose.

We have a range of tools and resources available to support our colleagues,

their dependents, family members and loved ones to help look after their personal

health and wellbeing.

Outcomes Outcomes

Read more about our net zero and climate-related reporting commitments and KPIs

on pages 52 to 53 and our sustainability actions in our 2024 Sustainability Report

and Stewardship Report. Our GHG emissions and energy consumption disclosure

can be found in the ESG Data Appendix.

Other relevant colleague engagement, including Diversity, Equity and Inclusion data

can be found on pages 112 to 113 as well as in the ‘Supporting our colleagues’ and

‘Diversity, Equity and Inclusion’ sections of our 2024 Sustainability Report.

For further information For further information

• Our sustainability policies:

www.thephoenixgroup.com/our-impact/responsible-business/reports-policies/

• For further reading on sustainability governance see page 45 of our

SustainabilityReport: https://www.thephoenixgroup.com/media/vbdlv5xk/

sustainability_report_2024.pdf

• Health and wellbeing approach: www.thephoenixgroup.com/careers/wellbeing/

• Reward and benefits: www.thephoenixgroup.com/careers/reward-benefits/

• Diversity, Equity and Inclusion: www.thephoenixgroup.com/about-us/our-team/

diversity-equity-inclusion/

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Social and community Human rights Anti-bribery and corruption

Our policies Our policies Our policies

Customers

The Group’s Customer Outcomes Risk Policy sets the minimum operating

standards relating to the management of customer outcomes risk across

the organisation that could impact the delivery of good customer outcomes

and cause foreseeable harm.

The Group is committed to continuously improving communications and

support, ensuring customer vulnerabilities are carefully considered to allow

them to make informed decisions.

Robust processes and controls are in place to facilitate ongoing oversight

and monitoring of customer outcomes and ensuring we continue to deliver

fair value on our product and proposition design in line with regulatory

requirements.

Suppliers

Our ESG Supplier Standards reinforce our commitment to embedding

sustainable best practice into our supplier base, so that our partners are

aligned with the Group’s values and commitments. We are looking to all

our partners and suppliers to implement requirements and targets which

reflect our own standards . By working with partners that share our

values and ambitions around sustainability, we can establish long-term

relationships that are both mutually beneficial and which help to protect

the interconnected interests of people and planet. We have focused on

the environmental, social and governance commitments which are

connected to the most material issues in our supplier base, represent best

practice, and will have a significant positive impact in terms of long-term

behaviour change. The Supplier Code of Conduct (‘Code of Conduct’)

applies to all suppliers which provide goods or services to us and/or any

of our subsidiaries. The terms of the Code of Conduct are in addition to

any other commercial or contractual terms or obligations agreed and

outline the minimum conduct standards to which suppliers must adhere

when doing business with us, as well as supporting operational resilience

and strategic growth.

Communities

We aim to make a positive and lasting difference to the communities in

which we are based, addressing social issues identified. Through our

commitment to being a responsible business our colleagues can participate

in a range of community-based activities, utilising their collective time, skills

and resources. All colleagues across the UK and Ireland are entitled to

three days’ volunteering during business hours for individual activities or

team volunteering. We match fundraising donations colleagues make to

approved registered charities across the year, in line with our community

approach. We also give our colleagues the opportunity to donate to

registered charities across the UK and Europe through the payroll giving

scheme Give as You Earn where they can support their chosen charities.

We recognise our responsibility to respect human

rights and do this in accordance with:

• the International Bill of Human Rights; and

• the International Labour Organization’s (‘ILO’)

CoreConventions.

As an asset owner, we also align with the Organisation

for Economic Co-Operation and Development

(‘OECD’) Guidelines for Multinational Enterprises,

a set of responsible business conduct standards

for multinational enterprises, as well as the OECD

guidance on responsible business conduct for

institutional investors.

We are committed to fully aligning with theUnited

Nations Guiding Principles on Business and Human

Rights (‘UNGPs’), theauthoritative global framework

on business and human rights, and our ambition is

to encourage other organisations to do thesame.

Our Group-wide Human Rights Policy applies to all

entities, business units and operations and we expect

all employees to adhere to the policy in their work.

We are committed to working with our partners to

multiply our impact and we expect our suppliers,

contractors, asset managers and investee companies

to be aware of our policy and respect human rights

in their business operations.

We are committed to updating our Human Rights

Policy atleast every three years.

The Group has a zero-tolerance

policy to bribery and corruption

in all its forms. The Group is

committed to countering bribery

and corruption and has suitable

policies and procedures in place.

This includes, forexample:

• a Group Financial Crime

Prevention Policy that covers

Anti-Bribery and Corruption risk;

• mandatory training for our

employees covering compliance

with the Bribery Act;

• a Code of Ethics for ethical

behaviour and general

standards; and

• a Group Stewardship

policy which details our

stewardship approach.

The Group’s Financial Crime

Prevention policy addresses risks

such as money laundering, terrorist

financing, fraud, bribery and

corruption risks and the facilitation

of tax evasion.

The Group also operates a Speak

Up policy, prompting colleagues

to disclose information where they

believe wrongdoing, malpractice

or risk exists across any of the

Group’s operations. The Group

has a zero-tolerance for individuals

experiencing detriment as a result

of raising Speak Up concerns.

Due diligence Due diligence Due diligence

Our Data Protection Officer oversees and monitors compliance with the

GDPR and DPA 2018 and manages the Group Privacy Notice and owns

the Data Protection Risk policy. Our Chief Information Security Officer

oversees the delivery of and compliance to our Information Security policy,

utilising capabilities such as Threat Intelligence, Penetration Testing and

Vulnerability Management to identify and control cyber risks. The Group

manages a comprehensive programme of continuous testing and

improvement to our Information Security Framework collaborating with

industry experts and authorities to embed best practices throughout.

Complaint activity including those referred to the Financial Ombudsman

Service and the Pensions Ombudsman is monitored, and we also resolve

a significant proportion of complaints across the Group in fewer than

threedays.

During 2022 we appointed a human rights consultant

to review our alignment to the UNGPs by conducting

an assessment and identifying opportunities for

improvement.

As a result, we developed a three-year roadmap to

address gaps, which we have been progressing over

2023 and 2024. We continue to identify and assess the

salient human rights issues that we intend to prioritise

for further action across our operations and areas of

our value chain as part of our due diligence processes.

This process includes a portfolio-level human rights

assessment and an assessment of human rights risks

in countries of operations and high-risk business

relationships on an ongoing basis.

Colleagues are required to

complete annual computer-based

training in all aspects of financial

crime prevention and are also

required to complete a Gifts and

Hospitality Register which is

overseen and managed by

the Financial Crime Team.

Outcomes Outcomes Outcomes

Information on our customer satisfaction scores and initiatives

can be found on page 33 of our 2024 Sustainability Report.

Information on relevant supplier and communities metrics can

be found in our 2024 Sustainability Report.

During 2024 The Group effectively resolved all

colleague disputes and as a result has not been subject

to any adverse employment tribunals judgements or

awards. We report on our salient human right issues,

actions, and progress to align with the UNGPs

through our 2024 Sustainability Report and

Modern SlaveryStatement.

The Group’s governance processes

for financial crime prevention,

anti-bribery and anti-corruption,

ethics and compliance training,

whistleblowing and speaking up can

be found on our Group website.

For further information For further information For further information

• Privacy policy: www.thephoenixgroup.com/site-services/privacy-hub

• ESG Supplier Standards: https://www.thephoenixgroup.com/

media/2nhfdqyr/esg-supplier-standards_dec2024.pdf

• Phoenix Group 2024 Modern Slavery Statement:

https://www.thephoenixgroup.com/media/ru1jahi0/

modern-slavery-statement-2024.pdf

• Phoenix Group 2023 Human Rights Policy:

https://www.thephoenixgroup.com/media/

c5sos5qs/human-rights-policy.pdf

• Governance:

www.thephoenixgroup.com/

investors/governance/

Anti-bribery statement:

www.thephoenixgroup.com/

investors/governance/

anti-bribery/

Strategic report

Phoenix Group Holdings plc Annual Report and Accounts 2024

Chair of the Group Board’s

introduction to governance

The development

of our culture remains

a top priority

Sir Nicholas Lyons

Chair of the Group Board

Dear Shareholder,

I am delighted to introduce our Corporate

governance report for 2024. The following

pages set out the Company’s approach

to governance and how the Board and

Committees operated during 2024. During

the year, the Board has overseen the

completion of the first year of our 3-year

strategic journey. In addition, the Board was

excited to appoint Nicolaos Nicandrou as

Group Chief Financial Officer (‘CFO’). This is

discussed throughout this report, along with

the other Board and Committee changes.

Governance

A key governance focus in 2024 was ensuring

that the Group Board worked closely with the

Life Companies and Standard Life International

boards. I have regular meetings with the Life

Companies’ chair, John Lister and the Standard

Life International chair, Aidan Brady, as do both

the Group Board Audit and Risk Committee

Chairs. The subsidiary audit and risk committee

chairs regularly attend the equivalent Group

Committees to discuss relevant outcomes

from their discussions. Minutes from those

board meetings are shared at each equivalent

Group meeting to ensure the appropriate

challenge and focus where required.

The Group Board has taken part in additional

Board calls and education sessions throughout

2024, where updates between Board meetings

were beneficial. The Group Board has also

streamlined and enhanced its governance

framework relating to sustainability reporting.

From 2024, joint Audit, Risk and Sustainability

Committee meetings were held to ensure

that their respective duties on sustainability

reporting and climate risk were discharged

efficiently and to eliminate duplication.

Private sessions are held regularly after

each Board meeting with all Non-Executive

Directors (‘NEDs’). Board dinners allow

fuller discussion on how we can best

strategically support Management

and in turn, ourshareholders.

During 2024, an emerging focus for many

FTSE boards, including Phoenix Group, was

the use of Artificial Intelligence (‘AI’) across

our business and sector. This presents both

risk and opportunities, which the Group

Board will continue to monitor, making

measured decisions at the appropriate time.

The Code

The Board is pleased to confirm it

complies with all the 2018 UK Corporate

Governance Code provisions (the ‘2018

Code’). In respect of the 2024 UK Corporate

Governance Code (the ‘2024 Code’),

the provisions for which come into effect

from Full Year 2025 or Full Year 2026, a

wholesale review has been undertaken

and Phoenix Group is satisfied with its

implementation of the 2024 Code to date.

Board highlights 2024

Board activities during 2024

Read more on pages 96 to 97

84 Phoenix Group Holdings plc Annual Report and Accounts 2024

Corporate governance

Board activities during 2024

The Board announced a progressive and

sustainable ordinary dividend policy in March

2024 and has recommended a Final dividend

of 27.35 pence per share, bringing the total

2024 dividend to 54.00 pence per share.

The Board’s focus during the first year of

our 3-year strategic journey has included

monitoring several ongoing projects that

support our long-term strategy and the

2024business plan, since the announcement

of its new financial framework in March

2024. Any variances and headwinds against

levers have been carefully monitored by the

Executive Committee (‘ExCo’). Consumer

Duty, though aLife Companies’ board

priority, has been monitored at Group level

to ensure that we provide our customers

with the best possible outcomes. To that

end, our customer strategy was also a topic

of focus for the Group Board during 2024.

Phoenix Group is a heavily regulated

organisation and our relationship with our

UK and overseas Regulators remains a top

priority for the Board. We receive regular

updates from our Regulatory Relationships

Director, who provides their views and any

impact this can have on the execution of our

strategy. The Group Board also receives

feedback from subsidiary board members

on the relationship with BaFin, Central Bank

of Ireland (‘CBI’) and the Bermuda Monetary

Authority (‘BMA’). In addition, Brid Meaney

was appointed Group Chief Risk Officer

(‘CRO’) with effect from 19 August 2024 and

has brought a fresh perspective to our risk

team and how it best supports the business,

whilst working closely with ourRegulators.

Board changes

The Board announced on 13 May 2024 that

Rakesh Thakrar would step down as Group

CFO. Following his handover to the Interim

Group CFO, he stepped down from the

Board on 8 September 2024. Rakesh joined

Phoenix in 2001 and held various strategic

and finance positions within the Group,

before being promoted to Group CFO in

2020. The details of his post-employment

remuneration with the Company can be

found in the Directors’ Remuneration report

on page158. I would like to thank Rakesh

on behalf of the Board for his dedication

to Phoenix Group over such a long service

period. TheBoard initiated a formal process to

find a permanent successor, considering both

internal and external candidates during2024.

Stephanie Bruce joined the Company with

effect from 17 June 2024 as Interim Group

CFO and a member of ExCo. She provided

significant support during the transition period

and her professional leadership has been

commended by theBoard.

The Board was delighted to welcome

Nicolaos Nicandrou as a Director of the Board

in the role of Group CFO and ExCo member

with effect from 2 December 2024, subject to

regulatory approval. Nicolaos has extensive

financial services, life insurance and executive

leadership experience within the FTSE 100,

most recently from his role as Chief Executive

Officer of Prudential Asia & Africa, the largest

division of Prudential plc, having previously

held the role of Chief Financial Officer of

Prudential plc for eight years. Iwould like to

personally thank Stephanie Bruce for the

diligent handover she provided to Nicolaos

to support his success at Phoenix Group.

John Pollock retired from the Board on

31 December 2024. John had been a member

of the Board and Chair of the Group Risk

Committee from 1 September 2016. The

Board has thoroughly enjoyed working with

John, his diligence, challenge and technical

knowledge have been invaluable. The Board

was pleased that Mark Gregory, a member

of the Group Board since 1 April 2023,

was appointed to that role with effect from

4 December 2024. The succession plan had

been ongoing for some time and Mark has

been a member of this Committee since his

appointment, ensuring a smooth handover.

We announced on 14 March 2025 that

Sherry Coutu will join the Board and

Remuneration Committee with effect

from 1 May 2025. Sherry is an experienced

FTSE100 remuneration committee chair.

Her biography can be found on page 87.

Shareholder &

stakeholder engagement

Appointment of Group CFO

Following the announcement of Nicolaos

Nicandrou as Group CFO, a shareholder

consultation was conducted with our top

20 shareholders covering 70% of the share

governance representatives from a broad

range of shareholders were invited to

engage on his appointment, including his

remuneration. The letter to shareholders

outlined the rationale for his remuneration

package (as provided in the Directors’

Remuneration report on page 136).

During 2024, the Board and other Committee

Chairs met with our largest shareholders,

representing approximately 38% of the

Company’s issued share capital. As Chair

ofthe Group Board, I undertook the Group’s

annual institutional roadshow during

February2025, which is intended to reinforce

the dialogue with our major shareholders,

particularly concerning corporate governance

matters. I met with eight of Phoenix Group’s

largest shareholders who in aggregate own

approximately 20% of the Company’s issued

share capital.

The meetings covered a range of topics,

including the appointment of Nicolaos

Nicandrou as Group CFO, strategic progress

and outlook of the Company, the Board’s

performance review and the recent share

price performance.

Culture

The development of our culture remains a

top priority and has become a greater focus

as we complete the first year of our 3-year

strategic journey and the implementation of

the 2024 Code. Phoenix Group was pleased

to launch The Big Three in 2024, see page 96.

Board performance review

Following an external Board performance

review in 2023, the Board performance

review in 2024 was facilitated internally by

myself, supported by the Group Company

Secretary. The review was enhancedfrom

the previous internal review in 2022 to

include individual formal evaluations. It found

the Board to be capable, with thoughtful

challenge and supportive of PhoenixGroup’s

culture, see pages 103 to 104.

Annual General Meeting (‘AGM’)

I look forward to welcoming shareholders

to our AGM, which will be held at Floor9,

20 Old Bailey, London EC2M 7AN on

13 May 2025. This will be an in person

meeting, providing the opportunity for

shareholders to speak and ask questions.

Further details can be found in the Notice

of AGM, which will be published in due

course and made available on our website.

The Board was pleased with the support from

Phoenix Group’s shareholders throughout

2024 and we hope to receive similar support

in 2025. As ever, the Board is here to

engage and respond to any questions our

shareholders or stakeholders may have.

Sir Nicholas Lyons

Chair of the Group Board

2025 priorities

During 2025, the Board

intends to focus on:

• Risk management & internal

controls to support the business.

• Further embedding our culture.

• Continuing the open and

transparent relationship

with the Regulators.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Board leadership and Company purpose

Our Board of Directors

Leading from

the top to drive

governance and

a clear purpose

2024 Board changes

• Rakesh Thakrar stepped down from

the Board on 8 September 2024

• Nicolaos Nicandrou was appointed

to the Board on 2 December 2024

• John Pollock retired from

the Board on 31 December 2024

• Sherry Coutu will join the Board

on 1 May 2025

The Board comprises the Chair of the Group Board,

the Group Chief Executive Officer, the Group

ChiefFinancial Officer, one Aberdeen Group plc

(formerly ‘abrdn plc’ now trading as ‘Aberdeen’

Nominated Director, one MS&AD Insurance Group

Holdings, Inc. (‘MS&AD’) Nominated Director and

eight Independent Non-Executive Directors.

Sir Nicholas Lyons

Chair of the

Group Board

Appointed:

31 October 2018 to

1 September 2022,

reappointed on

1 December 2023

Committee:

Chair of the Nomination Committee

Career and experience

Nicholas has wide-ranging experience

across the financial services industry,

both in executive and non-executive

roles. He started his career in banking

at Morgan Guaranty Trust Company

of New York UK (later JP Morgan LLP),

where he held various roles in Debt

and Equity Capital Markets and then

in Mergers & Acquisitions. He later

moved to Salomon Brothers and then to

Lehman Brothers International Limited

where he was a Managing Director and

Co-Head of their European Financial

Institutions Group and then Global

Co-Head of Recruitment, Training and

Career Development for the whole

of Lehman Brothers. Nicholas has

extensive Non-Executive Director

(‘NED’) experience, including Chair of

Miller Insurance Services LLP, Senior

Independent Director of Pension

Insurance Corporation plc and Catlin

Group Limited and NED of Friends Life

Group Limited and Convex Group

Limited. Nicholas is a member of the

Chartered Insurance Institute.

Key skills and competencies

• Seasoned business leader with

experience and understanding

ofinsurance and the financial

services industry, including

the regulatory environment.

• Strong communicator, bringing

asharp focus to people leadership,

succession planning and development.

• Experience in the governance

of large-scale business operations,

leading mergers and acquisitions

and managing complex projects

which are skills key to the fulfilment

of Phoenix Group’s vision and

purpose supporting his role

as an experienced Chair of

the Group Board.

Current external appointments

NED at Convex Group Limited and

Alderman in the City of London.

Andy Briggs, MBE

Group Chief Executive

Officer (‘CEO’)

Appointed:

10 February 2020

Career and experience

Andy joined Phoenix Group in 2020

with over 30 years of experience in the

insurance industry. He has held senior

executive roles across multiple business

areas in the industry including: CEO

ofUK Insurance and Global Life and

Health at Aviva plc; CEO of Friends

LifeGroup Limited; Managing Director

of Scottish Widows; CEO of the

Retirement Income Division at

Prudential plc and Chair and President

of the Association of British Insurers

(‘ABI’). Andy is a Fellow of the Institute

of Actuaries.

Key skills and competencies

• Sound executive leadership and a

considered approach to strategy,

demonstrated through continued

delivery of the Group’s operating

model. Andy has a strong history

of high-profile M&A work in his

previous roles.

• Broad knowledge of the global

insurance industry which helps

inform views on long-term

strategicdirection.

• Proactive approach to understanding

stakeholder priorities, which closely

aligns to Phoenix Group’s core social

purpose and strategy, including

work on developing initiatives such

as Midlife MOT, financial and

digitalinclusion.

Current external appointments

President of the ABI and a member of

the Business in the Community

Leadership Council.

Committee membership key

Audit

Nomination

Remuneration

Risk

Sustainability

86 Phoenix Group Holdings plc Annual Report and Accounts 2024

Corporate governance

Karen Green

Senior Independent Director

(‘SID’)

Appointed:

1 July 2017

Committee:

Chair of the Sustainability Committee

Career and experience

Karen has over 30 years of financial

services experience. She has held

a number of senior executive roles

including Chief Executive Officer of

Aspen UK (comprising the principal

insurance and reinsurance companies

of the Aspen Insurance Holdings,

a NYSE listed specialty re-insurer),

Principal of MMC Capital Limited (now

Stonepoint Capital LLC) and Director of

Corporate Development of GE Capital

Europe Limited. Karen has significant

Non-Executive Director (‘NED’)

experience, including Chair of the

Remuneration Committee at Admiral

Group plc, a former Council member

and Chair of the Investment Committee

at Lloyd’s of London, and NED and SID

Designate

at Great Portland Estates plc.

Key skills and competencies

• Significant experience in the

insurance industry which supports

oversight of Phoenix Group’s activity,

aligned with market expectations

and stakeholder needs.

• A strong background in strategic

planning and corporate

development including M&A which

facilitates informed oversight and

constructive challenge of the

development and execution of

Phoenix Group’s growth strategy.

• A balanced sounding board, with

significant leadership experience and

understanding of the Phoenix Group

allowing the provision of well qualified

support to the Chair of the Group

Board and Board as a whole as SID.

Current external appointments

NED and Chair of the Remuneration

Committee at Admiral Group plc,

Board member and Chair of the

Audit Committee of Tucano Holdings

Jersey Ltd (the TMF Group), SID and

Chair of the Audit and Risk Committees

at Miller Insurance Services LLP and

Ben Nevis Cleanco Ltd (the Miller

broking group), NED and SID Designate

at Great Portland Estates plc, Adviser

at Cytora Limited and Trustee of

Wellbeing of Women.

Eleanor Bucks

Independent Non-Executive

Director (‘NED’)

Appointed:

1 December 2023

Career and experience

Since 2021, Eleanor has been Chief

Investment Officer of Lloyd’s of London.

Prior to this, she was at Legal & Generalplc

holding several senior roles including:

Chief Operating Officer of Legal &

General Capital, Managing Director of

Direct Investments and Real Assets and

Chief Investment Officer of Legal &

General Retirement. Eleanor serves as

Chair of Lloyd’s Investment Platform

ICAV and has held executive

directorships as Chair of Legal &

General Investment Management’s

Alternative Investment Fund Manager

and Director of Legal & General’s

Single-Family Build-to-Rent business.

Eleanor is a Fellow of the Institute

ofActuaries.

Key skills and competencies

• Seasoned investment professional,

experienced in leading high

performing investment teams and

setting investment strategy for both

insurance and pension funds.

• Deep understanding of the life

insurance sector and the investment

approaches that underpin those

businesses, which brings an external

perspective and supports the

delivery of robust, constructive

challenge and guidance during

Board discussions.

Current external appointments

Chief Investment Officer of Lloyd’s

of London.

Nicolaos Nicandrou

Group Chief Financial

Officer (‘CFO’)

Appointed:

2 December 2024,

subject to regulatory approval

Career and experience

Nicolaos joined Phoenix Group on

2 December 2024 with over 30 years

offinancial services experience.

Hemost recently held the position of

Chief Executive Officer at Prudential

Asia & Africa, and prior to this was

Group CFO of Prudential plc.

Nicolaos has held several senior finance

and executive leadership roles during

his career including CFO of Aviva UK

Life, Group Financial Control Director

of Aviva plc and Chair of the European

Insurance Industry CFO Forum. He is

a Non-Executive Director (‘NED’) of

Kingdom of Saudi Arabia Insurance

Authority and a member of the Institute

of Chartered Accountants of England

& Wales.

Key skills and competencies

• Experienced in leading significant

transformational and infrastructure

projects which assists with oversight

of the implementation of the Group’s

evolved financial framework, driving

progress towards being the UK’s

leading retirement savings and

income business.

• Detailed knowledge of financial

markets as leader of Phoenix Group’s

financial strategy, which supports

achievement of strong financial

results in line with the financial

framework of Cash, Capital

andEarnings.

• Extensive financial services

experience and strong awareness

ofthe global life insurance sector

enabling informed contributions to

discussions on long-term strategy.

Current external appointments

NED and member of the Audit

Committee of Kingdom of

Saudi Arabia Insurance Authority.

Sherry Coutu, CBE

Independent Non-Executive

Director (‘NED’)

Appointed:

1 May 2025

Committee:

Career and experience

Sherry has a wealth of business and

entrepreneurial experience, having

founded several technology companies

and invested in both tech start-up

companies and venture capital firms.

Throughout her career, Sherry has held

senior leadership positions including

Chief Executive Officer at Interactive

Investor International plc and UK

Managing Director at ISI Emerging

Markets Group and has supported

numerous companies in their

transformation journeys.

Sherry has significant experience as a

NED from a combination of technology,

investment, innovation, education

and financial services organisations

that empower their customers. Her

experience includes roles as NED at

London Stock Exchange Group plc,

Senior Independent Director (‘SID’) and

Chair of the Remuneration Committee

at RM plc and Raspberry PI and NED and

Chair of the Remuneration Committee

at Pearson plc and Zoopla plc before

it was bought by private equity.

Key skills and competencies

• Established Remuneration

Committee Chair with experience

in different industries and

regulated environments which

enables well-informed and

productive discussions at the

Remuneration Committee,

whilst always being mindful of

Phoenix Group’s stakeholders.

• Deep understanding of the role

posed by technology, Artificial

Intelligence and cyber within the

business environment, which offers

a unique insight into the ways in

which Phoenix Group can capitalise

on opportunities and keep abreast

of risks whilst navigating a rapidly

changing landscape.

Current external appointments

NED and Chair of the Remuneration

Committee at Pearson plc, SID and

Chair of the Remuneration Committee

at Raspberry Pi, Chair of Trustees

at Founders4Schools and Trustee

of National Numeracy.

1 With effect from 4 April 2025.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Board leadership and Company purpose continued

Our Board of Directors

Hiroyuki Iioka

Non-Executive

Director (‘NED’)

Appointed:

23 July 2020

Shareholder Nominated Director

Career and experience

Hiroyuki is the appointed representative

of one of Phoenix Group’s major

shareholders, MS&AD Insurance Group

Holdings Inc. (‘MS&AD’). He has over

37years of experience and is currently

Senior General Manager for the

International Business Planning

Department at MS&AD. Previously he

was General Manager for the Asian Life

Insurance Business Department at

Mitsui Sumitomo Insurance Company

Limited (Japan) and Assistant General

Manager for MSIG Holdings (Europe)

Limited (UK). Hiroyuki’s NED experience

includes roles as NED of ReAssure

Group plc, Mitsui Sumitomo Insurance

(London Management) Limited (UK)and

an Alternate NED of Challenger Limited

(Australia). Hiroyukiis a Chartered

Member of theSecurities Analysts

Association ofJapan and Certified

International Investment Analysts.

Key skills and competencies

• Commercial business leader,

providing an international business

perspective, with strong global

insurance and financial services

industry experience.

• Responsible for general

management, including managing

efficient and effective operations

and business development within

the financial services industry.

Current external appointments

Senior General Manager of

International Business Planning

Department for MS&AD Insurance

Group Holdings, Inc. and Alternate

NED of Challenger Limited (Australia).

Katie Murray

Independent Non-Executive

Director (‘NED’)

Appointed:

1 April 2022

Committee:

Chair of the Audit Committee

Career and experience

Katie has over 30 years of experience

gained across the financial services

industry and is currently Group Chief

Financial Officer (‘CFO’) of NatWest

Group plc, having also acted as Deputy

Group CFO. Prior to this, Katie spent

a number of years at Old Mutual plc,

where she held various senior executive

roles including Group Finance Director

of Old Mutual Emerging Markets,

Director of Finance – Group Chief

Accountant and Head of Group

Planning and Analysis. She was also a

Senior Audit Manager at KPMG LLP.

Katie is a member of the Institute of

Chartered Accountants in Scotland.

Key skills and competencies

• Vast financial services experience

means that she is well placed to

provide valuable and technical

input in both Board discussions

and in her capacity asChair

of the Audit Committee.

• Current business leader with recent

and relevant financial experience

and deep understanding of

industry complexities.

• Valuable knowledge and executive

director experience within global

financial services organisations.

• Plays an active role in the development

and reporting for climate reporting

across the financial services sector.

Current external appointments

Group Chief Financial Officer

of NatWest Group plc.

Belinda Richards

Independent Non-Executive

Director (‘NED’)

Appointed:

1 October 2017

Committee:

Career and experience

Belinda has extensive financial services

and strategy experience from a 30-year

career. She was Senior Partner and

Global Head of Merger Integration

and Separation Advisory Services at

Deloitte LLP. Prior to this, Belinda was

Vice President of Post-Acquisition

Integration and Separation Services

at Ernst & Young LLP and Principal

of Corporate Finance and Strategic

Advisory Services at KPMG LLP. Her

NED experience includes roles as Chair

of the Audit Committee of Avast plc

and William Morrison Supermarkets

plc, Senior Independent Director of

Grainger plc and NED of Aviva Life

& Pensions UK Limited and Friends Life

Group Limited.

Key skills and competencies

• Highly qualified to appraise

corporate growth opportunities,

integration processes and the

post-acquisition environment

allowing the provision of robust

challenge and guidance in relation

to the Phoenix Group’s strategy.

• Extensive leadership experience

and technical perspective enabling

contribution to Risk and

Remuneration Committee

discussions and debate.

Current external appointments

NED at The Monks Investment Trust plc,

NED and Chair of the Sustainability

Committee of Olam Food Ingredients

(Singapore).

Mark Gregory

Independent Non-Executive

Director (‘NED’)

Appointed:

1 April 2023

Committee:

Chair of the Risk Committee

Career and experience

Mark has 25 years of experience in

thefinancial services industry. Most

recently, Mark was Chief Executive

Officer (‘CEO’) of Merian Global

Investors Limited (‘Merian’). Preceding

this, he held roles at Legal & General

Group plc including Group Chief

Financial Officer, CEO of Savings and

Managing Director of With Profits,

at Asda Limited as the Divisional

Director for Finance and the Business

Development Director and at Kingfisher

plc as a Senior Financial Analyst. His

NED experience consists of roles as

NED and Chair of the Risk Committee

at Direct Line Insurance Group plc and

NED at Entain plc and Merian. Mark is an

associate of the Institute of Chartered

Accountants in England & Wales.

Key skills and competencies

• A wealth of executive finance

experience and acumen and a deep

knowledge of the insurance industry,

particularly life and general

insurance, which contribute to his

effectiveness as Chair of the Risk

Committee and a member of the

Audit Committee.

• Highly qualified to appraise

strategy development and execution

having led corporate projects and

transactions with added appreciation

of the retail sector and customer

service activity.

• Valuable experience in establishing

and delivering strategy whilst

managing risk appetite and

compliance, which contributes

to his effectiveness as Chair

of the Risk Committee.

Current external appointments

NED and Chair of the Risk Committee at

Direct Line Insurance Group plc, NED of

Churchill Insurance Company Limited,

UK Insurance Limited and Westdown

Park Management Company Limited.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

David Scott

Non-Executive

Director (‘NED’)

Appointed:

11 May 2023

Shareholder Nominated Director

Career and experience

David is the appointed representative

of one of Phoenix Group’s major

shareholders, Aberdeen Group plc

(‘Aberdeen’). He has over 35 years of

financial services experience and is

currently Chief Enterprise Technology

Officer at Aberdeen. His previous roles

include Chief Security and Resilience

Officer and Group Digital & IT Strategy

Director at Aberdeen, Group

Operations & IT Director at Bankhall

Investment Management and Head

of IT at Aegon Asset Management UK.

David’s NED experience includes roles

as NED of Origo Services plc and

Chair of the University of St Andrews

Students’ Association. He is a Fellow

of the Institute of Directors, a Full

Professional Member of the British

Computer Society, and a Chartered

IT Professional.

Key skills and competencies

• Expert understanding of the current

and future role of technology across

the financial services industry, and

the impact of disruptive trends and

resultant transformation.

• Knowledge of leading and driving

enterprise technology strategies and

operating models, innovating and

digitising for the future, which is

invaluable to Phoenix Group’s aim

oforganic growth.

• Understanding of operations,

strategic development and

implementation and customer

experience which relates closely

to the Phoenix Group’s objectives.

Current external appointments

Chief Enterprise Technology Officer

at Aberdeen Group plc.

Maggie Semple, OBE

Independent Non-Executive

Director (‘NED’)

Appointed:

1 June 2022

Committee:

Designated NED for

Workforce Engagement

Career and experience

Maggie is currently a business owner

and co-founder of three businesses;

The Experience Corps, Maggie Semple

Ltd and I-Cubed Group Ltd. Prior to this,

Maggie acted as Director of Learning

Experience at the New Millennium

Experience Co and Director of

Education and Training for the Arts

Council England. She began her career

in education as a teacher and later an

education inspector and has received

an OBE for her services to learning.

Maggie’s NED experience includes roles

as NED of PwC Business Restructuring

Services, JN Bank UK Limited,

McDonald’s Restaurants Limited and

as an Ambassador of the Black British

Voices Project.

Key skills and competencies

• A combination of experience and

passion for sustainability, ethics and

inclusivity which brings a breadth of

knowledge across the broad ESG

agenda and informs development of

operations and strategy in this area.

• Brings a strong sense of social

purpose and depth of perspective

to Board considerations and

distinguished stakeholder

engagement with a highly

personable style, as is evident

in her role as Designated NED

for Workforce Engagement.

Current external appointments

NED of JN Bank UK Limited and Crest

Nicholson Holdings plc; HR Committee

Member at the University of Cambridge;

and Ambassador of British Black

VoicesProject.

Nicholas Shott

Independent Non-Executive

Director (‘NED’)

Appointed:

1 September 2016

Committee:

Chair of the Remuneration Committee

Career and experience

Nicholas brings recent and relevant

financial services experience having

retired from Lazard & Co Limited in

2021, where he spent over 30 years.

There he held various positions

including: European Vice Chairman and

Head of UK Investment Banking. In his

early years, Nicholas worked in the

national newspaper sector in various

management positions such as General

Manager of the Evening Standard and

Sunday Express and Group Marketing

Director of Express Newspapers.

Nicholas is a Special Adviser to the

Chair and Board of the Daily Mail and

General Trust plc and has been a NED

for the Home Office.

Key skills and competencies

• Extensive M&A experience in

multiple sectors through investment

banking, enabling the provision of

support and insight to the Board.

He is also Chair of Phoenix Group’s

M&A Advisory Group.

• Knowledge of a broad range

of investor and stakeholder

perspectives, providing insight that

enables him to lead well-informed

and productive discussions at the

Remuneration Committee.

Current external appointments

Special Adviser to the Chair and Board

of the Daily Mail and General Trust plc.

Our business,

led by the ExCo

The executive management

of the Group is led by

theGroup CEO, who is

supported by the ExCo.

During 2024, ExCo played

akey role in driving Phoenix

Group’s year of significant

progress, striving to help

people secure a life of

possibilities. The roles and

responsibilities of each

member of the ExCo can

be found on:

www.thephoenixgroup.com

Andy Briggs

Group Chief

Executive Officer

Nicolaos Nicandrou

Group Chief Financial

Officer

Arlene Cairns

Life Chief Financial Officer &

Group Performance Director

Andy Curran

Chief Executive Officer,

Standard Life

Mike Eakins

Group Chief

Investment Officer

Dean Galligan

Chief Capital Officer

Tom Ground

Chief Executive Officer,

Retirement Solutions

Claire Hawkins

Director of Corporate

Affairs & Brand

Brid Meaney

Group Chief Risk Officer

Jackie Noakes

Chief Operating Officer

Sara Thompson

Chief People Officer

Colin Williams

Chief Executive Officer,

Pensions & Savings

Quentin Zentner

Group General Counsel

Kulbinder Dosanjh

Group Company Secretary

(Secretary to ExCo)

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Board leadership and Company purpose continued

UK Corporate Governance Code

Compliance with the UK Corporate Governance Code 2018 (‘the 2018 Code’)

The Board is responsible for ensuring high standards of corporate governance. Throughout 2024, the Board believes that

Phoenix Group Holdings plc applied the Principles and complied with the Provisions of the 2018 Code. An update on the action

taken against the two areas identified for enhancement in the 2023 Annual Report in relation to the 2018 Code is provided below:

The review confirmed that all areas of the 2018 Code have been upheld through the work of the Board and its Committees. The below table

confirms where disclosures to evidence this approach can be found in line with UKLR 6.6.6(5):

As part of the preparations for the introduction of the 2024 Code at Full Year 2025 and Provision 29 at Full Year 2026 the Group Company Secretary

supported a full review of the Group’s compliance with the 2024 Code and identified the below areas for enhancement to ensure compliance during 2025.

Areas for enhancement

Provision or Principle Action currently undertaken Enhancement for 2025

2. The Board should assess and

monitor culture and how the desired

culture has been embedded.

The Board Sustainability

Committeeassists the Board with

oversight of corporate culture

through its regular reporting cycle.

Enhancing how the culture has been embedded will be further developed. A culture

dashboard was introduced in 2024 for the ExCo and Board to review periodically.

Thedashboard received input from several functions and reports against the Company’s

internal culture model (The Big Three) as well as data points suggested by the

Financial Reporting Council’s (‘FRC’) Guidance on Board Effectiveness. From 2025,

Maggie Semple, Designated NED for Workforce Engagement (‘DNED’) will report

to theBoard bi-annually on her reflections on how culture is being embedded from

her workwith the PCRF to further support the assessment and monitoring of culture.

29. The Board should monitor and review the

effectiveness of the company’s risk management

and internal control framework and a description

of how this has been done, along with details

regarding the effectiveness of the material

controls and action taken to improve any material

controls which have not operated effectively,

should be included in the Annual Report.

The Board reviews the

effectivenessof the Group’s

systemof risk management

andinternal controlsannually.

Continued embedding of IFRS 17 through enhanced modelling and automation,

and process and control improvements.

Enhancing the testing of internal controls will be completed during 2025 so that

the Board can comply with Provision 29 of the 2024 Code, ahead of its effective

reporting date from 1 January 2026.

2023 areas for enhancement – completed

Provision or Principle Enhancement during 2024

L. Annual evaluation of the Board should consider its composition, diversity and how

effectively members work together to achieve objectives. Individual evaluation should

demonstrate whether each Director continues to contribute effectively.

Individual evaluation formed part of the formal internal Board review during 2024

andwill continue to form part of the formal internal Board reviews going forward.

41. There should be a description of the work of the Remuneration Committee in

theAnnual Report, including: what engagement with the workforce has taken place

toexplain how executive remuneration aligns with wider company pay policy.

The Company provided an intranet announcement to the wider workforce detailing

how executive remuneration aligns with the wider workforce pay policy following

theAGM on 14 May 2024.

Maggie Semple became a member of the Remuneration Committee on 1 January

2024which has allowed her to discuss the alignment of Directors’ pay with the wider

workforce and any changes on remuneration outcomes in her role as Designated

NEDfor Workforce Engagement and her work with the PCRF. Maggie will be

workingcloser with the PCRF during 2025 on culture and reporting bi-annually to the

Board in order to connect with her role as a member of the Remuneration Committee.

Board leadership and Company purpose

A. An effective board promoting long-term

success for the company, value for shareholders

and contributing to society more widely.

Pages 86 to 89

B. Purpose, values, strategy and culture Pages 96 to 97

C. Performance measures and controls Pages 34 to 35, 43 to 49,

93 and 123

D. Stakeholder engagement Pages 98 to 100

E. Wider workforce Pages 96 to 97, 98 to 100,

101 to 102 and 120

Division of responsibilities

F. The role of the Chair Page 91

G. Board composition and division

of responsibilities

Pages 86 to 89, 91, 92 and 113

H. Directors’ responsibilities

and time commitment

Pages 94 and 113

I. Support information and resources

available to the board

Page 93

Composition, succession and evaluation

J. Board appointments, succession planning

and diversity considerations, including

senior management

Pages 82, 108 to 113

K. Board skills, experience and knowledge Pages 82, 86 to 89, 92, 113

L. Board performance review Pages 103 to 104

Audit, risk and internal control

M. Independence and effectiveness

of Internal and External Audit functions

Pages 118 to 133

N. Fair, balanced and understandable assessment

of company’s position and prospects

Pages 50 to 51, 118 to 125,

166 to 170

O. Risk management and internal

control framework

Pages 43 to 49,

123 and 128 to 130

Remuneration

P. Remuneration and its alignment to strategy,

company purpose and values

Pages 134 to 165

Q. Executive and senior management remuneration Pages 134 to 165

R. Independent judgement and discretion when

authorising remuneration outcomes

Pages 134 to 165

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Division of responsibilities

Division of responsibility on the Board

Division of responsibilities on the Board

Clear roles and responsibilities

to drive forward our purpose

and strategy

The Directors understand their role both

as individuals and as a collective, to ensure

the long-term success of the Company and

achievement of Phoenix Group’s purpose.

The Board ensures the appropriate division

of responsibilities on the Board and that

there is no existence of unfettered power

or over-reliance on any one person. The

independence of Directors not only supports

good governance, but also facilitates diversity

of thought and inclusion on the Board.

The Board considers all NEDs to

be independent, except for the

Shareholder Nominated Directors and

the Chair of the Group Board, who

was independent on appointment.

Chair of the Group Board

(independent upon appointment)

• Leadership and effective

operation of the Board.

• Leading the Board in driving

the strategy, desired culture and

values of the Group. Assessing and

monitoring how the Phoenix Group

culture has beenembedded.

• Setting the Board agenda, working

with the Group Company Secretary

to ensure effective meetings.

• Leading, whilst ensuring effective

challenge from all members of the

Board on all agenda items.

• Leading the development of and

monitoring the effective implementation

of policies and procedures for the

induction, training and education

sessions for the Board.

• Leading the highest standards

of corporategovernance.

• Effective shareholder engagement.

• Ensuring an orderly succession

process for the Group CEO

and the Board as a whole.

Independent

Non-Executive Directors

• Assessing, challenging and

monitoring Management’s delivery

of the strategy, within the risk and

governance structure set by the Board.

• Measuring, monitoring and

assessing culture.

• Robustly challenge items brought

to any committee they are a member

of, applying their skillset and

expertise (seepages 86 to 89).

• Co-operating with the Regulators

and any other applicable

regulatory authority.

Group Chief Executive Officer

• Overall performance and day-to-day

management of the Group.

• Leading on embedding the desired

culture, values and purpose of the

Group throughout.

• Operational matters relating to:

– business strategy and management;

– investment and financing;

– risk management and controls;

– recommending remuneration policies

and succession plans to the relevant

Board Committees for employees

belowExecutive Board level;

– regulation;

– sustainability;

– communication; and

– HR policies.

Designated Non-Executive Director

for Workforce Engagement

• Developing an annual communication

programme with the PCRF to collate

employees’ views.

• Acting as the primary Board feedback

mechanism between colleagues across

the Group and the Board and raising

relevant matters, or issues of concern,

highlighted by engagement with

theworkforce.

• Participating in ExCo and Life

Companies’ boards when culture

is discussed.

Senior Independent Director

• Acting as a sounding board

for the Chair of the Board.

• Chairing Board meetings

in the Chair’sabsence.

• Supporting on governance matters,

including the annual Board

performance review and the Chair’s

performance review by the NEDs.

• Serving as an intermediary between

theChair and the other Executive

Directors as necessary.

• Being available to shareholders

whose concerns are not resolved

through the normal channels or when

such channels are inappropriate.

• Ensuring an orderly succession

process for the Chair.

Shareholder

Nominated Directors

(not independent in line with the UK Code)

• A relationship agreement between

Phoenix Group and MS&AD includes

the right for MS&AD to appoint a

representative NED to the Group Board,

provided that MS&AD continues to hold

10% or more of Phoenix Group’s shares.

• A relationship agreement between

Phoenix Group and Aberdeen

includes theright for Aberdeen

to appoint a representative NED

to the Group Board, provided that

Aberdeen continues to hold 10%

or more of Phoenix Group’s shares.

Full descriptions of the Board’s roles and responsibilities are available on Phoenix Group’s website www.thephoenixgroup.com

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Division of responsibilities continued

Division of responsibility on the Board

Independence

During the year, the Nomination Committee

assessed the independence of the NEDs to

ensure that they are able to properly fulfil their

roles on the Board and provide constructive

challenge to the Executive Directors.

Conflicts of interest

A register of conflicts of interest is maintained

by the Group Company Secretary. Each

Director has a duty under the Companies Act

2006 to avoid a situation in which they have

or may have a direct or indirect interest that

conflicts or might conflict with the interests of

the Company. If any Director becomes aware

of any situation which might give rise to a

conflict of interest, they must, and do, inform

the rest of the Board immediately and the

Board is then permitted under the Company’s

Articles of Association to authorise such

conflict. This information is then recorded

in the Company’s Register of Conflicts,

together with the date on which authorisation

was given. Each Director certifies, at least

annually that the information contained

in the Register of Conflicts is correct and

completes an annual questionnaire to ensure

any conflict of interest has been disclosed.

From 2025, the Company’s Register of

Conflicts will be presented to the Board

ona quarterly basis for Directors to review.

When the Board decides whether or not

to authorise a conflict, only the Directors

who have no interest in the matter are

permitted to participate in the discussion

and a conflict is only authorised if the Board

believes that it would not have an impact on

the Board’s ability to promote the long-term

success of the Company. Additionally, the

Board may determine that certain limits or

conditions must be imposed when giving

authorisation. At 31 December 2024, noactual

conflicts have been identified which have

required approval by the Board. However,

the situations that could potentially give

rise toa conflict of interest have been

identified and duly authorised by the Board

and are reviewed at the beginning of each

meeting. Due care and process is, of course,

applied in respect of the two Shareholder

Nominated Directors for Aberdeen and

MS&AD and when the Group CEO declares

any conflict relating to his appointments

on subsidiary boards of Phoenix Group.

Andy Briggs is the

President of the

Association of British

Insurers and a member

of the Business in

the Community

Leadership Council.

Outside directorships

Executive Directors are encouraged to serve

as NEDs of external companies, dependent

upon time commitment in accordance

with the 2024 Code. Andy Briggs is the

President of the Association of British

Insurers and a member of the Business

in theCommunity Leadership Council.

NicolaosNicandrou is a non-executive

director of Saudi Arabia Insurance Authority.

Re-appointment of Directors

In accordance with the 2024 Code, all

Directors offer themselves individually

to shareholders for initial election or

re-election annually, unless retiring

immediately following the AGM.

Independent advice

All Directors have access to the advice and

services of the Group Company Secretary

in relation to the discharge of their duties

on the Board and any Committees they

serve on. Furthermore, any Director may

take independent professional advice

at the Company’s expense. During the

year, no Directors sought to do so. The

Company arranges appropriate insurance

cover in respect of legal actions against

its Directors and has also entered into

indemnities with its Directors as described

in the Directors’ report on page 166.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Our governance framework

The Board provides strong challenge to Management through a robust governance

framework enabling cohesion of our purpose, strategy, values and culture. We maintain

high standards of corporate governance to enable the successful delivery of our strategy.

ExCo supports the Group CEO in discharging his responsibilities in managing

Phoenix Group’s business day-to-day. In addition, a Market Disclosure Committee reports into the Group

CEO and has oversight of PhoenixGroup’s disclosure obligations in accordance with the Listing Rules.

• Recommends

Board

appointments.

• Reviews Board

andCommittee

composition.

• Reviews Board and

senior executive

succession planning.

• Recommends Life

Companies’ board

appointments.

• Oversees

nomination,

induction and

evaluation of

theBoard.

• Oversees the

diversity, equity

and inclusion of the

Board and senior

appointments.

• Monitors skillset

ofthe Board in

line with the

Group’s strategy.

Committee report

on page 108

Committee report

on page 118

Committee report

on page 128

Committee report

on page 131

Committee report

on page 134

• Sets and reviews

the Group’s

remuneration

framework.

• Recommends

Executive Directors’

remuneration

andpolicy.

• Reviews Chair,

executive, senior

management and

SMF remuneration.

• Assesses the impact

of the Group CRO

report on any

undue risk taken

byindividuals or

the Group and

applying its

discretion.

• Reviews

performance

related share

schemes.

• Reviews wider

workforce

remuneration

related policies.

• Monitors the

integrity of

financial reporting.

• Reviews of

significant reporting

judgements.

• Assesses the

effectiveness of

the Group’s internal

controls system.

• Maintains an

appropriate

relationship with

the External

Auditor.

• Reviews the

Internal Audit

programme

andany

recommendations.

• Reviews ESG

reporting.

• Monitors Speak Up.

The Board’s role is to provide leadership, promoting the long-term sustainable success of the Company, generating value for

shareholders and positively contributing to wider society, within a framework of prudent and effective controls, which enables risk to

be assessed and managed. It establishes Phoenix Group Holdings plc’s strategy, leading the development and setting of its culture.

Our governance framework ensures that the Board is effective in both making decisions and maintaining oversight of those

Committees it delegates to. The Chair of each Committee reports into the Board at the end of each Board meeting cycle.

Matters Reserved for the Board and each Committees’ Terms of Reference can be found at: www.thephoenixgroup.com

• Reviews the risk

appetite and

high-level risk

matters ensuring

they are appropriate

for the Group as

awhole.

• Assesses the

effectiveness of

theGroup’s Risk

Management

Framework.

• Oversees the

appropriateness of

the Group’s capital

and liquidity

requirements.

• Agrees the

Sustainability

Strategy.

• Reviews ESG

reporting.

• Monitors culture,

and diversity,

equity and

inclusion (‘DE&I’).

Nomination

Committee

Audit

Committee

Phoenix Group Holdings plc Board

Chair of the Board, Sir Nicholas Lyons

Risk

Committee

Sustainability

Committee

Remuneration

Committee

Board support

All Board Directors have access to the advice and services of the Group

Company Secretary to support the discharge of their duties and on

matters of governance.

The Group Company Secretary supports the Chair of the Group

Board, ensuring that the Directors receive accurate, timely and clear

information. Appropriate policies, processes, time and resources are

available to the Board to ensure its effective and efficient operation.

The Group Company Secretary ensures that accurate records of Board

and Committee meetings are prepared on a timely basis enabling

unresolved concerns of Directors to be duly recorded. No concerns

were recorded during 2024.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Division of responsibilities continued

2024 Board and Committee meeting attendance

The Board met formally seven times during

2024, including a two-day strategy setting

meeting. The Board regularly holds calls

outside of the formal Board schedule to

facilitate education sessions or provide

support or feedback to Management on

matters between meetings if required.

The NEDs met with the Chair of the Group

Board on at least seven occasions without

Executive Directors present, which normally

takes place after each Board meeting.

The Chair works closely with the Group

Company Secretary and Group Executive

Directors to plan appropriate and

well-informed agendas, ensuring time

is given to strategic matters and full

challenge can be provided by the Board.

Planning Board meeting agendas:

• The Group Company Secretary

meets with the Group CEO to discuss

the first draft of the Board agenda

following the previous ExCo meeting.

Meeting agendas stem from the annual

planner, which is approved by the

Board at the end of each year and sets

out the regular items and expected

topics of discussion for the following

year. Management, following

consultation with the Group Company

Secretary, may add items to the agenda

which are notified to the Group CEO

for approval.

• This agenda is then taken to the Chair

of the Group Board who meets with

both the Group CEO and Group

Company Secretary to provide

feedback. Actions from the previous

meeting, the Board planner, strategic

items and stakeholder matters, for

example our regulatory relationships,

are discussed to ensure the agenda is

appropriately balanced.

• The Board planner is reviewed in that

meeting and updated in anticipation

of the next agenda. A similar process

is followed by the Group Company

Secretary or their designate for each

of the Board Committee meetings.

The following Board and Board Committee attendance table details all formal Board and Board Committee meetings

held during 2024. Board members are expected to attend all formal Board meetings with the aim of 100% attendance.

The Nomination Committee has confirmed its satisfaction with the time and commitment given to the Phoenix Group Board

and its Committees byall Directors.

Board

Audit

Committee

Risk

Committee

Remuneration

Committee

Nomination

Committee

Sustainability

Committee

Actual/Max Actual/Max Actual/Max Actual/Max Actual/Max Actual/Max

Chair

Sir Nicholas Lyons 7/7 – – – 6/6 –

Executive Directors

Andy Briggs (Group CEO) 7/7 – – – – –

Rakesh Thakrar (Group CFO)

4/4 – – – – –

Nicolaos Nicandrou (Group CFO)

1/1 – – – – –

Non-Executive Directors

Karen Green

7/7 – 2/2 5/5 6/6 5/5

Eleanor Bucks 7/7 – – – – –

Mark Gregory

7/7 8/9 8/8 – – –

Hiroyuki Iioka 7/7 – – – – –

Katie Murray 7/7 9/9 – – 6/6 –

John Pollock 7/7 9/9 8/8 – 6/6 –

Belinda Richards 7/7 – 8/8 5/5 – –

David Scott 7/7 – – – – –

Maggie Semple

7/7 – 6/6 5/5 – 5/5

Nicholas Shott 7/7 9/9 – 5/5 6/6 5/5

1 Rakesh Thakrar stepped down from the Board on 8 September 2024.

2 Nicolaos Nicandrou was appointed as a Director of the Board and Group CFO on 2 December 2024, subject to regulatory approval.

3 Karen Green became a member of the Risk Committee on 13 September 2024.

4 Mark Gregory was unable to attend an Audit Committee meeting due to an unforeseen clash of meetings.

He read all papers and provided comments to the Chair of the Audit Committee prior to the meeting.

5 Maggie Semple stepped down as a member of the Risk Committee on 12 September 2024.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Board activities

During 2024, in addition to the scheduled meetings, the Board calendar is supplemented with an annual two-day strategy session along with

additional education sessions. Details of the education sessions delivered can be found on pages 106 and 107.

Other key matters considered during the year

Q1 Q2 Q3 Q4

Purpose,

values and

strategy

• Approved the 2024 Business Plan

• Received an update on

SocialPartnerships

• Held a two-day strategy

meeting in June 2024

• Reviewed and approved

theInterim Report

• Approved the 2025 Business Plan

• Reviewed the strategy for

Phoenix Re, Bermuda

Financial

management

and

performance

• Reviewed and approved the Annual

Report and Accounts, including the

Going concern & Viability statement,

the Full Year 2023 RNS and the Full

Year 2023 Investor Presentation

• Considered and approved the

Fair,Balanced and

Understandablestatement

• Approved Phoenix Group’s

dividendpolicy

• Recommended the 2023

Finaldividend

• Approved the Solvency

and Financial Condition

Report (‘SFCR’)

• Reviewed and approved

a TradingUpdate

• Considered the Group’s hedging

• Approved the

AnnualQuantitative

ReportingTemplates

• Received an update on the

Group’s hedgingstrategy

• Approved the Group’s

taxstrategy

• Approved the appointment of

the Group’s External Auditor

• Received an update on

LiquidityManagement

• Reviewed and approved

the Half Year 2024

Investor Presentation

• Approved the 2024

Interimdividend

• Approved the Going

concernstatement

• Considered the

Group’s hedging

• Reviewed the Group’s

fundingstrategy

• Approved the External

Auditor’sfees

• Considered the Group’s hedging

Risk

management

and internal

controls

• Received an update on RiskCulture

• Approved the Internal Controls

Self-Assessment (‘ICSA’) reportupdate

• Risk Universe Annual Refresh

• Considered the Risk Appetite

Framework Annual Review

• Reviewed the Own Risk &

Solvency Assessment (‘ORSA’)

• Change management oversight

• Approved the ORSA

• Reviewed and approved

the Share Dealingpolicy

• Reviewed and approved

the Corporate Affairs and

Brand Riskpolicy

• Reviewed the Group’s

principal risks anduncertainties

• Received a customer

and conduct risk update

• Considered deep dives into

the 2025 Business Plan before

providing Board approval

• Reviewed and approved

the Group Tax Risk policy

• Completed an annual deep

dive into the risk profile of

Standard Life International

• Approved the Credit RiskAppetite

• Approved the Dividend RiskAppetite

Governance • Monitored compliance

with the 2018 Code

• Assessed NED independence

and time commitment

• AGM re-election of Directors

• Approved the renewal

of NED appointments

• Considered the results of the

Board performance review

• Held the 2024 AGM

• Reviewed the Group’s

brandstrategy

• Approved the Board

DE&I policy

• Approved the appointment

of the Group CRO (subject

to regulatory approval)

• Reviewed the tenure

of the Chair and the NEDs

• Approved the conflicts

of interestregister

• Reviewed the Matters

Reserved for the Board

• Approved the Board

DE&I policy

People,

culture and

sustainability

• Reviewed the ‘Who We Are’

diversity data

• Received an update on PhoenixFlex

• Considered the Board Succession Plan

• Reviewed and approved the

Sustainability Report, the Climate

Report and the TCFD disclosures

• Approved the 2024

SustainabilityStrategy

• Monitored the progress against

the Net Zero Transition Plan

• Reviewed the appropriateness

of the Group’s social

impact initiative

• Received the Gender

& Pay Gapreport

• Approved the Modern

SlaveryStatement

• Approved the 2023

StewardshipReport

• Considered the Executive

Committee Succession Plan

• Held a people &

culture reviewsession

• Reviewed the people

& culturestrategy

• Approved the

Whistleblowingpolicy

Stakeholder

engagement

• Received feedback from

the Chair’s Roadshow

• Considered Full Year

2023 investor feedback

• Reviewed the Group’s approach

to Consumer Duty

• Considered the Pensions

& Savings customer strategy

Regular quarterly items

• Group CEO report.

• Group CFO report.

• Asset Management update.

• Project updates.

• Regular Board Committee reports.

– Group Internal Audit updates

(via Audit Committee).

• Life Companies’ board reports

including Consumer Duty updates.

• Designated NED for Workforce

Engagement report.

• Legal, governance and regulatory updates.

– Regulatory updates (via Risk Committee).

– Liquidity management update.

– DE&I report (via Sustainability

Committee).

– People and Culture report

(via Sustainability Committee).

From2025 this will also be part

of the Group CEO report.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Division of responsibilities continued

Our culture

The following pages explain how the Directors

of Phoenix Group monitor and assess the

embeddedness of its desired culture across

the organisation.

We put our

customers first

We work

together

The Big Three

We aim high

As the principal decision-making body

for the Group, the Board sets the cultural

tone for the organisation through strong

custodianship and alignment with the Group’s

intended purpose, values, and strategy.

Our desired culture: The Big Three

Previously, the Group’s culture had developed

organically as the organisation grew, utilising

the strengths from each new organisation

as Phoenix Group underwent an acquisitive

period. During 2024, the Group reviewed

its culture and decided to align it more

holistically to both the Company’s purpose

and vision and to unify the cultures from the

organisations that now form Phoenix Group.

The Board and Management are cognisant

that evolving the culture of the Company

will be key to ensuring that Phoenix Group

is “the best place colleagues have ever

worked” and is aligned to the operational

and commercial success of the organisation.

It is recognised that in order to achieve

this, barriers must be removed to cultivate

conditions that enable greater alignment and

collaboration across the business. The Big

Three are the Group’s guiding principles and

the newly designed cultural strategy serves

as a roadmap to embed The Big Three into

everything we do, providing a framework

for optimum commercial growth whilst

maintaining focus on customer outcomes.

Whilst introducing new cultural principles,

Management has focused on maintaining an

iterative and agile phased approach to culture

evolution with a colleague-centric method

to the redesign. The Big Three was created

as a result of extensive engagement with

colleagues across all functions and an

in-depth review of the mechanisms

available for bringing values and culture

ambitions to life. Detailed diagnostic

work into the Company’s previous culture

uncovered several strengths and areas for

development which were grouped into

priority themes. Colleagues suggested

that clear cultural statements would assist

in clarifying organisational aims and

provide a robust framework through which

colleagues and leaders could challenge

and prompt behavioural norms.

The Big Three was launched with the aim of

being simple, clearly expressed and relevant

to all colleagues across the Group, agnostic of

brand. The culture strategy and the concept

of The Big Three were externally validated by

advisers with extensive experience supporting

UK Financial Services organisations on their

culture evolution journey. Feedback from

this review was reported to the ExCo and

the Board with actions which will be tracked

closely throughout 2025. A three-year

strategy for culture evolution will be used

to set the foundation for a workplace where

colleagues can thrive, find purpose in their

work and deliver results for customers.

Embedding and measuring

ourculture

Following the roll-out of The Big Three,

the Board has been focused on ensuring

that the culture is embedded in ways of

working throughout the organisation.

To effectively monitor and measure the

culture and its embeddedness across the

organisation, the Board will be presented

with more holistic data to enable the tracking

of progress against The Big Three and the

priority areas for action. Quantitative and

qualitative data, including a range of metrics

and colleague feedback will be collated

to ensure that a true and holistic snapshot

of culture is presented to the Board.

In 2025, the Board will ensure that the

dataset will be challenged and reviewed,

and a clear action plan to close gaps

between the current and desiredstate

will be created and monitored.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Board performance review

The annual Board performance

review is used to review the Board’s

performance as a whole, as well as

individual elements, such as measuring

how effective the Board has been in

promoting the Group’s culture and

assessing whether the Board continues

to set a clear cultural ‘tone from the top’

by embodying the Group’s values. The

Nomination Committee advises the

Board on succession planning to ensure

that appropriate candidates are chosen

and the desired culture is preserved.

Employee engagement survey

– Peakon

Peakon is the Group’s main platform

for employee feedback and empowers

colleagues to speak openly and honestly

about their experiences at work. This

survey is completed on a monthly basis,

providing recent and relevant insights

directly from colleagues. This helps

the Board to gain an awareness into

how colleagues experience working

at Phoenix Group which subsequently

assists with monitoring the culture.

Board engagement

As part of each Board meeting cycle,

the Board holds in-person sessions

with colleagues. Through this two-way

dialogue, the Board is able to understand

colleague experiences and the topics

that matter most, helping the Board to

monitor culture and supporting it with

discharging its duties under s.172 by

having regard to the interests of the

Company’s employees. To read more

about the work of our Designated NED

for Workforce Engagement throughout

2024, please see pages 101 to 102.

Workforce policies

Workforce policies help support

fairness and consistency by

describing colleague’s entitlements

and responsibilities at work.

These policies reinforce the

Group’s culture and strengthen

understanding of the required

behaviours across the organisation.

Internal Audit

To achieve the principles contained in

the Internal Audit Charter the Board is

required to set an appropriate ‘tone at

the top’. This is to ensure a supportive

and collaborative culture of internal

audit, assurance and internal controls at

all levels of the organisation. Updates on

the effectiveness of this are provided to

the Audit Committee on a regular basis.

Remuneration

The Remuneration Committee is

responsible for ensuring that the

Remuneration policy and practices

are established, implemented and

maintained in line with the Group’s

culture and strategic direction. The

Committee liaises with the Group

CRO, and the Board Risk Committee

to ensure that risk is incorporated into

remuneration discussions, guidance

is provided on individuals whose

remuneration may require adjustment

and the management of material risks are

considered to support application of the

Annual Incentive Plan rewards (‘AIP’).

Diversity, equity & inclusion

The Sustainability Committee oversees

the implementation of the Diversity,

Equity and Inclusion strategy. The

strategy shapes the Group’s culture and

supports the ambition to be the best

place that colleagues have ever worked.

Customer

The Life Companies have primary

responsibility of overseeing the Group’s

customer strategy, encouraging a culture

of customer centricity and in turn helping

people secure a life of possibilities.

Risk culture

The Risk Committee monitors the

Group’s risk culture which determines

our awareness, attitude and behaviour

towards risk and is an important

feature of the Group’s culture.

Intranet and employee

communications

Colleague communications, providing

Group-wide news and updates,

emphasising the Group’s values and

culture and promoting The Big Three

(the Group’s guiding principles),

are provided in a variety of formats

such as intranet announcements

and interactive all colleague hybrid

sessions called ‘Phoenix Live’.

Site visits

The Board conducts site visits across

the Group’s main offices in order to

better understand specific colleague

experiences, which vary depending on

location. These visits enable the Board to

monitor culture and ensure appropriate

tailored responses to any specific needs.

Culture dashboard

The Board, via the Sustainability

Committee, monitors and assesses

culture on a quarterly basis. This consists

of a culture dashboard which includes

statistics on employee surveys, diversity

data and talent pipeline development.

The Board also receives regular culture

updates from the Group CEO.

How the Board and its Committees monitor and assess culture

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Stakeholder engagement

s172 statement

A key responsibility of all directors of UK companies under

Section 172 of the Companies Act 2006 (the ‘Act’) is their

duty to promote the success of the Company.

Stakeholder engagement allows our Board

to understand what matters to our stakeholder

groups and to consider all relevant factors

when conducting business in the interest

of stakeholders in the long term.

Strategic engagement reinforces the

understanding of issues material to

each stakeholder group and includes

a combination of business-led and

Board-level interaction, and the Board has

aimed to establish a business culture that

ensures stakeholder interests are at the

forefront of decision-making process at

every echelon of the organisation. As well

as discussions at Board level, the ExCo

regularly engages with stakeholders and

discusses any key issues identified.

The Board is aware that it is not always

possible to provide positive outcomes for

all stakeholders and the Board might be

required to make decisions by balancing

the competing priorities of stakeholders.

The Board seeks to take decisions that it

believes are most likely to provide results that

deliver the strategy, therefore serving the

interests of all stakeholders in the long-term.

Further information as to how the Board

have had regard to the matters set out

in the Act are incorporated by cross-

reference and in the table to the right.

s172 Principle Relevant Disclosure

The likely consequence of

any decision in the long term

• Chair’s statement (pages 10 to 11)

• Group CEO’s report (pages 12 to 15)

• Risk Management and principal risks (pages 43 to 49)

• Board activities (page 95)

• Viability statement (page 50 to 51)

• Going concern (page 168)

• Our strategic priorities and KPIs (pages 26 to 32 and 34 to 35)

• Our business model (pages 16 to 19)

The interests of the

Company’s employees

• Our culture (pages 96 to 97)

• Workforce engagement (pages 101 to 102)

• Our business model (pages 16 to 19)

• Sustainability Report (www.thephoenixgroup.com)

• Nomination Committee report (pages 108 to 113)

• Remuneration Committee report (pages 134 to 137)

• DE&I (pages 111 to 113)

• Speak Up policy (page 120)

The need to foster business

relationships with suppliers,

customers and others

• Our business model (pages 16 to 19)

• Sustainability Report (www.thephoenixgroup.com)

• Sustainability Committee report (pages 131 to 133)

The impact of the Company’s

operations on the community

and the environment

• TCFD (pages 54 to 55)

• SECR (pages 80 to 81)

• Sustainability Report (www.thephoenixgroup.com)

• Sustainability Committee report (pages 131 to 133)

• Net Zero Transition Plan (www.thephoenixgroup.com)

The desirability of the Company

maintaining a reputation for high

standards of business conduct

• Risk Management (pages 43 to 45)

• Board activities (page 95)

• Sustainability Report (www.thephoenixgroup.com)

• Board performance review (pages 103 to 104)

• Division of responsibilities (pages 91 to 96)

• Our governance framework (page 93)

The need to act fairly as between

members of the Company

• Annual General Meeting (pages 85 and 167)

• Dividend policy & Final dividend (pages 33, 42 and 166)

• Sustainability Committee report (pages 131 to 133)

• Our business model (pages 16 to 19)

s172 preparation, discussion and feedback mechanism

Director induction

and training

• The Directors’ induction

programme includes

detailed training on

Directors’ duties and the

requirements of s172

• The Board is formulated

to include a diverse set

of skills and experience

which contribute to

well-considered and

strategic decision-making

Board

information

• Each Board and

Committee paper

submitted to the Directors

has a segment wheres172

considerations areset out,

including any engagement

that has takenplace

• Board and Committee

agendas contain the

details ofDirectors’duties

Board

discussion

• Rigorous risk management,

challenge and assessment

of s172 factors to ensure

value creation in the short,

medium and long-term

• The Chair of the Board

or eachCommittee is

responsible for ensuring

that the outcomes and

decisions are informed

by s172factors

• The s172 factors are

discussedby the Board

to ensure that long-term

value iscreated for

stakeholders

Board decision

feedback to business

• PCRF consultation

and feedback loop

from the DNED

• Intranet communications

on business-wide decisions

• Senior Management

tasked with

follow-up actions

• Board updated

on progress asthe

decision is actioned

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Key stakeholder groups

How we engage

• Received formal training and

updates on Consumer Duty

regulations implemented in July

2024 for closed book products.

• Customer strategy was discussed at

the annual strategy days in June 2024.

• Financial education webinars rolled

out to Standard Life customers.

• Customer satisfaction scores are

tracked and included in the AIP for

Executive Directors, monitored by the

RemunerationCommittee.

• Regular Board updates on customer

strategy and risk, customer experience,

customer journeys and customer

servicelevels.

• Customer shareholders were able

to submit questions in advance

of the AGM as well as on the day.

• Strong stewardship to support

betteroutcomes.

How we engage

• Colleague shareholders were given

the opportunity to meet the Board

and submit questions at the AGM.

• The Group CEO and other members

of the ExCo presented ‘Phoenix Live’

events throughout the year to provide

workforce updates and receive

live Q&A both in-person and through

the streaming platform.

• Colleague engagement sessions

were held by the Board during each

Board and Committee meeting

session throughout2024.

• The Board receives regular updates

fromthe DNED for Workforce

Engagement following engagement

sessions with colleagues and the PCRF.

• DE&I ‘Who We Are’ surveys to better

understand the composition of

the workforce and their needs.

• The Board, together with the Board

Audit Committee, reviews Speak Up data.

How we engage

• The Board engaged directly

with shareholders before and

at the 2024AGM.

• The Board received regular updates

fromthe Chair of the Group Board on

investor relations roadshow meetings.

• The Board received regular updates

fromthe Group CEO on investor

relations activities and feedback/

questions received from investors.

• The Board reviewed all shareholder

communications, including the Annual

Report, Interim Report, Notice of Annual

General Meeting, Trading Updates and

a Letter to our largest Shareholders on

the appointment of Nicolaos Nicandrou

as Group CFO.

• The Board is also composed of two

Shareholder Nominated Directors

from our major shareholders, Aberdeen

and MS&AD, who join Board meetings

and share direct views on behalf of

thoseinstitutions.

Customers Colleagues Shareholders

Outcome

• In July 2024, the Group announced

that it would create a new investment

management business with Schroders

plc, Future Growth Capital, that aims

to champion investing in UK and global

private markets to improve outcomes

for long-term pension savers.

• Following an increase in industry-wide

complaints, a deep-dive on root cause

analysis was scheduled at the Life

Companies’ board risk committee

for Q1 2025.

• Colleagues from the customer relations

teams were present at the AGM to

respond to specific questions from

customer shareholders and to expedite

resolutions where possible.

Outcome

• To better understand the colleague

experience at different sites, the Board

travelled to Edinburgh to conduct its

strategy days, and held the October

Board and Committee meetings in Wythall.

• In recognition of the estimate from a DE&I

survey completed by 64.3% of

colleagues that 21.2% of respondents

were a carer, Phoenix Group launched its

‘Caring for Carers’ campaign to support

colleagues financially, professionally, and

emotionally during their journey. As such,

the Company won ‘Best for Carers and

Eldercare’ at the Working Families

Best Practice Awards 2024, as well as

‘Best Employer for Carer Support and

Workplace Policies’ and ‘Best Employer

for Carer Practical Support’ at the

Carer Positive Awards.

• Phoenix Group won ‘Best Flexible

Working Initiative’ at the CIPD

Management Awards 2024.

Outcome

• All resolutions at the 2024 AGM

passed with at least 97% in favour.

• Following engagement with stakeholders

and detailed discussion by the Board on

the strategic vision of theCompany, in

March 2024, the Board approved a

progressive and sustainable ordinary

dividend policy, which is underpinned

by the sustainable, growing operating

cash generation that the Board expects

to deliver over thelong term.

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Stakeholder engagement continued

Key stakeholder groups

How we engage

• Supporting employee

volunteering and fundraising

programmes across the Group,

particularly through the

Company’s social partnership

with Carers UKand the

GiveAs You Earnscheme.

• The Board, via the Board

Sustainability Committee,

received regular updates on

progress against the Group’s

Sustainability Strategy and

Net Zero Transition Plan.

• Regular horizon scanning

updates are provided to the

Board via the Board

Sustainability Committee

to ensure that Directors are

apprised of regulatory and

climate-related changes.

• The Board answered questions

at the 2024 AGM on the

Company’s climate ambitions

and strategy.

How we engage

• Together with the Board Risk

Committee, monitored risks

related to suppliers, including

the potential forpoor

customer service and risks

connected with themigration

of acquired books of business.

• Modern Slavery

Statementapproval.

• Human Rights policyapproval.

• All supplier related activity is

managed in line with Group

procurement processes to

ensure that risk is managed

andmitigated.

• ESG Supplier Standards are

approved by the Board

Sustainability Committee.

How we engage

• Received updates at each

Board meeting on progress

against Regulators’ requests

forinformation and any

feedback received.

• Formally met with the FCA

andPRA during the year

on a range of matters,

including Solvency UK.

• More regular contact with the

Financial Ombudsman Service

to better understand customer

complaints if theyarise.

How we engage

• Sir Nicholas Lyons

attended the International

Investment Summit 2024

and the Pensions

workshop on the UK

pensions reform strategy

with the PensionsMinister.

• Executive and Non-

Executive level advocacy

to enable policy, bi-lateral

meetings, round tables

and government forums.

• The Board, via the Board

Sustainability Committee,

received updates from the

Director of Public Affairs

on post-election public

affairs and priorities, and

the work being undertaken

by Management to

influence external policy

to create better outcomes

for itscustomers.

Community

and environment

Suppliers Regulators Government

Outcome

• Since announcing the Group’s

partnership with Carers UK

inMay 2024, colleagues

haveraised over £125,000,

whichincluded a period of

triple-matching contributions

by the Company.

• In acknowledgement of the

prevalence of climate risk

to both the business and its

communities, the Board

created a bi-annual joint

committee of the Board

Audit,Risk and Sustainability

Committees to review

disclosures and to assess

climate specific risks.

Outcome

• To ensure continued efforts to

strengthen controls and best

practice in sustainability within

the supplier base, the ESG

Supplier Standards will

be tabled at the Board

Sustainability Committee for

review and approvalannually.

• Practices and processes

reinforced to ensure that the

Group focuses its supplier

engagement efforts on those

suppliers that materially

matter to theGroup’s carbon

reduction commitments.

Outcome

• Standing agenda items

were added to Board Risk

Committee to ensure that

risks and regulatory requests

are appropriately discussed

and challenged.

• Engaged with PRA on

Solvency UK to ensure that

thePRA better understands

thecomplexities of Phoenix

Group and the implementation

of Solvency UK.

• Positive engagement withthe

FCA in relation toConsumer

Duty and an improved

understanding ofhow the

regulation could be applied

tothe Group.

Outcome

• Positive and frequent

engagement with the

government which aided

a smooth transition of

power and ensured that

pensions remained a focus

of the new government.

This includes a review

of pension outcomes,

including adequacy that

commenced in Q4 2024.

• In September 2024,

the Pensions Minister

Emma Reynolds, joined

Phoenix Insights, the

Group’s think tank, to

discuss the Pension

Schemes Bill and the

government’s Pensions

Investment Review.

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Our colleagues are central to

the ongoing success of Phoenix

Group. They are critical to our

continued growth and delivery

of our strategy, and it is important

for the Company to create the

conditions in which they can

do their best work.

The Board sets the cultural tone for the

organisation and seeks to engage with

colleagues both directly and indirectly

throughout the year. The Board recognises

that colleagues are central to the achievement

of our strategic priorities and the Group’s

ability to provide customers and wider

stakeholders with the best outcomes possible.

At the start of each year, a programme of

colleague engagement is created to ensure

coverage across business functions and

targeted groups. Phoenix Group has clear

goals for the colleague experience set out in

our Big Three culture ambitions which shape

the conversations that the Board has with

the workforce, and provides a framework

against which we can measure progress.

At a time when Phoenix Group is undergoing

a fast-paced evolution, it has been

especially important to establish regular

touch-points with colleagues across the

business. The Board has found it incredibly

insightful to hear first-hand how people

are experiencing change and the wider

context of life at Phoenix Group.

In-person meetings

Throughout 2024, in-person engagement

sessions were hosted at our main operating

locations. Targeted groups, including

our PCRF and colleague networks were

invited to join us for open and transparent

conversations. The PCRF is an autonomous,

independent forum made up of colleague

representatives and enables us to have

direct and transparent discussions about

our strategy and how it impacts colleagues.

A key theme from discussions in 2024 was

the work being undertaken to transform

and simplify the business, which had

brought uncertainty for some colleagues.

I have continued to write a regular blog to

share my reflections and perspectives on

transformation activity at Phoenix Group,

as well as sharing best practice approaches

for colleagues to support themselves and

navigate through times of ambiguity.

In October 2024, the Board met with

representatives from ‘Enable’, the Company’s

colleague network created to promote

disability inclusion at Phoenix Group. During

this session, we received feedback across

a range of issues and the Board has since

focused on how Phoenix Group could

become even more inclusive for colleagues

with disabilities or long-term health conditions.

Outcome: Enable successfully advocated

for funding to improve IT accessibility

across all functions.

Maggie Semple

Designated Non-Executive Director

for Workforce Engagement

Workforce engagement

Engagement in

action: listening to

the colleague voice

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Corporate governance

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Corporate governance

In June 2024, the Board met colleagues

working in the telephony customer services

team in the Pensions and Savings business.

The Board was able to listen to customer calls

and engage with customer-facing colleagues.

Outcome: Further engagement with

customer-facing colleagues has been

planned for 2025 to test the embeddedness

of our cultural aim of being a place where

‘We put our customers first’.

Monthly engagement surveys

The Board continues to take a keen interest

in the outputs from Phoenix Group’s monthly

colleague engagement survey. Since the

introduction of The Big Three, the Company

has introduced a series of quarterly focus

groups for colleagues to share insights on

key cultural themes such as empowerment

at work, or their feelings in response to

transformation. This adds a qualitative overlay

to the data we receive through our surveys.

Iwas able to attend one of these focus groups

in August 2024 to discuss The Big Three

cultural ambitions. This feedback helped me

to understand what colleagues are expecting

from leadership, which I then relayed to

theBoard through my regular update.

Maggie’s presence at our colleague network inclusion forums has

beenextremely valuable this year for the network leads to share their

agenda, actions and challenges. This time has enabled the networks

tohave the opportunity to speak to and hear directly from Maggie’s

perspective on how we can benefit both colleagues and the business

through the communities that have been developed.

Simona Provenzano

Network Inclusion Lead

Engagement activities throughout the year

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Board meeting and colleague

engagement session

DNED update

to the Board

DNED engagement

with PCRF

DNED network leads

meeting and Q&A

DNED blog

Employee survey

Communicating the colleague

voice totheBoard

In January 2024, I became a member

of the Remuneration Committee to

ensure that the Board receives feedback

from the PCRF on the alignment of

Executive Directors’ remuneration with

the wider workforce, and to ensure that

colleagues understand the Remuneration

policy and its practical application.

A priority focus for 2025 will be continued

improvement to the colleague feedback

mechanism from the PCRF and engagement

sessions to the Board, and the subsequent

relaying of actions taken by the Board

as a consequence of that engagement.

As such, I will be attending relevant

ExCo meetings in 2025 to monitor the

embeddedness of the desired culture and

to review the implementation of actions

agreed by Management and by the Board

following workforce engagement. I will

also be providing a quarterly update to

the Board on my engagement activity.

In 2025, the programme of engagement

between colleagues and the Board

will be expanded, building on the

relationship with the PCRF and engaging

with colleagues based on other

demographic or topic related matters.

Maggie Semple

Designated NED for Workforce Engagement

Workforce engagement continued

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Composition, succession and evaluation

Board review

Following an external Board performance review in 2023, an internal

Board performance review was facilitated by the Chair of the Group

Board, supported by the Group Company Secretary in 2024.

Internal Board review process:

1. The Chair of the Group Board, supported by the Group

Company Secretary and Senior Independent Director

drafted aspecific Phoenix Group questionnaire, covering

areas such as:

• the Board, Committees, governance and process;

• strategy;

• oversight;

• culture; and

• Board skills and capabilities.

3. The Chair of the Group Board held individual meetings

witheach member of the Board and discussed their own

individualperformance review, along with the responses

tothequestionnaire.

4. The Senior Independent Director held a meeting with the

Chair of the Group Board to discuss his own performance

review and responses to the questionnaire.

2. The questionnaires were then disseminated electronically

toevery member of the Board, itsattendees and the Group

Company Secretary. Externaladvisers, where relevant, such as

the Remuneration Committee consultant were also included.

5. Finally, the Group Company Secretary, reviewed the

responses and she or her designate worked with each

individual Chair ofthe Committees to finalise actions and

any potential 2025 education sessions. These were then

added to the 2025 education session calendar. Actions

were approved at the early February 2025 meeting and

will be monitored by the Board and Committees

throughout the year.

Board review

The 2024 Board performance review concluded that the Board and its Committees operated, and were chaired effectively.

However, a few areas for enhancement for the Board were identified and these are highlighted below:

Action 1

Continue to enhance and

monitor the quality of

Board papers to ensure

sustained improvement.

Action 2

Review agenda focus and

consider the frequency

of meetings.

Action 3

Thoroughly review

in advance the approach

to,and agenda for, the

2025 Board Strategy

Dayto ensure alignment

with long-term

strategic objectives.

Action 4

Continue to enhance

NED colleague

engagement.

Committees’ performance

The Committees’ performance review was

undertaken as part of the internal Board

review process and concluded that each

Committee operates effectively, and Chairs

performed strongly. All duties set out in the

Committees’ Terms of References were

addressed during the year. The areas of

enhancement to the Committees for 2025 are

set out in each Committee report in a similar

format to the actions above for the Board.

Individual performance

Executive Directors are evaluated annually

toensure they have performed against

their strategic targets (see page 144 of

the Directors’ Remuneration report).

The NED’s individual performance

was assessed by the Chair, as part of

the 2024 internal Board review.

Assessment of the

Chair’sperformance

The Senior Independent Director carried out

the above process for the Chair of the Group

Board. Feedback was provided by the Board

and Group Company Secretary. The Chair was

found to be highly effective in fostering robust

challenge and debate in meetings, promoting

an inclusive culture and enabling Directors

to contribute to effective decision making.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

The 2023 Board review

The 2023 Board performance review was externally facilitated by an external Board Performance Reviewer.

The following progress against actions identified during the review have taken place during 2024:

Action identified Action taken

Management to continue to consult with the NEDs in preparation

for the annual strategy session to ensure that extensive experience

of strategy development on the Board is leveraged appropriately.

 A paper was tabled at the meeting held on 6 February 2024 with

suggested topics for the strategy sessions and the Board was asked

toprovide comment and feedback. This was then used to form the

agenda for the strategy sessions held on 19 and 20 June 2024.

The Chair of the Group Board, Group Chief Executive Officer,

Group Company Secretary and Committee Chairs to ensure

adequate time is given to debate strategic objectives.

Regular updates are provided by the business units

(Pensions and Savings, Retirement Solutions, Europe and

SunLife and Asset Management).

The Chair of the Group Board to continue to provide regular

individual performance feedback to each Director as appropriate,

atleast annually.

An internal Board review commenced during Q4 2024. A questionnaire

was completed by all Board members and interviews were held with

Directors during December which covered the performance of all

Board members. A report was provided to the February Board

to agree actions for 2025.

The Board to continue to focus on key material and relevant issues

with support from the Chair of the Group Board. To enhance the

timeliness and succinctness of papers.

A new template was launched and training has been undertaken

with all colleagues who regularly write papers. Improving the quality

of papers will continue to be a focus in 2025.

Composition, succession and evaluation continued

Board review

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Male (three) 60%

Female (two) 40%

See page 90 for a summary of how the Company

complied with the 2018 Code during 2024

AGM votes in favour of

all resolutions May 2024

97%

97% in 2023

Board ethnic minority

Director representation¹

17%

23% as at 21 March 2024

Board female Director representation¹

42%

38% as at 21 March 2024

Independent Board Directors¹

67%

Board ethnic minority Director representation

for those appointments controlled by Phoenix Group¹

10%

18% as at 21 March 2024

2018 UK Corporate

Governance Code

Fully compliant

Fully compliant in 2023

Board female Director representation for those

appointments controlled by Phoenix Group¹

50%

45% as at 21 March 2024

FTSE Women Leaders

ranking (February 2025)

6th

12th in 2024

Committee Chairs

1 As at 14 March 2025. Sherry Coutu will be appointed as a Director

on 1 May 2025 and is therefore not included in these numbers.

105Phoenix Group Holdings plc Annual Report and Accounts 2024

Corporate governance

Composition, succession and evaluation continued

Board education and development

Each year, through its annual performance review, the Board ensures a

continuous improvement cycle and clear focus on personal and collective

development through a formal programme of education and deep dive

sessions. The following education and deep dive sessions were provided to

the Board during 2024. Board Committees may have specific educational

or deep dive sessions relevant to the work of each Committee.

Board deep dives and education sessions:

Progressive and sustainable ordinary dividend policy

Assessed the merits of moving towards a progressive and

sustainable ordinary dividend policy, being mindful of future

cash remittances from the LifeCompanies.

Outcome: Approval from the Group Board to adopt

a progressive and sustainable ordinary dividendpolicy.

The Board received specific mandatory training on:

• Code of Conduct;

• Consumer Duty;

• Data Protection;

• Financial Crime;

• Information Security; and

• Internal Model Validation.

Committee deep dives and education sessions:

Remuneration Committee

AGM Season

Update on the AGM season and 2023 remuneration outcomes,

focusing on those FTSE companies that had attracted the best

Executive Director talent.

Board deep dives and education sessions:

Retail strategy

Deep dive into retail trends, digital and review of the breadth

ofproducts on offer to our customers.

Review of the use of AI within the business, how its use has

enhanced both colleague and customer experience and

evaluation of its potential risks and opportunities.

Though AI may enhance traditional ransom attacks, it could

also provide a better defence, thwart phishing and respond

to any attack quicker.

Outcome: AI to be included in the regular Group CRO’s

report so any risks can be carefully monitored.

People strategy

Deep dive and discussion on the introduction of the Group’s

new guiding culture principles, The Big Three, which was

internally announced in Q4 2024.

Outcome: Feedback loop between the DNED, the PCRF

and the Board to be utilised and enhanced where possible.

Committee deep dives and education sessions:

Audit Committee – invited the Group Board

IFRS 17 – Lessons learnt

Deep dive into lessons learnt following the publication

of both the Half Year 2024 and Full Year 2023 set of results.

Outcome: An education session to be provided on

the impact of key performance indicators and the

levers required to enhance thosemetrics.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Board deep dives and education sessions:

IFRS 17

Deep dive into how IFRS 17 had impacted key performance

metrics and the levers required to enhance those metrics

and viceversa.

Operational resilience & cyber security

Deep dive into the cyber security and operational resilience

changes required for new regulations implemented from

1 April 2025 with a roadmap to achieve compliance.

A review of current residual risk, current examples of ransom

attacks and impact of market movement was provided.

Outcome: ExCo to continue to carefully monitor

and provide robust challenge on this topic.

Investor Relations

Feedback provided to the Board following Half Year 2024

investormeetings.

Market Abuse Regulation training

Annual training implemented through the digital platform

used byPhoenix Group.

Customer and Conduct Risk bi-annual deep dive

Deep dive into the customer strategy now that the Group

had completed the first year of its 3-year strategic journey.

Outcome: Further understand industry trends and

relevant issues as Consumer Duty continues to develop.

Committee deep dives and education sessions:

Risk Committee

Deep dive into risks and mitigation of a strategic initiative.

Outcome: Lessons learnt so far about this strategic

initiative to be provided at the appropriate time.

Board deep dives and education sessions:

Credit Risk Appetite

Deep dive into Phoenix Group’s credit risk appetite.

Committee deep dives and education sessions:

Audit Committee

CFO Finance update

A progress report on people, culture, automation, process

reporting, performance management of the balance sheet

and capital within the Finance function.

Outcome: Audit Committee to receive an annual deep

dive into the enhancements being implemented.

Solvency II as modified by the PRA’s 2024

reforms (‘Solvency UK’)

Education session provided on how the UK’s insurance

regulatory framework was changing post Brexit.

Internal Controls Framework

Review provided by an external third party on Phoenix Group’s

Internal Controls Framework.

Joint Audit/Risk/Sustainability Committees

New Sustainability Reporting

Deep dive into Corporate Sustainability Reporting Directive

(‘CSRD’), International Sustainability Standards Board (‘ISSB’)

and Taskforce on Nature-related Financial Disclosure (‘TNFD’)

and the work being undertaken by the Group in anticipation

of their implementation and timeline.

Risk Committee

Risk Management Framework

Review provided by an external third party on PhoenixGroup’s

Risk Management Framework, including the Internal

Controls Framework.

Outcome: Agreed continuous enhancements to the Risk

Management Framework, including the Internal Controls

Framework during 2024 and 2025 to support the compliance

of Provision 29 of the 2024 Code at Full Year 2026.

Remuneration Committee

Proxy advisers and Investment Association Guidelines

and wider workforce dashboard.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Composition, succession and evaluation continued

Nomination Committee report

Sir Nicholas Lyons

Nomination Committee Chair

Key committee activities in 2024

• Approved Rakesh Thakrar stepping down as Group CFO

with effect from 8 September 2024 and the appointment

of Nicolaos Nicandrou asGroup CFO with effect from

2 December 2024, subject to regulatory approval.

Stephanie Bruce performed the role of Interim Group

CFO between 17 June 2024 and 31 January 2025 and

provided a diligent handover to Nicolaos Nicandrou.

• Approved the appointment of Mark Gregory as Chair

of the Risk Committee and member of the Nomination

Committee with effect from4 December 2024. John Pollock

retired from the Board with effectfrom 31 December 2024

after nearly nine years’ tenure.

• Reviewed Committee membership and the approval

of Karen Green asa member of the Risk Committee with

effect from 13 September 2024and Maggie Semple

stepping down on 12 September 2024.

• Monitored our DE&I targets at Board, ExCo and Business

Leadership level, being mindful of the Listing Rules,

Parker Review and FTSE Women Leaders Review.

• Approved the stepping down and appointment of the

Group CRO. Eventhough the Committee would not

usually be involved with appointments below Board level,

the Board considered this role tobeofstrategic importance

to Phoenix Group at this time.

• Approved changes to the Life Companies’ board.

No objection providedfor non-UK domiciled subsidiary

board appointments.

• Succession planning for the Board and Senior Management

which resulted in a search being initiated for a new

INED, remaining cognisant of the Directors reaching

their nine-year tenure.

2025 focus

• Review of talent at ExCo -2 level.

• Succession planning for three Board roles due to

the length of tenure in 2025 and 2026, with a focus

on enhancing broaderdiversity of the Board, as well

as closing any skills gaps.

• Board performance reviews for the Group and Life

Companies as a whole.

Committee meetings and membership

Member

from

2024 meeting

attendance

2024 %

attendance

Sir Nicholas Lyons

1 December 2023 6/6 100%

Karen Green

5 May 2022 6/6 100%

Katie Murray

29 June 2023 6/6 100%

John Pollock

1 November 2022 6/6 100%

Nicholas Shott

11 May 2017 6/6 100%

Additional regular attendees include the Group CEO, Group HR Director and the Group

Company Secretary.

Number of Committee meetings

held during 2024 (including ad hoc)

Role, responsibilities and effectiveness

The Role of the Committee is shown on page 93

The Committee’s responsibilities and duties can

be found within its Terms of Reference

The Committee’s performance review is shown

on page 109

108

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Committee review

The 2024 performance review was facilitated internally by the Chair of the Group Board, supported by the

Group Company Secretary. The review concluded that the Committee is functioning effectively and operating

well. Members provided thoughtful and challenging contributions, as well as effective chairing.

There were a few areas of enhancement highlighted below:

Action 1

Continue to focus on talent

management and succession planning

for the Board and Senior Management.

Action 2

Continue to conduct regular reviews

to ensure there were no skills gaps as

a result of any Director retirements.

Action 3

Ensure meeting frequency and focus

remained appropriate to ensure

effective oversight of Nomination

Committee matters.

Action Progress

Continued focus on the executive succession plan and talent grid. The Committee considered the executive succession plan and,

following its analysis in September 2024, decided that a further

update would be presented at the February 2025 meeting.

Review the Committee memberships on an ongoing basis to

ensure skills and experience are being utilised effectively.

As set out on page 93, the Committee regularly reviews the

membership of Committees. During the year, Mark Gregory

was appointed as Chair of the Risk Committee and member

of the Nomination Committee with effect from 4 December 2024,

following John Pollock’s retirement from the Board on 31 December

2024 and as Chair of the Risk Committee on 3 December 2024.

Karen Green joined the Risk Committee as a member on

13 September 2024, replacing Maggie Semple who stepped

down on 12 September 2024.

Sherry Coutu will be appointed to the Board and as a member

of the Remuneration Committee with effect from 1 May 2025.

Nomination Committee reporting cycle

• Approval of Nomination

Committee report for

Annual Report purposes

• Re-election proposals

for2024 AGM

• Review of NED

independence and

timecommitments

• Renewal of

NED appointments

• Board succession planning

• Search commenced for

new INED

• Executive Director and

Senior Management

talentreview and

succession planning

• Agreed process for

internal Board

performance review

• Reviewed INED long-list

from Korn Ferry

• Retirement of NEDs

androtation proposal

• Reviewed the Board

DE&Ipolicy

• Reviewed INED short-list

• Interviewed prospective

candidates for INED role

The following actions from the 2023 performance review facilitated by an external

Board Performance Reviewer were progressed during 2024:

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Composition, succession and evaluation continued

Nomination Committee report

Outcomes from Nomination Committee discussions

On an annual basis, a review of the Committee’s activities is undertaken. In 2024, it was concluded that all elements of responsibility

detailed in the Committee’s Terms of Reference had been addressed. An overview of some of the significant activities undertaken

during the yearand the way in which they contributed to important outcomes is detailed in the following table:

Outcomes from Nomination Committee agenda items

Talent review Outcome

Review of talent at ExCo

and ExCo -1 level.

HR to provide feedback to ExCo -1 individuals on the wider experience required to be a successful

candidate to the ExCo level role. This feedback to form part of their development plans.

Appointment of Group CFO Outcome

Search for a Group CFO

and member of the ExCo.

A large focus since announcing that Rakesh Thakrar was stepping down in May 2024 was on the

search for areplacement Group CFO. Nicolaos Nicandrou was appointed on 2 December 2024

as Group CFO, subject to regulatory approval. His biography can be found on page 87.

Appointment of Group CRO Outcome

Search for a Group CRO

and member of the ExCo.

Though unusual for the Nomination Committee to be involved with a non-Board appointment,

this is a crucial role due to its interface with the Regulators, one of Phoenix Group’s key stakeholders.

MarkGregory, Chair of the Risk Committee with effect from 4December 2024, supported the

interview process to ensure it was rigorous, robust and fair. Thisled to the appointment of Brid Meaney

as Group CRO with effect from 19 August 2024.

NED process Outcome

Sherry Coutu to be appointed

to the Board with effect from

1 May 2025.

The Company announced that Sherry Coutu will join the Board and the Remuneration Committee

with effect from 1 May 2025. Sherry Coutu is an experienced Non-Executive Director working with

a combination of technology, investment, innovation, education and financial services organisations

that empower their customers and has FTSE 100 Remuneration Committee chair experience.

Subsidiary governance Outcome

Oversee appointments to

the Life Companies’ board.

External review of the Group and Life Companies’ boards to ensure enhanced governance between

the two-tier board governance framework.

The Committee also received education sessions as shown on pages 106 to 107.

Board and Executive

succession planning

Succession planning is a key focus for

the Board from both a leadership and

governance perspective. The Committee

continually reviews the Board and

Committees’ compositions and skillsets

to ensure that the Board can support

the ExCo to execute Phoenix Group’s

strategy. This has become a greater focus

with some Directors’ nine-year tenure

being reached in both 2025 and 2026.

The Committee ensures that Board

recruitment and succession planning are

conducted in a measured and timely manner

allowing a robust and rigorous search to be

undertaken for each Board appointment.

This allows the additional time required

by the Board members to interview and

ensure the best candidate is appointed.

During 2024, the Committee has

remained active in its consideration

of NED succession, which, following

further review by the Board, has led to:

• the appointment of Mark Gregory

as the Chair of the Risk Committee

with effect from 4 December 2024,

replacing John Pollock, who retired

from the Board on 31 December 2024;

• the appointment of Karen Green

as a member of the Risk Committee

on 13 September 2024, replacing

Maggie Semple who stepped down

on 12 September 2024. This change

was made to allow Maggie more time to

focus on her role as DNED and support the

wider culture and workforce engagement

strategy in 2025 and beyond; and

• commencing the process to appoint

SherryCoutu to the Board and as a

member of the Remuneration Committee

with effect from 1 May 2025. Korn Ferry was

the external search consultant used for this

appointment. Korn Ferry has no connection

with the Company or individual directors.

In addition, a main focus for the Committee

was supporting the Group CEO and

Chief People Officer with the recruitment

process for the Group CFO and the

Group CRO roles throughout 2024.

Appointment process

The standard process used by the

Committee for Board appointments

involves the use of an external search

consultancy to source external candidates

and, in the case of executive appointments,

also considers internal candidates. A role

profile is drafted by the Group Company

Secretary and reviewed for approval by

the Nomination Committee and other

members of the ExCo as appropriate.

Detailed assessments of short-listed

candidates are undertaken by the

search consultancy and the Committee.

The Committee requires search firms

to ensure that both long-lists and

short-lists are balanced from a diversity

and inclusion perspective. If not, the

Committee will insist on a refresh.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Each member of the Nomination Committee

interviews short-listed candidates individually

or jointly with other members of the

Committee. A pre-prepared list of questions

is used to ensure continuity. Interviewers

are mindful of the skills matrix, diversity of

thought and how Phoenix Group values are

demonstrated to ensure any potential Director

is a good culture fit for the Board. Interviews

are also held with the Group CEO and Chief

People Officer as part of the process and

other members of the ExCo as appropriate.

References are then obtained prior

to the Committee recommending the

appointment to the Board. Once the Board

has approved the recommendation a

market announcement is made immediately,

and the onboarding process begins.

Typical induction

programmefeatures

Meetings

• Chair of the Group Board.

• Group Chief Executive Officer.

• Group Chief Financial Officer.

• Group Company Secretary.

• Chief Audit Officer.

• Group Chief Risk Officer.

• Strategy and M&A Director.

• Regulatory Relationships Director.

• Group Treasurer.

• Director of Corporate Affairs & Brand who

also has responsibility forSustainability.

• Other members of the ExCo,

asappropriate.

• External stakeholders which may include

the External Auditor, brokers, major

shareholders or remuneration consultants.

Site tours and meetings with Management

• London.

• Edinburgh.

• Birmingham.

• Telford.

• Dublin.

Key documents

• Board operations, minutes and meeting

packs, governance framework, policies,

delegations of authority, conduct/

regulatory responsibilities.

• Financial, strategic and operation plans

andpriorities.

• Directors’ & Officers’ liability

insurance summary.

• Market Abuse Regulations training.

• Listed Company and Life Companies’

governance training.

• Other documents as appropriate

in relation to the level of Board or Board

Committee responsibilities.

• Mandatory training.

A similar process is followed for Executive

Director succession planning, which is

undertaken by the Committee for Executive

Directors and for ExCo roles to ensure

appropriate succession in an emergency

situation with at least one internal successor,

who is ready now or expected to be ready

in one to two years. External candidates

are also included in the process. ExCo

succession planning was a focus for 2024,

considering talent, capabilities and the

broader diversity agenda. Much work has

been undertaken to strengthen the skills

and experience at ExCo level, with focus

now on successors for all ExCo members to

ensure there is a strong pipeline of talent.

Subsidiary governance

Part of the Committee’s role is the oversight

of the Group’s subsidiary governance

framework, which form part of our regulated

entities. This year succession planning has

commenced in earnest for those INEDs

on the Life Companies’ board that will be

retiring during 2025 and 2026 due to their

length of tenure. In addition, Standard Life

International appointed a new remuneration

committee chair. The Committee received

regular updates on succession planning and

search firms engaged to support the refresh

of both the Life Companies and Standard

Life International boards throughout 2024.

Board skills

A Board skills review was undertaken by the

external Board Performance Reviewer as part

of its 2023 performance review. It concluded

that skills could be expanded further to

include experience in the banking sector,

where complex transformational experience

could be advantageous along with a focus

on digitisation. Future succession planning

during 2025 and 2026 will take this criterion

into account as well as proven experience in

AI. Sherry Coutu will join the Board on 1 May

2025 and has considerable AI experience.

Board skills are separated into core and

secondary skills and can be found on page117.

That skills matrix feeds into the succession

plan for the Board and was reviewed more

regularly throughout 2024 in light of the

upcoming Board changes in 2025 and 2026.

Board diversity

The Board supports and aims to fully

comply with the FTSE Women Leaders

Review guidance for FTSE 350 companies,

which is aligned with the FCA’s Listing

Rules (UKLR 6.6.6(9)) on diversity, being:

• at least 40% of the board are women;

• at least one of the senior board positions

(chair, chief executive officer, senior

independent director or chief financial

officer is a woman); and

• at least one member of the board is from

anethnic minority background.

As at 14 March 2025, the Board is comprised

of 42% female Directors. The Board has

two Shareholder Nominated Directors. The

Board is unable to choose these candidates

as these are nominated and is therefore

unable to influence its composition entirely.

The Board is comprised of 50% female

Directors when considering appointments,

the Board has independently made.

In relation to the second part of the Listing

Rule, Karen Green is the Senior Independent

Director of the Board. Again, the Board

will be mindful of gender diversity when

making future senior Board appointments.

The Board was pleased to be recognised

as a top performer for 2024 in the

FTSE Women Leaders Review.

In addition, the Board met the

recommendation of the Parker Review for

FTSE 100 companies in relation to there

being at least one director from an ethnic

minority background on the Board by

2021. Phoenix Group’s target for Senior

Management

ethnic minority representation

is 13% by 31 December 2025. As at 14 March

2025, the Board has two members of an

ethnic minority background, representing

17% of the total Board composition. If the

Shareholder Nominated Directors are

excluded, the Board has one member of an

ethnic minority background representing

10% of the total Board composition. Further

information can be found on page 112.

The Committee has been active in promoting

gender and ethnic diversity on the Board and

continues to take an active role in oversight

and guidance of the executive diversity

and inclusion process including a focus

onthe development of a diverse succession

pipeline. Details of the diversity and inclusion

initiatives for Phoenix Group colleagues

(including the Executives) are contained

in the Group’s Sustainability Report.

The Group’s Senior Management

gender diversity data (including

statutory requirements) is contained

inthe Strategic report on page 82.

1 Definition of Senior Management is in line with the Parker

Review of ExCo and ExCo minus 1, excluding those not in

senior management roles.

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Composition, succession and evaluation continued

Nomination Committee report

Gender diversity

Number

of Board

members

Percentage

of the Board

Number of

Board members

appointed by

Phoenix Group

Percentage

of the Board

appointed by

Phoenix Group

Number

of senior

positions on

the Board

(CEO, CFO,

SID and Chair)

Number in

Executive

Management

Percentage

of Executive

Management

Number

of total

employees

Percentage

of total

employees

As at 14 March 2025

Men 7 58% 5 50% 3 8 57% 3,459 51%

Women 5 42% 5 50% 1 6 43% 3,331 49%

As at 31 December 2024

Men 8 62% 6 55% 3 8 53% 3,531 51%

Women 5 38% 5 45% 1 7 47% 3,449 49%

The definition of Executive Management includes the Group Company Secretary in line with that under UKLR 6.6.6(10) and Provision 23

of the 2024 Code.

1 Sherry Coutu will be appointed as a Director on 1 May 2025 and is therefore not included in the numbers as at 14 March 2025.

Ethnic diversity

Number

of Board

members

Percentage

of the

Board

Number of

Board members

appointed by

Phoenix Group

Percentage

of the Board

appointed by

Phoenix Group

Number

of senior

positions on

the Board

(CEO, CFO,

SID and Chair)

Number

in ExCo

Percentage

of ExCo

Number

of total

employees

2,3

Percentage

of total

employees

As at 14 March 2025

White British or other

White (including minority

White groups) 10 83% 9 90% 4 10 77% 3,411 50%

Mixed/Multiple

Ethnic Groups 0 – 0 – 0 0 0 83 1%

Asian/Asian British 1 8.5% 0 – 0 0 0 377 6%

Black/African/Caribbean/

Black British 1 8.5% 1 10% 0 0 0 88 1%

Other ethnic group,

including Arab 0 – 0 – 0 0 0 45 1%

Not specified/

prefer not to say 0 – 0 – 0 3 23% 2,786 41%

As at 31 December 2024

White British or other

White (including minority

White groups) 11 85% 10 91% 4 11 79% 3,518 50%

Mixed/Multiple Ethnic Groups 0 – 0 – 0 0 – 85 1%

Asian/Asian British 1 7.5% 0 – 0 0 – 387 6%

Black/African/Caribbean/

Black British 1 7.5% 1 9% 0 0 – 90 1%

Other ethnic group,

including Arab 0 – 0 – 0 0 – 46 1%

Not specified/

prefer not to say

– 0 – 0 3 21% 2,854 41%

1 Based on the Office for National Statistics classification and included: Asian, Black, Mixed/multiple ethnic groups, Other ethnic groups, White and Prefer not to say.

2 In January 2024, Phoenix Group moved from an annual diversity data survey collected via an app to data collection through the internal HR platform.

This will provide an up-to-date view of the diversity of our colleagues and allow data analysis on an intersectional basis, providing better data insights than an annual survey.

Currently the participation rate is 64.2%. At 50%, high level results can be shared and at 65% detailed data analysis can be provided. It is not known when this target will be hit.

A full programme of employment engagement is in place to help colleagues increase its participation.

3 Data collected, permissible and volunteered by colleagues.

4 Sherry Coutu will be appointed as a Director on 1 May 2025 and is therefore not included in the numbers as at 14 March 2025.

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Board Diversity policy

The Phoenix Group Board annually reviews and updates its Board DE&I policy to ensure it reflects its values, culture and relevant

Listing Rulescompliance and UK Code Principles. The 2025 Board DE&I policy can be found at www.thephoenixgroup.com.

The Group Board is pleased that it currently complies with its own policy in line with UKLR 6.6.6(9), the Parker Review and the

FTSE Women LeadersReview.

Objectives Compliance update as at 31 December 2024

Board diversity

Ongoing compliance with the FTSE Women Leaders Review,

Parker Review and the FCA’s Listing Rules:

• at least 40% of women on the Board;

• at least one of the senior Board positions (Chair, CEO, CFO

or Senior Independent Director) should be a woman; and

• at least one Board member should be from a non-white

minority ethnic background (as defined by the ONS).

As at 14 March 2025:

• Five female Directors representing 42% of Board composition.

When excluding Shareholder Nominated Directors this is 50%.

• The Senior Independent Director is female.

• Two minority ethnic Directors representing 17% of Board

composition. When excluding Shareholder Nominated

Directors thisis 10%.

• Phoenix Group’s target for ethnic minority representation

at Senior Management level is 13% by 31 December 2025.

See pages 111 and 112 for further details.

Board independence

With the exception of the Chair of the Group

Board and Shareholder Nominated Directors,

all NEDs are considered independent in

character and judgement. The independence

criteria set out in the 2024 Code will be taken

into account as part of the selection process

for the NEDs who join Phoenix Group.

There were no new NED appointments to the

Board during 2024. However, Sherry Coutu

who will be appointed to the Board on 1 May

2025, was assessed against the 2024 Code.

The independence of NEDs is reviewed and

confirmed annually by the Committee.

Additional appointments

If any Director wishes to take on an additional

external appointment, they are required

to seek permission from the Board. The

Board will take into consideration the

additional time commitments, independence

and any potential conflicts of interest in

relation to the Directors’ current roles and

responsibilities before any permission is given.

Time commitment

All Directors are expected to commit

sufficient time to the Board, and the

Company. Time commitments for Directors

are reviewed by the Committee on a regular

basis including prior to recommendation

for appointment to the Board, on changes

in role (joining additional Committees or

taking on further responsibility) and prior

to approving external appointments. It is

expected that on average, each of the seven

scheduled Board meetings is likely to require

approximately three days of participation

(including Committee meetings, education

sessions, travel and Board dinners) and

appropriate preparation time reviewing

papers. In addition, a two-day strategy session

is held and there are also regular briefing

sessions for the Board Committees. On this

basis, the basic time commitment required

of each Board member is estimated to be

at least 40 days each year, noting that this

may be less for a full time executive who

would typically sit on fewer Committees.

The basic time commitment can be

significantly increased on account of

transactional or other activity. The Nomination

Committee confirms that all NEDs have

demonstrated they have sufficient time

to devote to their present roles and this

has been an area of focus during 2024.

The Group Company Secretary maintains

a register of Directors’ commitments which

is regularly reviewed by the Committee.

As part of the Board review process,

the Board, supported by the Committee,

considered each individual Director’s

attendance, contribution and external

appointments, and has concluded that

the time given by individual Directors

during 2024 exceeded the levelexpected

in their appointment terms.

Time commitment was a focus during

the recruitment process of Sherry Coutu.

Her current appointments were listed against

the proxy and major shareholders’ voting

guidelines on overboarding along with the

number of hours spent on each board to

ensure she had the appropriate time to also

commit to her role at Phoenix Group.

It has been an exciting year in my role

as Chair of the Group Board and its

Nomination Committee and I look

forward to continually enhancing and

strengthening governance during 2025.

Sir Nicholas Lyons

Chair of the Nomination Committee

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Composition, succession and evaluation continued

Group CFO recruitment

During 2024, a large focus

forthe Board hasbeen the

appointment of a Group CFO

Rakesh Thakrar

stepped down from

Phoenix Group, after

over 20years of service,

four of which were as

Group CFO. The search

for his replacement

was led by the Group

CEO and the Chief

PeopleOfficer.

That search included working with the

Board, Nomination and Remuneration

Committees. Gramercy Search was selected

to lead the recruitment and was chosen for

its global reach of senior financial services

appointments. The Board was mindful of the

competition for UK FTSE 100 Chief Financial

Officers, who rarely move once in position.

The search process conducted led to the

appointment of Nicolaos Nicandrou as Group

CFO with effect from 2 December 2024.

Gramercy Search worked closely with the

Group CEO and Nomination Committee to

refresh a previous exercise undertaken for

succession planning purposes. The Group

CEO was clear on the qualities required in

this ExCo role and research was requested

across the FTSE 100 insurers, banks and

asset wealth managers alongside global

territories. The Board is always mindful of its

gender and ethnicity considerations when

making appointments to the Board, this is

discussed further on page 111. It was important

that the candidates could demonstrate:

• Being a FTSE 100 CFO at

a life companywith specific UK

insurance industry experience.

• Credible experience as an executive

committee and board operator that had

led a sizeable division with the ability to play

an external facing role with shareholders,

regulators, rating agencies and analysts.

• Being someone who really embraces the

PhoenixGroup values and culture and

felt excitedby our purpose.

• Deep understanding of the regulatory

environment Phoenix Group operates within.

• Driving significant change within the function

in line with a strong Company purpose.

• Leading and organising a business

strategyand plans.

• Leading and delivering funding strategy,

treasury matters, tax planning, compliance

and investor relations, and related external

communications activity.

• Ensuring an organisation embeds strong

financial disciplines into its operating

andreporting processes.

• Ability to provide emergency cover

to theGroup CEO if ever required.

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Corporate governance

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A long-list of candidates was provided by

Gramercy Search that included a broad

range of high calibre candidates, which the

Group CEO and Chief People Officer initially

interviewed. That long-list was reduced to

a short-list of four that were interviewed

by the Chair of the Group Board, Chair

of the Audit Committee and Chair of the

Risk Committee. A progress update was

provided to the Nomination Committee

at the meeting on 16 October 2024. Here,

it was decided that the remaining INEDs

should meet the final three candidates

before any final decision could be made.

Candidates were scored and assessed

on anexternal leadership benchmarking

surveyand their ability to demonstrate:

• Execution of results

• Relationships and influence

• Commercial mindset

• Technical expertise and

knowledgerequired

The Remuneration and Nomination

Committees and the Board met in early

November to make the final decision that

Nicolaos Nicandrou was the best candidate

for the role, having extensive financial

services, life insurance and executive

leadership experience within a FTSE 100

peer. His biography can be found on page 87.

The Board was pleased to secure the

appointment of a Group CFO with such

strong FTSE 100 experience as the Board

iscognisant of the high demand for such

candidates within the financial services

market. Nicolaos Nicandrou’s remuneration

details can be found on page 136 of

the Directors’ Remuneration report.

Details of the shareholder consultation

on both his appointment and remuneration

as Group CFO on 2 December2024

can be found on page 85.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Male 58%

Female 42%

Board gender balance

(including

Shareholder Nominated Directors)

White (English) 58%

White (Scottish) 17%

Asian (Japanese) 8%

Black (Caribbean) 8%

White (Irish) 8%

Board ethnicity

(including

Shareholder Nominated Directors)

Less than 1 year 0%

1–3 years 50%

3–6 years 10%

6–9 years 40%

9 years or more 0%

Non-Executive Director tenure

White (English) 70%

White (Scottish) 10%

Black (Caribbean) 10%

White (Irish) 10%

Board ethnicity

(excluding

Shareholder Nominated Directors)

Male 50%

Female 50%

Board gender balance

(excluding

Shareholder Nominated Directors)

Target

FTSE Women

Leaders target

FCA Listing Rules

target – gender

Parker Review

target

FCA Listing Rules

target – ethnicity

FCA Listing Rules

target – female

Chair, CEO,

CFO or SID

40%

42%

40%

42%

Achieved

Target

Achieved

Target

Achieved

Target

Achieved

Overall diversity progress for the Board

Target

FTSE Women

Leaders target

FCA Listing Rules

target – gender

Parker Review

target

FCA Listing Rules

target – ethnicity

FCA Listing Rules

target – female

Chair, CEO,

CFO or SID

Achieved

Target

Achieved

Target

Achieved

Target

Achieved

Overall diversity progress for the Board

members appointed by Phoenix Group

40%

50%

40%

50%

Composition, succession and evaluation continued

Board diversity

The composition of the Board ensures a diverse mix of backgrounds,

skills, knowledge and expertise to enhance decision-making; reduce

the risk of ‘group-think’; and support robust management of risk.

Average age of the Board

1 As at 14 March 2025.

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Board skills and expertise

The Board skills and expertise below shows a high level of skills in the expected categories and a wide breadth of skills across the Board.

The assessment of Board skills and areas of expertise feeds into its succession planning and the ongoing recruitment of NEDs, with action

being taken to address areas highlighted for strengthening.

Mergers & Acquisitions

Capital markets

Regulatory

Financial

Life assurance

Asset management

Actuarial

Investment management

Risk management

Customer service & solutions

Sustainability/ESG

Change/Transformation

IT/ Product Digitisation

Sales/Distribution

Marketing

Operations

Human resources

FTSE 100 board experience

Artificial Intelligence

Sir Nicholas Lyons

Chair of the Group Board

              

Andy Briggs

Group Chief Executive Officer

                

Nicolaos Nicandrou

Group Chief Financial Officer

              

Karen Green

Senior Independent Director

             

Eleanor Bucks

Independent Non-Executive Director

          

Sherry Coutu

Independent Non-Executive Director

               

Mark Gregory

Independent Non-Executive Director

             

Hiroyuki Iioka

Non-Executive Director

          

Katie Murray

Independent Non-Executive Director

            

Belinda Richards

Independent Non-Executive Director

                 

David Scott

Non-Executive Director

            

Maggie Semple

Independent Non-Executive Director

          

Nicholas Shott

Independent Non-Executive Director

          

Total core skills

10 10 10 11 7 5 2 7 8 7 9 6 6 4 5 7 5 12 2

Total secondary skills

1 1 3 0 3 5 2 2 4 2 1 4 1 3 1 4 7 1 1

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Audit, risk and internal controls

Audit Committee report

Katie Murray

Audit Committee Chair

Key Committee activities in 2024

• Monitored the transition of IFRS 17 processes to

business-as-usual (‘BAU’) and reviewed lessons learnt

from the implementation ofthe standard, ensuring

a plan is in place, and being delivered against,

to fully embed IFRS 17 reporting processes.

• Supported the appointment of Stephanie Bruce

asInterim Group CFO with effect from 17 June 2024

and NicolaosNicandrou as Group CFO with effect

from 2 December 2024.

• Focused on reviewing Phoenix Group’s Internal Control

Framework (‘ICF’) inanticipation of the Board’s

declaration as to its effectiveness in accordance with

Provision 29 of the 2024 Code at Full Year 2026.

• Monitored the control environment to ensure

consistentimprovement.

• Recommended the approval of KPMG LLP (‘KPMG’)

as the Company’s External Auditor and the resignation

of EY LLP (‘EY’) on 14 May 2024.

• Further considered the financial reporting and

disclosure impacts ofSolvency II as modified

by the PRA’s 2024 reforms (‘Solvency UK’).

• Approved the appointment of the new Chief Audit

Officer, subject to regulatory approval who will join

Phoenix Group during Q1 2025 following the retirement

of the Chief Audit Officer who has been in role for

eightyears.

2025 focus

• Supporting the induction of both the Group CFO

and Group Chief Audit Officer into their new roles

at Phoenix Group.

• Monitoring the continued delivery of strategic

improvements within the Finance function to ensure

its improving performance, with particular focus

on the delivery of the plan to fully embed IFRS 17.

• Monitoring Phoenix Group’s ICF and testing of material

controls in anticipation of the Board’s declaration asto

its effectiveness of internal controls at Full Year 2026,

inaccordance with the 2024 Code.

• Monitoring the control environment ensuring

consistent improvement.

• Further alignment between the Committee and the Life

Companies’ board audit committee to enhance governance.

• Oversight of the external disclosure for the PRA Life Insurance

Stress Tests (‘LIST’) results.

Committee meetings and membership

Member

from

2024 meeting

attendance

2024 %

attendance

Katie Murray

1 April 2022 9/9 100%

Mark Gregory

1 January 2024 8/9 88%

John Pollock

11 May 2017 9/9 100%

Nicholas Shott

2 July 2019 9/9 100%

1 Mark Gregory was unable to attend an Audit Committee meeting due to an unforeseen

clash of meetings. He read all papers prior to the meeting and provided comments to

the Chair of the Audit Committee prior to the meeting.

Additional regular attendees include the Group CFO, Group CEO, External Auditor,

Chief Internal Auditor, Group CRO and the Group Company Secretary.

Role, responsibilities and effectiveness

The Role of the Committee is shown on page 93

The Committee’s responsibilities and duties can

be found within its Terms of Reference

The Committee’s performance review is shown

on page 119

Number of Committee meetings

held during 2024

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Committee review

The 2024 performance review was facilitated internally by the Chair of the Group Board, supported by the Group

Company Secretary. The review concluded that the Committee is functioning effectively. NEDs provided thoughtful

and challenging contribution during a time ofregulatory change, with a capable Chair.

There were a few areas of enhancement highlighted below:

Action 1

The Committee Chair to support and

assist the Group CRO and Group CFO

to transition into their new roles.

Action 2

Continue to enhance and

monitor the quality of papers to

ensure sustained improvement.

Action 3

Ensure meeting frequency and

focus remained appropriate to

ensure effective oversight of

Audit Committee matters.

Action Progress

Subsidiary companies to provide a one-page summary only,

rather than a full set of minutes.

Papers to be published no less than five days before the meeting

and the number of attendees streamlined.

Drive improvements in the quality of papers to ensure they are

moresuccinct.

Implemented providing much clearer summary and reducing

volume of papers.

Implemented both actions in Q1 2024 allowing members adequate

time to read papers.

Content of papers and process continues to be improved, allowing

more focussed meetings.

Audit Committee reporting cycle

• Full Year 2023 results

• External targets

• External Audit update

andtransition plan

• Internal Audit update

• Annual Control

Assurance Opinion

• Solvency Reporting

• Internal Controls report

• Update from Chair

of Risk Committee

• Full Year 2024 External

Audit Plan

• Solvency Reporting

• Internal Controls report

• Annual Quantitative

Reporting template

• Internal Audit update

• Joint Audit & Risk

Committees – Approve

the SFCR and the ORSA

• Tax Group Strategy

• Speak Up

• Corporate Governance

Reform

• Update from Chair

of Risk Committee

• Half Year 2024 results

• Half Year External Audit

• Half Year Control

Assurance Opinion

• Internal Audit update

• Solvency Reporting

• External Auditor fees

• Internal Controls report

• Update from Chair

of Risk Committee

• Approved the Chief Audit

Officer successor

• Key financial reporting

judgements

• External Audit update

• External Auditor

effectiveness

• Solvency Reporting

• Internal Audit Plan

for 2025 & Charter

• Three Lines of Defence

Assurance Map

• Internal Controls report

• Committee

effectivenessreview

• Internal Auditor

effectiveness review

• Speak Up

• Corporate

GovernanceReform

• Update from Chair

of Risk Committee

The following actions from the 2023 performance review facilitated by an external Board Performance Reviewer were progressed during 2024:

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Outcomes from Audit Committee discussions

On an annual basis, a review of the Committee’s activities is undertaken. In 2024, it was concluded that all elements of responsibility

detailed in the Committee’s Terms of Reference had been addressed. An overview of some of the significant activities undertaken

during the year and the way in which they contributed to important outcomes are detailed in the following table:

Key activities

Financial reporting Outcome

Interim Group CFO reports Interim Group CFO, with her leadership team, completed a deep dive into how the Finance function couldsupport

the next phase of Phoenix Group’s 3-year strategic journey. The review had particular regard to the delivery of IFRS 17,

data and technology, process reporting, Group performance and capital, and how this would be balanced with the

wellbeing of colleagues during this change in leadership.

Receiving and reviewing the Group’s

external Full Year and HalfYear

financial reports

An education session was provided on post-implementation findings following IFRS 17 coming into effect.

See page 107.

Solvency UK results An education session was provided on Solvency UK to the whole Board. See page 107.

Review of Going concern

& Viability statements

A benchmarking exercise was undertaken that confirmed a 3-year rather than 5-year Viability statement remained appropriate.

See pages 50 to 51 and 168 respectively for Phoenix Group’s Going concern and Viability statement.

Fair, balanced and understandable The Committee has satisfied itself that the Phoenix Group Holdings plc 2024 Annual Report and Accounts is fair, balanced

and understandable. It has done so by taking relevant FRC guidance into consideration and feedback from various sources,

then robust challenge from a Reporting Disclosure Committee formed of internal senior stakeholders. The Committee can

therefore concur with the declaration made by the Board of Directors on page 170 inline with Principle N of the 2024 Code.

Key estimates and judgements Thorough review and challenge by the Committee. See significant matters on pages 124 to 125.

IFRS 17 accounting standard Strong challenge to the work underway and plans over 2025 regarding embedding IFRS 17 including modelling improvements

and automation to reduce manual overlays, and process and control improvements across the reporting process.

Climate and environmental risk From 2024, it was decided that a joint Board Audit, Board Sustainability and Board Risk Committee would be convened at least

twice a year to review sustainability reporting and analyse the potential impact of climate risk. This would provide collaboration

across each Committee and avoid duplication.

External audit Outcome

Appointment of KPMG

as External Auditor

Strong handover from EY to KPMG with Management’s support shown through positive feedback from stakeholders when

evaluating KPMG’s effectiveness since its appointment in May 2024

Letters of Representation Since the implementation of IFRS 17 led to a number of additional standard representations, the Letter of Representation would

be thoroughly reviewed at the Life Companies’ board audit committee with further analysis of issuance of the representations

provided to the Group Committee.

Recommend to the Board the

appointment of the External Auditor,

their terms of engagement including

approval of their fees and non-audit

services and for reviewing the

performance, objectivity and

independence of the External Auditor

The Committee recommended the appointment of KPMG as auditor of Phoenix Group Holdings plc andits subsidiary entities.

EY published its section 519 letter following the approval of the SFCR. There was particularly strong challenge from Management

and the Committee on the External Auditor’s fees, which were higher than the previous auditor. The fee was higher than

communicated at the tender process due toinflation, process harmonisation and additional work in relation to IFRS 17.

Internal controls Outcome

Monitoring the overall integrity of

financial reporting by the Company

and its subsidiaries and the effectiveness

of the Group’sinternal controls

The Committee initiated detailed work to review the process and assess our internal controls. This will continue to be a focus

for Management and the Committee in 2025, with particular focus on IFRS 17 as it continues to be embedded. Challenge and

review of the ICSA to ensure it was fit for purpose to support the Directors’ declaration oninternal controls in line with the new

Provision 29 of the 2024 Code at Full Year 2026. External review of ICF completed and recommendations highlighted to the

Committee for Management tocomplete.

Speak Up Bi-annually, the Committee receives formal updates on: Speak Up activities and the operation of our processes to enable

confidential reporting; involvement in the assessment and resolution of individual matters raised in accordance with our

established policy. During 2024, a total of 18 concerns were reported into the Speak Up Office. Of these, 11 were triaged as

‘Speak Up Disclosures’, and were investigated in accordance with Phoenix Group’s Speak Up processes; the remaining seven

related to people policy matters and were taken forward through our HR channels. Whilst no material wrongdoing was found

to have taken place, our investigations resulted in various recommendations for the business which have been taken forward.

Employee survey scores indicated colleagues generally felt that Phoenix Group was a psychologically safe environment where

they can speak up freely and had a strong belief that serious misconduct would be dealt with appropriately.

Private meetings Private meetings were held with the External Auditor, Chief Audit Officer and at times the Group CRO. A number of meetings

with the Interim Group CFO were also held.

Where relevant, all papers receive a Line 1, 2 and regulatory review.

The Committee also received education sessions as shown on pages 106 and 107.

Audit, risk and internal controls continued

Audit Committee report

120

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Phoenix Group Holdings plc Annual Report and Accounts 2024

External Auditor

A key part of the role of the Audit Committee

is the review and oversight of the work of the

Group’s External Auditor. In light of the length

of their association with certain subsidiaries

of the Group and the application of auditor

rotation requirements, EY resigned as External

Auditor following completion of the 2023

audit. KPMG was appointed on 14 May 2024.

The External Audit partners represented EY

or KPMG at all Committee meetings during

2024. EY no longer attended meetings

following its resignation on 14 May2024.

During its tenure in 2024, EY provided

an update on the Full Year audit status,

including audit and fraud risks, actuarial

assumptions, accounting matters and

judgements and ESG reporting assurance.

The Committee reviewed and discussed

various reports from the External Auditor,

KPMG since its appointment on 14 May 2024.

It presented its audit plan and strategy with

an overview of key milestones for the year,

materiality, audit scope and the significant

risks and other areas of audit focus. KPMG

outlined its approach to providing assurance

over the Half Year results in anticipation

of that exercise for the six months ended

30 June 2024. It subsequently reported

on the findings of its review procedures

on those results to the Committee in

September 2024 and then continued to

provide regular updates and attended

private sessions with the Committee in

anticipation of the Full Year 2024 results.

Audit Quality Indicators (‘AQIs’):

AQIs aim to provide users of audit

services with information regarding

factors contributing to audit quality,

and to complement other means of

assessment. KPMG has developed

proposed AQIs which focus on inspections,

engagement and team. KPMG is

working with Management to develop

appropriate AQIs for project and delivery

management which supports the audit.

Assessment of the effectiveness

ofthe external audit process

Due to KPMG’s short tenure since 14 May2024,

it was not possible to complete a review of

its effectiveness for the year. A full review

will be undertaken in June 2025 following

the publication of the Full Year 2024 results.

That review will include how KPMG has

performed against its audit plan from the

tender stage. However, Management

performed an exercise that considered

KPMG’s effectiveness following the

publication of the Half Year 2024 results

by reference to:

• the FRC’s defined firm-level AQIs;

• the expertise of core team members; and

• initial feedback arising from the audit

planning process, Half Year 2024 review

and interim audit procedures.

That review found that the firm-level AQIs

and initial feedback have not identified any

matters that would lead to concerns as to the

effectiveness of KPMG in its role as Group

External Auditor for the 2024 reporting cycle.

The Committee also observed the FRC’s

inspection of Public Interest Entity audits

during the period under review and its

positive commentary on the continued

improvement in audit quality from KPMG.

Overall, the Audit Committee concluded

that KPMG had carried out its Half Year 2024

review effectively and made a strong start

to its tenure. Stakeholders do not review the

effectiveness of the audit until June 2025.

The additional criteria included in the Minimum

Standards for Audit Committees published

in May 2023 on external auditor effectiveness

will be reported in this Committee’s report

for the year ending 31 December 2025.

Independence and objectivity

of the External Auditor

KPMG’s independence was reviewed and

monitored against the Group’s External

Auditor policy, including its provision of

non-audit services. KPMG was able to confirm

its independence on appointment. This

included an assessment of its independence

and a review of services provided by KPMG

from 14 May 2024 until 16 March 2025 during

the 2024 financial year. The Committee is

satisfied with KPMG’s objectivity, and that

KPMG is fully independent from Management

and free from conflicts ofinterest.

KPMG continually monitors its own

independence throughout the year and

voluntarily brings any potential matter to the

Committee. KPMG has confirmed that

between 14 May 2024 and 16 March 2025

there were no relationships thatwould be

thought to bear on KPMG’s independence

and objectivity. It outlines to the Committee its

independent approach, including threats and

safeguards when the audit plan for that year is

approved by theCommittee.

Appointment of External Auditor

KPMG was appointed as the Group’s External

Auditor commencing from the financial

period starting 1 January 2024 with effect

from 14 May 2024. A transition process was

undertaken from April 2023 until KPMG’s

formal appointment at the 2024 AGM on

14 May 2024, which received over 99%

votes in favour by shareholders. KPMG has

attended all Audit Committee meetings from

30 June 2023 and had access to papers

presented to the Committee at each meeting.

The Committee has received updates on

the transition from EY to KPMG as External

Auditor and provided challenge to ensure

KPMG is receiving an appropriate handover

with sufficient input from Management

and EY itself. The Committee confirms

that it complied with the provision of The

Statutory Audit Services for Large Companies

Market Investigation (Mandatory Use Of

Competitive Tender Processes and Audit

Committee Responsibilities) Order 2014

(‘CMA Order 2014’) for that tender.

The Group’s External Auditor policy includes

audit partner rotation with the expectation

that the audit partner will rotate at least

every five years. Under the Audit Ethical

Standards, signing audit partners for public

interest entities should retain the role for up

to five years. Stuart Crisp became Phoenix

Group’s External Audit partner on 14 May

2024. The Committee prepares for audit

rotation well in advance and this will be

given due focus from 1 January 2027.

Re-appointment of External Auditor

at Annual General Meeting

Resolutions will be put to the AGM to

be held on 13 May 2025 proposing the

re-appointment of KPMG as the Company’s

External Auditor and authorising the Board

to determine its remuneration, on the

recommendation of the Audit Committee

in accordance with the CMA Order 2014.

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Internal Audit

During 2024, the Committee continued to receive regular updates from the Chief Audit Officer on all Internal Audit related matters.

This included:

Item Outcome

Internal Audit Strategy The Committee reviewed and approved the Internal Audit Strategy. This included the purpose, vision and operating

model for Internal Audit, aligned to Phoenix Group’s core purpose and strategy. The strategy focused on harnessing

Data Analytics and Artificial Intelligence innovations and supporting enhancements to overall Company risk and

governance capabilities.

Annual plan,

budget,resources

andplan progress

The Committee reviewed and approved the internal audit plan and budget. Internal Audit’s risk-based plan was aligned

to Phoenix Group’s strategic priorities and core purpose.

The Committee monitored progress against the plan. This included oversight of trends in findings, the status of management

actions to resolve issues identified, the ongoing adequacy of Internal Audit resources and progress against key

performance metrics.

Private sessions were held with the Chief Audit Officer.

Internal Audit Charter The Internal Audit Charter was updated and approved by the Committee. This sets out Internal Audit’s role, mandate,

and independence.

Control

Assurance Opinion

The Committee reviewed and challenged control assurance opinion reports which set out Internal Audit’s view of the

Phoenix Risk Management, Governance and Control Framework at Half Year and Full Year.

Internal Audit

effectiveness

The Committee reviewed and approved the Internal Audit strategy which is aligned to the overall Phoenix Group strategy.

An annual update was provided on Internal Audit effectiveness, which included output from independent quality control,

annual stakeholder effectiveness surveys and progress of actions to further enhance Internal Audit activity.

An external independent assessment of Internal Audit is completed every 5-years. The Committee has commissioned

an external assessment, with the output due in 2025. Initial feedback has included that the independence and objectivity

of Internal Audit is evident and that audit work is thoroughly conducted and robust.

The Chair of the Committee sets the objectives and reviews the performance of the Chief Audit Officer.

All areas of Internal Audit’s plan were aligned with Phoenix Group’s strategic priorities.

Audit, risk and internal controls continued

Audit Committee report

External Auditor policy

The Company has an External Auditor policy

which requires the Company and the External

Auditor to take measures to safeguard the

integrity, objectivity and independence

of the External Auditor and cap the level of

any non-audit fee paid to its External Auditor

at 70% of the average audit fees paid in the

previous three consecutive financial years.

The External Auditor policy was reviewed

during the year to reflect the FRC’s

Revised Ethical Standard that became

effective from 15 December 2024.

The review confirmed that no significant

changes were required. The External

Auditor policy can be found on the

website at www.thephoenixgroup.com.

The External Auditor policy covers

matters such as the rotation of audit

partner, employment of members of the

external audit team, permitted non-audit

services and audit-related services.

Permitted non-audit services are

those contained in the Revised Ethical

Standard 2019 of the FRC. During

2024, the only non-audit services

provided related to ESG assurance.

Audit-related services are a subset of

permitted non-audit services that are largely

carried out by the Audit Engagement Team

and where the work involved is closely

related to the work performed in the

audit. During 2024, an example of audit-

related services provided was the SFCR.

The Committee is satisfied that there

are no circumstances that could affect

the independence or objectivity of the

Auditor. The External Auditor policy

is refreshed annually and in May 2024

was updated to note the change in

External Auditor from EY to KPMG.

External Auditor’s fees

For 2024, KPMG was appointed as

External Auditor with effect from 14 May

2024. The engagement of the External

Auditor to perform any non-audit service

is subject to a process of pre-approval by

the Committee to safeguard the External

Auditor’s objectivity and independence

and the prescribed limit set out above

in line with statutory requirements.

Fees payable to KPMG LLP

2024

£m

Non-audit fees 0.2

Audit fees 22.4

Audit-related fees 3.0

Total 25.6

Ratio of non-audit:

audit fees 0.78%

In 2024, total fees of £25.6 million was

payable to KPMG. Of this amount, £22.4

million related to statutory audit fees of the

parent and its subsidiaries and £3.0 million

was payable in respect of audit-related

services, which included the audit of the

review of the Group’s Interim Report and

Solvency II regulatory returns. The remaining

fees of £0.2 million related to other services,

including ESG assurance. This gives rise to

a non-audit to audit fee ratio under the EU

Directive and Regulations of 3% for 2024.

This lies well within the limits prescribed in the

Group’s policy. The increase in the audit fee

from that quoted within the tender principally

reflects inflation, process harmonisation

and additional work in relation to IFRS 17.

In light of the above, the Committee

is satisfied that the non-audit services

performed during 2024 have not impaired

the independence of EY or KPMG in their

separate roles as External Auditor.

Internal Audit

The Internal Audit Financial Services Code

of Practice (‘Internal Audit Code’) issued by

the Chartered Institute of Internal Auditors

(‘CIIA’) sets out guidance that for any chief

audit officer in post for more than seven years,

the Committee should annually review their

independence and objectivity. To that end,

Ian Gray will retire after eight years in the

role. The Committee is pleased to welcome

Vanessa Swanton as the Chief Audit Officer

Elect with effect from March 2025, subject to

regulatory approval. Ian will remain in role until

an orderly handover has been completed.

I wish to thank Ian Gray, Chief Audit

Officer, for his dedication to his

role over the past eight years.

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Internal controls

The Board is accountable for ensuring

that an appropriate and effective system

of risk management and internal control

is in place across the Group. A robust and

effective internal control environment

supports the business in reducing the

likelihood and impact of unexpected

events, protecting its customers, and

ensuring it is viable over the long term.

The Group has an established ‘three

lines of defence’ model that delineates

between the roles and responsibilities of

the Business (Line 1) as being responsible

for risk ownership and maintaining effective

processes, procedures, and controls; Risk and

Compliance (Line 2) provides independent

oversight and challenge; and Internal Audit

(Line 3) providing objective assurance.

Details of Phoenix Group’s approach to

risk management are provided in the ‘Our

Risk Management Framework’ section.

The Board, supported by the Board Audit

Committee and the Board Risk Committee,

regularly reviews the effectiveness

of the Group’s internal controls.

Throughout 2024, the Group continued

to operate its processes for identifying,

measuring, assessing, managing, and

reporting risks within approved risk appetites

and related controls. A key part of this activity

was the bi-annual ICSA, requiring senior

management to evaluate the adequacy

and effectiveness of their internal control

environment and to identify areas that require

strengthening. For the 2024 assessments the

Board Audit Committee requested further

enhancements to the ICSA design to further

improve the identification and assessment of

the control environment. These assessments

were independently validated by Line 2 (Risk

and Compliance) and supplemented by an

Annual Internal Control Environment Opinion

Report from Line 3 (Internal Audit). Together

with regular reports on control improvement

initiatives and actions across the business,

this underpins the firm’s adherence to the UK

Corporate Governance Code’s provisions

on risk management and internal controls.

During 2024 the Group made significant

investment in its financial reporting processes,

systems and controls, building upon and

strengthening its existing control framework.

These improvements have addressed many

of the operational weaknesses that led to the

2023 year-end restatements and investment

is continuing to be made in 2025. Overall, the

control environment continued to strengthen,

including control improvements made to data

protection and how the Group manages the

internal model, interest rate and liquidity risks.

As part of its ongoing commitment to

improve the internal control system, in 2024,

Phoenix Group introduced testing of all

key controls in addition to independent

audit testing. This work provides additional

insight and verification on the design and

effectiveness of the control environment.

Phoenix Group recognises the importance

of a robust control environment. The

Group will continue to invest in further

control improvements through defined

action plans or as part of broader

transformation programmes. It is

preparing necessary enhancements to

the Internal Controls Framework (‘ICF’)

to meet the new requirements of the

UK Corporate Governance Code.

Finally, I would like to thank Stephanie

Bruce forher professionalism and

diligence during her role as Interim

Group CFO. She made animpressive

impact during her time in preparation

for Nicolaos Nicandrou’s appointment

as Group CFO on 2 December 2024.

Katie Murray

Chair of the Audit Committee

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Audit, risk and internal controls continued

Audit Committee report

Significant matters considered by the Committee in relation to the financial statements,

where KPMG was invited to provide robust challenge.

Significant matters in

relation to the 2024 IFRS

financial statements

How these issues were addressed

Review of the IFRS and

Solvency II actuarial valuation

process, to include the setting

of actuarial assumptions and

methodologies, and the

robustness of actuarial data

Management presented papers to the Phoenix Life Companies’ board audit committee detailing

recommendations for the actuarial assumptions and methodologies to be used for the interim and year

end reporting periods, with justification and benchmarking as appropriate. This included assumptions

related to longevity, mortality, expenses, persistency and policyholder behaviour, as well as economic

assumptions. These assumptions and methodologies were debated and challenged by the Phoenix Life

Companies’ board audit committee, prior to their approval, including consideration of the impacts of

continued economic volatility, expense inflation and data quality.

A summary of these papers was presented for oversight review by the Committee, and the Phoenix Life

Companies’ board audit committee’s conclusions were reported to the Committee through minutes

ofitsmeeting and a discussion between the Chairs of the committees. The Committee discussed and

questioned Management and KPMG on the content of the summary papers and the Phoenix Life

Companies’ board audit committee’s conclusions.

The Committee considered and debated the basis of the valuation for adjustments to actuarial provisions

that arise at a consolidated Group level, including the methodology and derivation of certain IFRS 17

assumptions where calibrated on a Group basis. This included consideration of the results of a detailed

review of the Group’s maintenance expense assumptions in light of strategic transformation and cost

reduction initiatives. The Committee also evaluated the determination of the IFRS 17 discount rate, including

the appropriateness of the allowances for illiquidity and credit risk, together with the calibration of the risk

adjustment assumption.

The Committee considered in detail the identified material corrections of IFRS financial information

arising from the embedding of the Group’s IFRS 17 and IFRS 9 control environment and resulted in the

restatement of prior period comparative information. This included an evaluation of the related disclosure.

The Committee reviewed management’s assessment of the operation of the internal control environment

in this regard and provided oversight of the response through the continuing activities to enhance financial

reporting processes, systems and controls.

Pension assumptions for use in the IAS 19 Employee Benefits valuations were reviewed and approved

by the Committee.

The Committee received and considered detailed written and verbal reporting from the External Auditor

setting out their observations and conclusions in respect of the assumptions, methodologies and actuarial

models, including benchmarking analysis.

Valuation of complex and

illiquid financial assets

Management presented papers setting out the basis of the valuation of financial assets, including changes

in methodology and assumptions, for the interim and year-end reporting periods to the Phoenix Life

Companies’ board audit committee. The assumptions, valuations and processes, particularly for financial

assets determined by valuation techniques using significant non-observable inputs (Level 3), were debated

and challenged by the Phoenix Life Companies’ board audit committee prior to being approved. This

included a review of judgements made in respect of data and inputs driving the valuation of equity release

mortgages, assumptions utilised in the valuation of modelled debt securities such as bond spreads, and the

impacts of continued economic volatility.

The valuation information was then presented for oversight review by the Committee which considered and

further challenged the information prior to confirmation of the appropriateness of the basis ofvaluation.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Significant matters considered by the Committee in relation to the financial statements,

where KPMG was invited to provide robust challenge.

Significant matters in

relation to the 2024 IFRS

financial statements

How these issues were addressed

Valuation and recoverability

of intangible assets and the

parent Company investment

in subsidiaries

Management presented papers detailing the results of annual impairment testing carried out in respect

of goodwill balances and reviews for indicators of impairment performed in respect of finite life intangibles

and the parent Company’s investment in its subsidiaries. Where indicators of impairment were identified,

Management provided an analysis of the recoverable amounts determined and the assumptions and

judgements underlying their calculation. This included assessing the potential impact of the risk

of climatechange.

The Committee considered the results of the work performed and confirmed the appropriateness

of the conclusions reached.

Provisions Management presented papers detailing the basis of recognition and measurement of accounting

provisions recognised by the Group. The Committee considered the results of the analysis performed,

the uncertainties surrounding the measurements adopted and confirmed the appropriateness of the

conclusions reached.

Alternative performance

measures (‘APMs’)

The Committee reviewed the use of APMs in the Group’s financial reporting, understanding the basis

for determining the metrics and considering the clarity and explanation of their usage within the Group’s

Annual and Interim Reports.

On reviewing the results, the Committee provided challenge as to the allocation of amounts to either

Adjusted Operating Profit or to non-operating items for consistency with the Group’s Adjusted Operating

Profit framework.

The Committee concluded that the usage, disclosure and prominence of APMs within the Group’s

Annual Report and Accounts was appropriate.

Assessment of whether

the Annual Report and

Accounts are fair, balanced

and understandable

The Committee considered and confirmed agreement with the analysis in support of Management’s

conclusions that the Annual Report and Accounts are fair, balanced and understandable. As part of the

year-end procedures, the Committee discussed with Management and KPMG the review processes that

operated over the production of the Annual Report and Accounts.

Going concern and

viabilityanalysis

The Committee reviewed information on the capital and liquidity position of the Group, together with a

review of the associated risks and supporting stress and scenario testing. This was part of a comprehensive

assessment undertaken prior to the Committee recommending to the Board that the Group financial

statements should be prepared on a Going concern basis and that the disclosures, with regard to the

long-term viability of the Group, were sufficient and appropriate. Specifically, the Committee challenged

the impact of losses experienced in the Group’s IFRS results on the disclosures included in the Viability

statement in concluding on their appropriateness.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Audit, risk and internal controls continued

Joint Audit, Risk & Sustainability Committee report

Key Committee activities in 2024

• Reviewed and provided feedback on the Climate

Report and Sustainability Report, including Task Force

on Climate-Related Financial Disclosures (‘TCFD’)

with regard to messaging andinternal assurance,

including the Line 2 opinion on both reports.

• Received external assurance from EY, the External

Auditor, until its resignation on 14 May 2024.

• Provided approval to streamline Phoenix Group’s

sustainability reporting and move to a single Sustainability

Report for 31 December 2024, in line with market practice.

• Received updates on the progress of Taskforce on

Nature-related Financial Disclosures (‘TNFD’), Corporate

Sustainability Reporting Disclosure (‘CSRD’) and

International Sustainability Standards Board (‘ISSB’)

reporting and the risk of non-compliance.

2025 focus

• Oversee the disclosures within the Sustainability Report

and the integration of climate risk (TCFD) reporting

within the Annual Report, in place of a standalone

Climate Report. Ensure that disclosures provide all

information required by the market.

• Continuous review of climate risk.

• Monitor the implementation of TNFD, CSRD and ISSB

reporting and receive updates on any further horizon

scanning of new legislation.

• Focus on climate metrics that link in with remuneration.

Committee meetings and membership

Member

from

2024 meeting

attendance

2024 %

attendance

Karen Green

1 January 2024 2/2 100%

Mark Gregory

1 January 2024 2/2 100%

Katie Murray

1 January 2024 2/2 100%

John Pollock

1 January 2024 2/2 100%

Belinda Richards

1 January 2024 2/2 100%

Maggie Semple

1 January 2024 2/2 100%

Nicholas Shott

1 January 2024 2/2 100%

Number of Committee meetings

held during 2024

The Audit, Risk and

Sustainability Committees

established joint bi-annual

meetings from 1 January 2024

to ensure a more harmonised

and collaborative approach in

relation to sustainability reporting.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Committee review

Role of the Committee meetings

The Audit, Risk and Sustainability Committees established joint bi-annual meetings from 1 January 2024 to ensure a more

harmonised and collaborative approach in relation to sustainability reporting. The main focus of these meetings is to review

sustainability reporting, internal andexternal assurance (including Line 2 opinions), climate risk and the implementation of new

regulation such as TNFD, CSRD and ISSB.

The Chair of the Audit, Risk and Sustainability Committees rotate at each meeting to allow each Chair to provide a different

lens. Each Committee provides its individual expertise: the Audit Committee will focus on the financial and controls aspects

of the Sustainability Report and the Risk Committee on climate risk or risk related to new regulations allowing each Committee

to understand each other’s focus and ensure feedback to Management is consistent and actions easily monitored.

Climate change risk

During 2024, the Audit, Risk and Sustainability

Committees held joint meetings to ensure

climate risk was a focus for the Committees

as a whole to avoid siloed review. The

Committees have a key oversight role

of climate-related reporting including

TCFD and other sustainability disclosures.

However, more focus in 2025 will be

given to the joint Committees’ oversight

of the impact of climate-related risks

and opportunities on the organisation’s

business strategy, and financial planning.

Katie Murray

Chair of the Audit Committee

Mark Gregory

Chair of the Risk Committee

Karen Green

Chair of the Sustainability Committee

Key activities

Activity Outcome

Review of TCFD/Climate Report

and Sustainability Report

Reporting now streamlined in line with market practice providing amore cohesive

and targeted report.

Caution should be given when signing

up to pledges to ensure that they can

be fully adhered to and align with the

purpose and values of the Company

There are particular pledges of societal importance that a purpose-led organisation should

consider carefully. A review will be undertaken as to whether Phoenix Group will become

asignatory to the Tobacco-Free FinancePledge.

Continued monitoring of internal

and external assurance

Outline of what was not within the scope of assurance and the rationale for that decision.

Internal controls Working with Finance to ensure ESG controls were enhanced through the ESG

operating model.

Review of science-based-targets Transparent disclosure was provided within the Sustainability Report that Phoenix Group

is no longer seeking Science Based Targets initiative (‘SBTi’) validation but remains

committed to science-based targets and is aligned with the Net Zero Asset Owner Alliance

target setting protocol.

Committee members agreed that the approach taken to these meetings was a step forward in good governance

and ensured the correct experts were able to discuss, consider and provide relevant feedback to Management.

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Audit, risk and internal controls continued

Risk Committee report

Mark Gregory

Risk Committee Chair

Key Committee activities in 2024

• Monitored risk appetite, risk management and challenged

Management tocontinue enhancements to risk reporting.

• Reviewed the applications to the PRA for major credit

modelling changes tothe Group’s internal model and

recommended approval by the Board.

• Monitored reporting on the Group’s capital and

liquidity requirements, recognising the volatility

of the macroeconomic environment.

• Oversaw the implementation of new Consumer Duty

regulations through updates from Management and the

Consumer Duty Champion, who is a member of the Life

Companies’ board riskcommittee.

• Approved the scenarios for stress testing for the Group

Business Plan alongside a detailed review of the risks

to the Business Plan, ensuring all material risks had been

appropriately considered byManagement.

• Challenged, before recommending, the Own Risk and

Solvency Assessment (‘ORSA’) to the Board for approval.

2025 focus

• Continue to monitor the Group’s principal risks and the

potential impacts tothe organisation from climate change

andshifts in consumer behaviour, the macroeconomic,

regulatory or political landscape.

• Provide effective oversight of the management of financial

and non-financial risk exposures from a current and

projectedperspective.

• Oversee the execution risk of the Group’s planned change

initiatives given the scale of investment in change across

thebusiness.

• Oversee how Consumer Duty is embedding into theorganisation.

• Continue to oversee the execution of the planned enhancements

to managing market and liquidity risks.

• Continue to monitor the risks posed to our operational resilience

by AI and cyber.

• Continue to support the newly appointed Group CRO in exploring

opportunities to streamline and augment the Risk Management

Framework. This will be considerate of the requirements of the

2024 Code requiring the Board to assess the effectiveness

of the framework.

• Review the results and analysis of the PRA Life Insurance

Stress Tests (‘LIST’) exercise.

Committee meetings and membership

Member

from

2024 meeting

attendance

2024 %

attendance

John Pollock

20 October 2016 8/8 100%

Mark Gregory

1 April 2023 8/8 100%

Karen Green

13 September 2024 2/2 100%

Belinda Richards

1 October 2017 8/8 100%

Maggie Semple

1 September 2022 6/6 100%

1 John Pollock retired as a Director of the Company on 31 December 2024

and as Chair of the Committee on 3 December 2024.

2 Karen Green became a member of the Committee on 13 September 2024.

3 Maggie Semple stepped down as a member of the Risk Committee on 12 September 2024.

Additional regular attendees include the Group CEO, Group CRO, Group CFO,

Group Chief Audit Officer and the Group Company Secretary.

Number of Committee meetings

held during 2024 (including ad hoc)

Role, responsibilities and effectiveness

The Role of the Committee is shown on page 93

The Committee’s responsibilities and duties can

be found within its Terms of Reference

The Committee’s performance review is shown

on page 129

128

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Committee review

The 2024 performance review was facilitated internally by the Chair of the Group Board, supported by the Group

Company Secretary. The review concluded that the Committee is functioning effectively. NEDs were well prepared,

providing thoughtful and challenging contribution from members with a very capable Chair.

There were a few areas of enhancement highlighted below:

Action 1

The Committee Chair to support and

assist the Group CRO and Group CFO

to transition into their new roles.

Action 2

Continue to enhance and

monitor the quality of papers to

ensure sustained improvement.

Action 3

Ensure meeting frequency and

focus remained appropriate

to ensure effective oversight

of Risk Committee matters.

Action Progress

Drive improvements in the quality of papers to ensure they are

on time and more succinct.

To ensure that supplementary papers are clearly signposted

so that members are clear on what they should read and why.

Board and Committee template reviewed and improved to ensure

that content is concise and clear.

Company Secretariat provided training and guidance to paper

authors across the business. Challenge is provided to authors to

ensure that any additional reading is essential for the Committee

to better understand the paper and its content.

Risk Committee reporting cycle

• Group CRO report

• Line 1 Risk report

• Update from Life

Companies’ board

riskcommittee

• Operational Risk

Management Framework

• Consumer and

conductrisk

• Update on the delivery

ofrisks from the Group’s

change plan

• Liquidity risk update

• Strategic asset allocation

• Results of climate-related

scenario testing

• Full Year 2023 dividend

• Full Year Group CRO

report forthe

Remuneration Committee

• Regulatory

relationshipsupdate

• Resolution Plan

• Recovery Plan

• Group CRO report

• Line 1 Risk report

• Update from Life

Companies’ board

riskcommittee

• Internal Audit –

risk culture assessment

• Liquidity risk update

• Emerging risks and

opportunities

• Stress and scenario testing

• Recommendation

of the Annual Report

• Review of

market sensitivities

• ORSA

• Group CRO report

• Line 1 Risk report

• Update from Life

Companies’ board

riskcommittee

• Consumer and

conductrisk

• Liquidity risk update

• Recommendation of

HalfYearReport

• Half Year Group

CROreport forthe

Remuneration Committee

• Funded

reinsurance update

• Update on the delivery

ofrisks from the Group’s

change plan

• Half Year 2024 dividend

• Update on control

improvement initiatives

• Business Plan strategic

riskallocation

• Group CRO report

• Top Risks report

• Update from Life

Companies’ board

riskcommittee

• Liquidity risk update

• Stress and scenario testing

• Risk Appetite

Framework review

• Business Plan review

• Standard Life

Internationalupdate

• Group credit limitsreview

• Approve the Shareholder

Hedging policy

The following actions from the 2023 performance review facilitated by an external Board Performance Reviewer were progressed during 2024:

129

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Audit, risk and internal controls continued

Risk Committee report

Outcomes from Risk Committee discussions

On an annual basis, a review of the Committee’s activities is undertaken. In 2024, it was concluded that all elements of responsibility

detailed in the Committee’s Terms of Reference had been addressed. An overview of some of the significant activities undertaken

during the year and the way in which they contributed to important outcomes is detailed in the following table:

Key activities

Discussion Outcome

Operational and conduct risk

Consumer Duty Whilst the Life Companies’ board risk committee has the main responsibility of overseeing the Consumer Duty programme,

the Committee requested a deep dive on the readiness for the regulations to go live for Closed Products from 1 August 2024,

in addition to the regular updates received from the Life Companies’ board risk committee.

Operational resilience In addition to the regular updates on operational resilience and change management related risks presented throughout the year, the

Committee requested a deep dive on the road to compliance to meet the new operational resilience regulations from 1April 2025 to

ensure the Group remains resilient in the areas that matter most to its customers. This session was delivered to the Board in September 2024.

Change delivery risk The Committee continues to recognise the importance of progress on projects designed to transform areas of theorganisation and

to increase efficiency. The Committee requested that change execution risk became a standing agenda item and input was provided

from the Chair of the Transformation Advisory Group, a Life Companies’ board committee.

Cyber and AI risk The Committee monitored the impact of both cyber and AI risk and requested that a Board education session was provided on

AI risks, opportunities and potential use cases at the June Strategy Day. The Committee reviewed and challenged the annual cyber

risk assessment and residual risk rating for cyber risk. Following the outcomes of the 2023 external Board review, the Board has

appointed Sherry Coutu who has strong AI and cyber security experience with effect from 1 May 2025.

Financial and strategic risk

Full Year and Half Year dividends To reduce duplication across Committees, the Board Risk Committee took sole responsibility for robustly challenging theaffordability

ofthe payment of a dividend ahead of recommending to the Board for approval.

Establishment of a Joint Venture

(‘JV’) with Schroders

The Committee carefully considered the risks of setting up an asset management JV with Schroders which would provide customers

with access to private markets instruments via Long Term Asset Fund products. This was of strategic importance given the Group’s

public commitment under the Mansion House Compact to achieve a minimum of 5% allocation to unlisted equities of Defined

Contribution Pension Funds and other sources of long-term savings by 2030.

Liquidity and market risks The Committee monitored carefully the planned improvements to liquidity management and interest rate risk management with

challenge to Management on the pace of delivery.

Funded reinsurance In July 2024, the PRA published SS5/24, directed to all life insurers to outline their expectations for managing risks associated

with funded reinsurance. The Committee oversaw the Group’s self-assessment, areas where development was required and the

implementation plan.

Climate and environmental risk From 2024, it was decided that a joint Board Audit, Board Risk and Board Sustainability Committee would convene at least twice a year

to review sustainability reporting and analyse the potential impact of climate risk. This would provide collaboration across the Committees.

Risk Management Framework

Effectiveness of the Risk

Management Framework

The Company commissioned an external review of the Risk Management Framework. The recommendations from the review were

presented to the Committee in October 2024 and the Committee requested a plan to deliver against these recommendations.

Thiswill be monitored by the Committee throughout 2025.

The Committee also received education sessions as shown on pages 106 to 107.

Group CRO and Committee

Chairchanges

In August 2024, the Committee welcomed

Brid Meaney as Group CRO and the Committee

looks forward to working closely with her

going forward. I became the Chair of the

Committee on 4 December 2024, following a

comprehensive handover from John Pollock.

Both myself and the Committee would like to

thank John for his insight, contribution and

support throughout his tenure.

Group CRO report

At each meeting, the Committee receives a

formal report from the Group CRO which

contains an assessment of the top risks

against the Group’s risk appetite, as well as

an overview of the current and emerging

risks to the organisation. The report also

includes updates on the activities being

undertaken by the Risk function to deliver

its strategic objectives, highlights the

outcomes of ongoing risk monitoring and

outlines current financial, non-financial,

compliance and regulatory riskexposures.

During the year, the Committee maintained

focus on the macroeconomic and geopolitical

environment, and the potential risk events

that could crystallise in 2024 and 2025.

The Committee received regular updates

and continued to oversee non-financial

risks such as operational resilience,

Consumer Duty, change delivery, controls

and people risk. As the Group continued

to undergo a period of simplification and

change, the Committee focused on the

impact on colleagues and the control

environment, challenging Management

to ensure safe delivery of change.

A summary of the principal risks and

uncertainties facing the Group can

be found on pages 46 to 49.

Connectivity with

principalsubsidiaries

During 2024, the Committee continued to

engage with principal subsidiaries to keep

abreast of key workstreams, top risks and

to assess and challenge the broad range of

risks impacting all stakeholders. An update

from the chair of the Life Companies’

board risk committee is provided at each

meeting to ensure that the Committee

has appropriate oversight on activity

delegated to the Life Companies.

Customer and conduct risks

The Committee received regular updates

on customer and conduct risk. In particular,

progress on the implementation and

embeddedness of the Group’s Consumer Duty

plans which included assessments of fair value

on Group products, customer service levels

and improvements to customer journeys. A key

focus was monitoring customer outcomes,

and this vigilance will continue in 2025.

Mark Gregory

Chair of the Risk Committee

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Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Audit, risk and internal controls continued

Sustainability Committee report

Karen Green

Sustainability Committee Chair

Key Committee activities in 2024

• Challenged the Group’s nature and biodiversity roadmap.

• Reviewed the content, integrity and completeness

of the Group’sexternal commitments.

• Ensured tangible, measurable progress against

the Group’s Sustainability Strategy.

• Assisted the Board with the close monitoring of the

Group’s cultureand reviewing key people metrics,

including diversity.

• Monitored progress of the Group’s Net Zero Transition

Plan, including a roadmap to investing up to £40 billion

in sustainableassets.

• Received updates on customer initiatives.

• Oversaw and challenged the Company’s ambitions

in thought leadership to advocate for change across

priority sustainability themes such as pensions adequacy

and unlocking solutions in climate change.

2025 focus

• Continue to monitor developments in sustainability

and emerging bestpractice.

• Continue to oversee Group activity relating

to pensions adequacy.

• Oversee and challenge Management’s engagement

with stakeholders to effect change.

• Continue to review the ways in which wider

macroeconomic factors will impact customers

and colleagues.

• Monitor and challenge progress against the

Sustainability Strategy.

Committee meetings and membership

Member

from

2024 meeting

attendance

2024 %

attendance

Karen Green

1 December 2020 5/5 100%

Nicholas Shott

1 December 2020 5/5 100%

Maggie Semple

1 September 2022 5/5 100%

Additional regular attendees include the Group CEO, Chair of the Group Board,

Chief Sustainability Officer, Director of Corporate Affairs and Investor Relations

and the Group Company Secretary.

Number of Committee meetings

held during 2024 (including ad hoc)

Role, responsibilities and effectiveness

The Role of the Committee is shown on page 93

The Committee’s responsibilities and duties can

be found within its Terms of Reference

The Committee’s performance review is shown

on page 132

131Phoenix Group Holdings plc Annual Report and Accounts 2024

Corporate governance

Committee review

The 2024 performance review was facilitated internally by the Chair of the Group Board, supported by the Group Company

Secretary. The review concluded that the Committee is functioning effectively, with engaged members providing targeted

and insightful challenge, supported by a capable Chair.

There were two areas of enhancement highlighted below:

Action 1

Continue to enhance and monitor the quality

of papers to ensure sustained improvement.

Action 2

Ensure meeting frequency and focus remained

appropriate to ensure effective oversight

of Sustainability Committee matters.

Action Progress

Maintain focus on how to help customers through retirement and

ensuring Consumer Duty remains a key consideration in all discussions.

Continue to address current affairs and how they impact the

organisation’s strategy and culture.

Consider whether training sessions should be held as strategic

deep dives with consideration of impact on the Group strategy.

All papers refer to and signpost Consumer Duty and customer

impact where relevant. The Life Companies’ Consumer Duty

Champion is a standing attendee at Sustainability Committee

meetings. Customer-related items were a regular feature on the

agendas for 2024 and this will continue into 2025.

Current affairs were included on 2024 agendas. This will continue

to be a focus of the Committee in 2025.

The Chair of the Committee, in conjunction with Company

Secretariat and senior members of the Sustainability team, review

the need for deep dives or external training, and how these fit with

the Committee’s workplan.

Sustainability Committee reporting cycle

• Chief Sustainability

Officer report

• Approval of

SustainabilityStrategy

• Update on sustainabilityrisk

& anti-greenwashing activity

• Deep dive: debrief

onCOP28

• Deep dive: nuclear power

• Group Internal Audit: ESG

in the supply chain

• Thought leadership plan

• Pensions & Savings

Sustainability Strategy

• Progress update against

the Net Zero Transition Plan

• DE&I update

• People and culture

quarterly update

• Report from DNED for

Workforce Engagement

• Social Partnerships update

• Phoenix Flex update

• Chief Sustainability

Officer report

• Modern Slavery,

Human Rights and Supply

ChainStatement

• Stewardship Report

• Deep dive:

communicating with

customers on sustainability

• Update on sustainabilityrisk

• Deep dive: commitments

and objectives for

nature roadmap

• Deep dive: UK and

US equity customised

decarbonising benchmarks

• Deep dive: social

impact initiative

• DE&I update

• People and culture

quarterly update

• Report from DNED for

Workforce Engagement

• Chief Sustainability

Officer report

• Deep dive: SBTi

• Deep dive: business travel

• Update on commitments

and objectives for

natureroadmap

• Deep dive: post-election

public affairs and priorities

• DE&I update

• People and culture

quarterly update

• Report from DNED for

Workforce Engagement

• Progress update

againstthe Net Zero

Transition Plan

• Chief Sustainability

Officer report

• Deep dive: ESG litigation

• Deep dive: Group

approach to safety

in the workplace

• Approval of changes

tothe ESG Supplier

Standards

• Review of progress

against Net Zero Transition

Plan Interim Targets

• Review of progress against

the Sustainability Strategy

• Approval of the

Stewardship policy

• DE&I update

• People and culture

quarterly update

• Report from DNED for

Workforce Engagement

• Long-term social

target proposal

• Deep dive: debrief

onCOP29

The following actions from the 2023 performance review facilitated by an external Board Performance Reviewer were progressed during 2024:

Audit, risk and internal controls continued

Sustainability Committee report

132

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Outcomes from Sustainability Committee discussions

On an annual basis, a review of the Committee’s activities is undertaken. In 2024, it was concluded that all elements of responsibility

detailed in the Committee’s Terms of Reference had been addressed. An overview of some of the significant activities undertaken

during the year and the way in which they contributed to important outcomes is detailed in the following table:

Outcomes from Sustainability Committee agenda items

Discussion Outcome

Sustainability Disclosure

Requirements (‘SDR’)

Following a discussion on SDR and its potential impact on the organisation, the Committee requested

a deep dive on SDR and other upcoming disclosure requirements to ensure that the appropriate plans

were in place within the organisation. This session was held in March 2024.

Culture monitoring

Read about how the

Board monitors culture

on pages 96 to 97.

Read about Maggie Semple’s

work as DNED and Workforce

engagement on page 101 to 102

Following a quarterly update on culture, the Committee requested a deep dive on workforce engagement

survey scores and the potential reasons for significant movements in scores over the year. This update was

presented in December 2024.

Group approach to nature

reporting and TNFD

The Committee received regular updates on nature reporting and the proposed commitments and

objectives for the Group. The Committee noted the need to be well considered in its approach to nature

disclosures, which could be aided by continued engagement with the TNFD to fully understand the

framework and how it would translate to the Group’s activities. Nature reporting will continue to be a regular

item for the Committee in 2025.

Macroeconomic and

geopolitical environment

The Committee has remained cognisant of external factors that may impact progress against Net Zero

Transition Plan targets or other objectives within the Sustainability Strategy. The Committee has continued

to request ad hoc deep dives on external events. In 2024, the Committee requested updates on nuclear

power on sustainability ambitions and the impact of the UK election on the Company’s sustainability

strategy. The Committee will continue to receive updates on the thought leadership programme, which

is designed to collaboratively drive policy change to unlock investment in climate solutions and advocate

for pensions adequacy.

The Committee also received education sessions as shown on pages 106 to 107.

Monitoring progress against

our Net Zero Transition Plan

The Group has committed to net zero across

our investment portfolio, own operations

and supply chain by 2050 or sooner. As a

purpose-led organisation, the Company

acknowledges the part it should play in

delivering net zero whilst ensuring good

outcomes for customers. Throughout 2024,

the Committee received regular updates

on progress against the Net Zero Transition

Plan, and the ambition to invest up to £40

billion in sustainable transition and productive

assets. As part of this, the Committee

reviewed and approved the Group’s second

Stewardship Report, which sets out the focus

on effective stewardship and the intention

to have a positive effect on action on climate

change and other ESG priority topics.

Supporting our customers

The Committee has maintained focus

onsupporting customers to deliver good

outcomes in 2024. The Committee received

regular updates on activity relating to

customers which included a review of

marketing plans and an update on Money

Mindset, the Company’s financial wellbeing

app which has been enabled for over

1.5 million workplace pension scheme

members. The Committee oversaw work

to increase inclusivity and accessibility

amongst products and services, and

received an update on how sustainability

will be communicated tocustomers.

Karen Green

Chair of the Sustainability Committee

133

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Directors’ Remuneration report

Nicholas Shott

Chair of the Remuneration Committee

Key Committee activities in 2024

• Approval of incentive outcomes for the 2023 Annual

Incentive Plan and 2021 Long Term Incentive Plan.

• Approval of remuneration for all colleagues within

the Committee’sremit.

• Consideration and approval of metrics for 2024

variable pay schemes to align with the Group’s

evolving business strategy.

• Consideration and approval of the good leaver

status for Rakesh Thakrar’s AIP and LTIP plans.

His remuneration package is discussed on page 136.

• Consideration and approval of remuneration

package for the incoming Group CFO and associated

shareholder engagement is discussed on page 136.

2025 focus

• Approval of incentive outcomes for 2024 AIP and 2022 LTIP.

• Consideration and approval of metrics and targets for the

2025 variable pay plans to align with our financial framework

and strategic priorities.

• Consideration of the Directors’ Remuneration policy ahead

of shareholder approval in 2026.

• Listening to the voice of the wider workforce on

remuneration through Maggie Semple, the Board’s

Designated NED for WorkforceEngagement.

Committee meetings and membership

Member

from

2024 meeting

attendance

2024 %

attendance

Nicholas Shott

20 October 2016 5/5 100%

Karen Green

1 July 2017 5/5 100%

Belinda Richards

2 July 2019 5/5 100%

Maggie Semple

1 January 2024 5/5 100%

Role, responsibilities and effectiveness

The Role of the Committee is shown on page 93

The Committee’s responsibilities and duties can

be found within its Terms of Reference

The Committee’s effectiveness review is shown

on page 135

Committee meetings held during 2024

134

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Outcomes from Remuneration Committee discussions:

On an annual basis, a review of the Committee’s activities is undertaken. In 2024, it was concluded that all elements of responsibility detailed

in the Committee’s Terms of Reference had been addressed. An overview of some of the key activities undertaken during the year and the way

in which they contributed to important outcomes is detailed in the following table:

Key activities

Activity Outcome

Consideration of remuneration

package for incoming Group CFO.

Appointment of new Group CFO and associated engagement with shareholders.

Review of Full Year 2023 and Half

Year 2024 Group CRO report.

The Group CRO reports provided helpful guidance to individuals whose remuneration

may require adjustment.

Consideration of metrics and

targets for all incentive plans.

The metrics align to financial framework and strategic priorities.

Education session – annual event

covering relevant topics and also

includes a dashboard of data and

information on the wider workforce.

Supported understanding amongst the Committee of latest market practice in both

the insurance sector and wider FTSE index through a review of 2024 AGM season

outcomes and latest proxy adviser guidelines.

Committee effectiveness

The 2024 effectiveness review was facilitated internally by the Chair of the Group Board, supported by the Group Company

Secretary. The review concluded that the Committee is functioning effectively, with engaged members providing a thoughtful

and challenging contribution that adequately scrutinises the risk culture in the Group Chief Risk Officer’s report.

Action 1

Continue to enhance and monitor the quality of

papers to ensure sustained improvement.

Action 2

Review agenda focus and frequency of meetings to

ensure effective oversight of remuneration matters,

including how the Committee has oversight of culture

and workforce engagement relating to remuneration.

Remuneration Committee reporting cycle

• Monitoring Employee

Benefit Trust

• Chief Executive Officer

and Chief Financial

Officer benchmarking

• Review of market trends

and AGM results

• Half Year 2024 Group

CROreport

• Approval of 2024 share

awardgrants

• Monitoring 2024 AIP

outturn and in-flight

LTIPawards

• Education session

(see below)

• Review of 2025 AIP

and LTIPmetrics

• Approved the leaver

status for Group CFO

• Approved remuneration

for new GroupCFO,

Nicolaos Nicandrou

appointed on

2 December 2024

• Full Year 2023 Group

CROreport

• Approval of 2023 AIP and

2021 LTIP outturns

• Executive Director and ExCo

2023 performance ratings

• Approval of 2024 AIP and

LTIP metrics and targets

• Approval of 2024 share

awardgrants

The Chair instigated a process of agreeing with the Committee

what the priority items of focus would be for each meeting.

Feedback from Committee members was that the new process had

been successful in identifying the most material issues for each meeting

so that appropriate time could be allocated to them on the agenda.

To continue with the Group Chief Risk Officer’s (‘CRO’) report,

which was deemed best practice and to be commended in supporting

the Committee’s consideration of variable remuneration adjustments

for Senior Management.

This continued to support the risk underpin for the AIP outturns.

Progress

Action

The following actions from the 2023 effectiveness review facilitated by an external Board Performance Reviewer were progressed during 2024:

135

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Dear Shareholder,

On behalf of the Remuneration Committee

(‘Committee’), I am pleased to present

the Directors’ Remuneration Report for

the year ended 31 December 2024.

Summary of the year

Phoenix has continued its strong

performance in 2024, as we made good

progress in the first year of our 3-year

strategy. This has enabled us to deliver

improved performance across our financial

framework of cash, capital and earnings:

• We delivered £1.8 billion of total cash

generation above the top-end of our

£1.4billion target for the year.

• Our balance sheet remains resilient with

ourSolvency II (‘SII’) Shareholder Capital

Coverage Ratio (‘SCCR’) of 172%,

withinour target range of 140% to 180%.

• We grew operating profit year-on-year

by 31% to £825 million driven in part by

the delivery of cost synergies as we make

progress towards our £250 million cost

savingstarget.

Board changes

Earlier in the year, it was announced that

Rakesh Thakrar would be stepping down

from his position as our Group Chief Financial

Officer (‘CFO’) on 8 September 2024.

Rakesh joined Phoenix Group in 2001 and

became Group CFO in 2020. The Board

is very grateful to Rakesh for the significant

contribution he made during his tenure.

In line with our Remuneration policy, Rakesh’s

2024 Annual Incentive Plan (‘AIP’) and

in-flight Long Term Incentive Plan (‘LTIP’)

awards will be pro-rated for his time served

in role and released in line with the normal

vesting schedules. Rakesh will be subject

to a two-year post-cessation shareholding

requirement of 200% of salary. Full details

of remuneration arrangements in respect of

Rakesh’s departure can be found on page 158.

The Board was delighted to welcome

Nicolaos Nicandrou as Group CFO with

effect from 2 December 2024. Nicolaos

brings a wealth of relevant insurance and

asset management experience which will

be invaluable to the Group as it executes

its strategy to become the UK’s leading

retirement savings and income business and

implements its evolved financial framework.

The remuneration arrangements for Nicolaos’

appointment were agreed by the Committee

in line with the policy approved by 98.8% of

shareholders at the 2023 AGM. As detailed

in the announcement on 6 November 2024

and in subsequent communications to

shareholders and proxy advisers, Nicolaos’

remuneration package comprises:

• a base salary of £730,000 per annum;

• a pension allowance of 12% of salary

aligned to the maximum contribution

available to our wider UK workforce;

• standard benefits in line with the wider

UK workforce;

• an AIP opportunity of 200% of base

salary; and

• an LTIP opportunity of 275% of base salary.

In considering this package, the Committee

recognised that it is above the level of the

previous incumbent and at the upper end

of the market when compared to UK listed

insurance companies. However, we are

confident that it reflects the quality and

experience that Nicolaos brings to the Group

and is appropriate in the context both of his

previous roles and of the important task of

transforming the Group’s Finance function.

Executive remuneration

outcomes for 2024

Based on its assessment of the corporate

metrics of the AIP which represent 80% of the

Executive Directors’ incentive opportunity, the

Committee determined that the AIP outcome

should be 84.4% of the maximum opportunity.

With regard to the achievements under the

Strategic Scorecard which represents 20% of

the Executive Directors’ AIP, the Committee

determined outcomes should be 75.0% for

Andy Briggs, Rakesh Thakrar and Nicolaos

Nicandrou. This results in a formulaic outcome

of 82.5% of the maximum AIP opportunity.

The outcome for Rakesh Thakrar was pro-

rated to 8 September 2024 when he stepped

down from the Board, and the outcome for

Nicolaos Nicandrou was pro-rated from the

date he joined the Board on 2 December

2024. Further details are set out on page 145.

Each year the Committee reviews the AIP

outcomes in the context of the Group’s

management of risk, overall business

performance and the broader stakeholder

experience. Last year we reported that

there had been problems relating to the

implementation of IFRS 17 in 2023, as a

consequence of which we reduced the bonus

payments for Rakesh Thakrar and Andy

Briggs. Those problems continued into 2024

and therefore had a greater impact than

had been foreseen originally and resulted in

a restatement of our prior year results. The

Remuneration Committee has therefore

concluded that it is appropriate to reduce

Rakesh’s bonus for the period until he left

the Board on 8 September by £57k (10%). In

addition, in discussion with the Committee,

Andy Briggs recognised that as CEO he has

overall accountability and has suggested –

and the Committee has agreed – that his own

bonus should be reduced. The Committee

has determined that a reduction of £70k (5%)

is appropriate. There were no adjustments

to the outcome for Nicolaos Nicandrou.

During 2024, significant investment was

made in the IFRS 17 financial reporting

processes, systems and controls, which is

continuing in 2025. In recognition of the

increased importance of IFRS following the

introduction of IFRS 17, the Remuneration

Committee has introduced this measure in

both our 2025 AIP and LTIP scorecard.

As a result of these discretionary adjustments,

overall outcomes under the AIP were 78.3%

of maximum for Andy Briggs, 74.3% of

maximum for Rakesh Thakrar, and 82.5%

of maximum for Nicolaos Nicandrou.

The 2022 LTIP award covering the years

2022–2024 was based on Net Operating

Cash Receipts, Return on Shareholder Value,

Persistency, Relative Total Shareholder Return

(‘TSR’) and Decarbonisation in respect of

our Operations and Investment Portfolio.

The overall formulaic vesting outcome

is 51.1% of the maximum opportunity.

Further details are set out on page 145.

The resulting single total figure of

remuneration for Andy Briggs is

£3,448k, for Rakesh Thakrar is £909k,

and for Nicolaos Nicandrou is £168k.

Full details are set out on page 142.

The Committee is satisfied that the

remuneration outcomes for 2024, with the

adjustments set out above in respect of the

AIP, are a fair and appropriate reflection

of the year’s business performance and its

trajectory and that the remuneration policy

was implemented as intended. The outcomes

provide strong alignment between pay and

performance and with appropriate regard

to both the management of risk within our

incentives and the broader stakeholder

experience. As a result, no further discretion

has been applied by the Committee

in respect of incentives outcomes.

Updated metrics to align

remuneration with our

evolving strategy

The Committee has approved a number of

changes to the metrics for the AIP and LTIP

in 2025 to ensure continued alignment to

business priorities. The financial metrics

for both plans reflect the focus in our

financial framework on the three financial

outcomes we deliver for our shareholders:

cash, capital and earnings (including cost

savings). The non-financial metrics focus on

our customers, our people, and the planet.

Directors’ Remuneration report continued

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Total Cash

Generation

12%

2024

2025

SII Shareholder

Own Funds

Unrestricted Tier 1

(excluding economics)

16%

Adjusted

Operating profit

16%

Cost savings

– Cumulative

run rate

12%

Customer

Experience

20%

4%*

Deferral 50%

for a period

of 3 years

Corporate element

Deferral 50%

for a period

of 3 years

Strategic

Scorecard

20%

*Colleague engagement

Total Cash

Generation

16%

New Business

Contribution

16%

Cost

Savings

16%

Group

Net Flows

12%

Customer

Experience

20%

Strategic

Scorecard

20%

Cumulative Operating

Cash Generation

20%

2024

2025

SII Surplus

20%

Relative TSR

20%

Net Operating

Cash Receipts

20%

Return on

Capital

20%

Relative TSR

20%

Cumulative

Net Flows

20%

Cumulative Adjusted

Operating Profit

20%

Decarbon-

isation

– Investment

Portfolio

10%

Decarbon-

isation

– Investment

Portfolio

10%

Diversity,

Equity and

Inclusion

10%

Diversity,

Equity and

Inclusion

10%

2025 AIP

15% of the Corporate element of the AIP will

be assessed on Total Cash Generation. 20%

will be assessed on a Solvency II Shareholder

Own Funds Unrestricted Tier 1 (excluding

economics) metric. This supports our ambition

of delivering sustainable cash generation and

our goal of further strengthening our balance

sheet and creating the capacity to repay debt,

thereby creating an appropriate incentive for

Management to reduce leverage. 20% will

be assessed on Adjusted Operating Profit,

which responds to the current shareholder

focus on IFRS 17 profitability measures. 15%

will be assessed on cumulative run rate cost

savings, which is aligned to our target for

2026, as part of a broader 3-year target.

25% of the assessment will continue

to be based on Customer Experience

metrics and the final 5% will assess our

People experience with reference to

our employee engagement score.

In line with prior years, 80% of the AIP

assessment for the Executive Directors

will be based on the Corporate measures

as set out above with the remaining 20%

based on the Strategic Scorecard.

2025 LTIP

20% of the assessment will be based on

Cumulative Operating Cash Generation.

This is our key cash measure, with externally

disclosed targets, and is included in the LTIP

rather than the AIP for alignment with the

long term nature of these targets. 20% will

be based on Solvency II Surplus recognising

the importance of a resilient balance sheet in

supporting our investment to grow, optimise

and enhance our business. 20% will be

based on Cumulative Adjusted Operating

Profit, which is included in both the AIP and

LTIP given the importance of this measure

to shareholders. 20% will continue to be

based on relative TSR, and non-financial

metrics (20%) will continue to measure

decarbonisation and ethnicity representation

amongst our senior leadership population

Consistent with previous years, targets

have been set with reference to the Group

Annual Operating Plan and maximum

payouts will only be delivered in the event of

exceptional performance. The LTIP targets

are disclosed prospectively on page 151.

Annual Incentive Plan

Long Term Incentive Plan

Implementation of pay in 2025

A salary increase of 2.6% effective from

1 April 2025 is proposed for Andy Briggs,

slightly lower than the overall pay budget

for the wider workforce of 3.0%. As a result

of his joining date, Nicolaos Nicandrou will

not be eligible for a salary increase in 2025.

Further details on how we implement pay for

the wider workforce is set out on page 157.

Looking forward

I hope that the matters set out in this report

will meet our shareholders’ expectations

and will therefore be supported through the

resolution proposed at the 2025 AGM. We

look forward to engaging with shareholders

later in the year as we undertake the review

of the Directors’ Remuneration policy

ahead of its renewal at the 2026 AGM.

Nicholas Shott

Chair of the Remuneration Committee

16 March 2025

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Directors’ Remuneration report continued

Overview

Remuneration structure

Base salaries are reviewed each year against companies

ofsimilar size and complexity.

AIP to motivate employees and incentivise delivery

ofannualperformance targets aligned to strategy.

LTIP to motivate and incentivise delivery of sustained

performance over the long term in line with our

strategy andpurpose, and to promote alignment

with shareholders’ interests.

Market competitive benefits are provided in a consistent

manner with the wider workforce.

Competitive employer sponsored Defined contribution

pension plan with contributions at the same level as the

widerworkforce.

Statement of intent

The Committee adopts a simple and transparent approach

to remuneration to support the Group’s purpose, values

and strategic priorities, in order to ensure the sustainability

of the business. When setting the remuneration for

Executive Directors, the Committee carefully considers

wider workforce pay across the whole organisation.

Company performance snapshot

84.4%

Outturn of 2024 AIP

51.1%

Outturn of 2022 LTIP

Alignment to purpose and strategy

Our Remuneration policy is designed to align to our purpose and is

focused on the delivery of our strategy and long-term value creation

for our stakeholders.

Our variable pay plans ensure remuneration outcomes are directly

aligned to our core strategic priorities as shown on page 140 and to

deliver long-term sustainable value. A significant portion of Executive

remuneration is delivered in shares and deferred for up to five years.

Our purpose

Our strategy

Pay for performance

A material portion of total remuneration is based on variable

pay (c.80% of total maximum remuneration for the Group CEO

and Group CFO). Performance targets are set with reference

to the Annual Operating Plan (‘AOP’) and consensus such that

maximum payouts can only be achieved for exceptional

performance. Under the maximum scenario, over 63% of the

Group’s CEO maximum remuneration is delivered in shares,

deferred for three years under the Deferred Bonus Share

Scheme and subject to a combined vesting and holding period

of five years for LTIP. This ensures strong alignment between

Executive Directors and shareholders.

For more information see page 141

Helping people secure

a life of possibilities

Building a

sustainable

business

Enhance

Grow

People

Optimise Planet

Remuneration at a glance

Pension

Benefits

Annual Incentive Plan

Long Term Incentive Plan

Base salary

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Phoenix Group Holdings plc Annual Report and Accounts 2024

16%

weighting

16%

weighting

12%

weighting

20%

weighting

20%

weighting

16%

weighting

Total Cash Generation

New Business Contribution

Cost Savings

Group Net Flows

Customer Experience

Strategic Scorecard

20%

weighting

20%

weighting

20%

weighting

20%

weighting

20%

weighting

Net Operating Cash Receipts

Return on Shareholder Value

Persistency

Relative Total Shareholder Return

Decarbonisation

Fixed pay

27%

Salary

24%

Benefits

Pension 3%

Variable pay 73%

AIP

39%

LTIP 34%

Fixed pay

27%

£844k

£11k

£89k

£1,323k

£1,181k

Variable pay

73%

2024 at a glance

Remuneration for 2024

2024 single figure

The outcomes under the AIP and LTIP resulted

in a single figure outcome for Andy Briggs of

£3.448 million, for Rakesh Thakrar £0.909 million,

and for Nicolaos Nicandrou £0.168 million.

Charts showing the breakdown of fixed vs variable

remuneration for the outgoing and incoming CFOs

are not shown given the change in role during the year.

2024 AIP weighted performance outturn

Total AIP out of maximum opportunity

CEO total pay

(Andy Briggs)

£3.4m

Group CEO

(Andy Briggs)

78.3%

Group CEO

(Andy Briggs)

51.1%

Former Group CFO

(Rakesh Thakrar)

74.3%

Overall outturn

82.5%

Overall outturn

51.1%

Group CFO

(Nicolaos Nicandrou)

82.5%

Former Group CFO

(Rakesh Thakrar)

51.1%

This chart reflects AIPoutcomes

prior to any discretionary

adjustment. The individual totals

below reflect outcomes post

adjustment (see pages 143 to 145

for further details).

Fixed vs variable pay (% weighting)

Group CEO (Andy Briggs)

See page 145 for

further details

See page 145 for

further details

2022 LTIP weighted performance outturn

Total LTIP out of maximum opportunity

CFO total pay

(Nicolaos Nicandrou)

£0.2m

Former CFO total pay

(Rakesh Thakrar)

£0.9m

See page 142 for

further details

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Group CEO Former Group CFO

Rakesh Thakrar

Group CFO

Nicolaos Nicandrou

350%

300% 300%

330%

457%

Shareholding guideline

Shares held at 31 December 2024

Directors’ Remuneration report continued

Shareholding requirement

A significant proportion of Executive

remuneration is delivered in shares which

are released over a period of five years.

In combination with our shareholding

guidelines, this aligns Executive

Directors with shareholders over the

long term. Shareholdings for Andy

Briggs, Rakesh Thakrar and Nicolaos

Nicandrou are shown to the right.

Further details on shareholding

requirements (including post-

cessation) are included in the

Remuneration policy on page 165.

2025 at a glance

Financial framework and strategic priorities

This table demonstrates how each of our performance measures for AIP and LTIP align with the Group’s strategic priorities.

Performance measures 2025

Financial framework and strategic priorities

Cash Capital Earnings Grow Optimise Enhance

AIP

Total Cash Generation

– – – – –

SII Shareholder Own Funds Unrestricted

Tier 1 (excluding economics)

– – – – –

Adjusted Operating Profit

– – – – –

Cost Savings – Cumulative run rate

– – – – –

Customer Experience

– – – –

Colleague Engagement eNPS

– – – – –

Strategic Scorecard

LTIP

Cumulative Operating

Cash Generation

– – – – –

SII Surplus

– – – – –

Cumulative Adjusted Operating Profit

– – – – –

Relative TSR

Diversity, Equity and Inclusion

– – – – –

Decarbonisation – Investment Portfolio

– – – – –

All employees participate in a common incentive plan ensuring consistency of corporate goals and individual performance management.

Certain sales colleagues in our Pensions and Savings Workplace function have additional functional metrics.

Percentages are calculated using the closing share price on 31 December 2024 (510.0 pence).

Nicolaos Nicandrou’s shareholding reflects his appointment date of 2 December 2024. The percentage

for Rakesh Thakrar is at 8 September 2024 when he stepped down from the Board. Shares included

are those held directly and beneficially, any unexercised vested LTIP awards and unvested DBSS awards

taking into account tax liabilities.

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Minimum On-target Maximum Maximum

with growth

100% 43%

38%

19%

34%

47%

15%

28%

38%

19%

Total fixed pay

AIP

LTIP

Share price growth

and dividends

969

2,269

5,087

6,279

Minimum On-target Maximum Maximum

with growth

100% 43%

38%

19%

34%

47%

15%

28%

38%

19%

Total fixed pay

AIP

LTIP

Share price growth

and dividends

808

1,903

4,275

5,279

Maximum 2025 2026 2027 2028 2029 2030

3 year performance period

LTIP

CEO – 275%

CFO – 275%

AIP

CEO – 200%

CFO – 200%

Pension

CEO – 12%

CFO – 12%

Pension

CEO – 12%

CFO – 12%

Benefits Benefits

Salary

CEO – £867k

CFO – £730k

Salary

CEO – £867k

CFO – £730k

1 year performance period

50% awarded

in cash

50% awarded

in shares

3 year deferral period

2 year

holding

period

Shares released

Shares vest

Alignment to shareholders

Our Executive remuneration is designed to align with shareholder interests to deliver long-term sustainable value. The diagram below shows

how a significant portion of Executive remuneration under the Remuneration policy is delivered in shares and deferred for up to five years.

Under the maximum scenario, over 63% of the Group CEO’s maximum remuneration is delivered in shares.

Group CFO (Nicolaos Nicandrou)

£000

Group CEO (Andy Briggs)

£000

Scenario charts

Name

Base salary

£000

Benefits

£000

Pension

£000

Total fixed

£000

Andy Briggs 867 11 91 969

Nicolaos Nicandrou 730 1 77 808

Minimum Consists of base salary, benefits and pension:

• Base salary is the salary to be paid in 2025.

• Benefits measured as benefits to be paid in 2025.

• Pension measured as the full entitlement of 12% of base salary when contributions paid into pension scheme, or approximately

10.5% of base salary receivable after the reduction to payments made in cash for employers’ National Insurance Contributions.

On-target Based on what the Executive Director would receive if performance was on-target:

• AIP: consists of the on-target annual incentive (100% of base salary for Group CEO and Group CFO).

• LTIP: consists of the threshold level of vesting (50% of base salary for Group CEO and Group CFO).

Maximum Based on the maximum remuneration receivable:

• AIP: consists of the maximum annual incentive (200% of base salary for Group CEO and Group CFO).

• LTIP: assumes maximum vesting of awards and valued as on the date of grant (award of 275% of base salary

for Group CEO and Group CFO).

Maximum

with growth

Based on the maximum remuneration receivable assuming share price growth of 50%:

• AIP: consists of the maximum annual incentive (200% of base salary for Group CEO and Group CFO).

• LTIP: assumes maximum vesting of awards and valued as on the date of grant (award of 275% of base salary

for Group CEO and Group CFO) and assumes 50% share price growth.

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Directors’ Remuneration report continued

This section of the Directors’ Remuneration report sets out

the Executive Directors’ remuneration for 2024. It contains

the annual report on remuneration which forms part of

the Directors’ Remuneration report to be proposed for

approval by the Group’s shareholders at the Group’s 2025

AGM on 13 May 2025.

Introduction

This report contains the material required to be set out as the Directors’ Remuneration report (‘Remuneration report’) for the purposes

of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2008 (as amended)

(‘the DRR regulations’).

Directors’ Remuneration policy

A summary of the Remuneration policy approved by the shareholders at the 2023 AGM is set out on pages 161 to 165 of this Remuneration report.

The full policy can be found on the Company’s website and on pages 118 to 126 of the 2022 Annual Report and Accounts.

Implementation report – Audited information

Single Figure Table

Salary/fees

1,2

Benefits

1,3

Pension

1,4

Total

fixed pay

Annual

incentive

1,5

Long-term

incentives

Total

variable pay Total

£000

2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024

2023

(restated) 2024

2023

(restated) 2024

2023

(restated)

Executive

Directors

Andy

Briggs 844 836 11 11 89 88 944 935 1,323 1,227 1,181 813 2,504 2,040 3,448 2,975

Rakesh

Thakrar 347 500 8 11 38 54 393 565 516 689 n/a

318 516 1,007 909 1,572

Nicolaos

Nicandrou 61 – 0 – 7 – 68 – 100 – – – 100 – 168 –

1 Salary, Benefits, Pension and Annual Incentive for Rakesh Thakrar and Nicolaos Nicandrou reflect the time they served on the Board (1 January 2024 to 8 September 2024

for Rakesh, and 2 December 2024 to 31 December 2024 for Nicolaos). Salary for Andy Briggs reflects the full year salary implemented in April 2023.

2 The Executive Directors are entitled to adjust their salary/benefit combination under flexible benefits arrangements and the figures shown are before individual elections.

3 Benefits for Executive Directors include car allowance, private medical insurance, other taxable allowances, ShareSave and matching shares awarded under the Share Incentive Plan.

No individual benefit provided has a value which is significant enough to warrant separate disclosure.

4 Executive Directors are entitled to each receive a Company pension contribution of 12%, (plus salary sacrifice uplift of 10% of the employee contribution) aligned to the wider workforce.

This may be paid as a cash supplement (without the salary sacrifice uplift), reduced for the effect of employers’ National Insurance Contributions. Andy Briggs and Nicolaos Nicandrou

received contributions as cash supplements (10.5%), Rakesh Thakrar received a combination of cash supplement and contribution (10.8%).

No Director participated in a Defined benefit pension arrangement in the year and none have any prospective entitlement to a Defined benefit pension arrangement.

5 Annual incentive amounts are presented inclusive of any amounts which must be deferred into shares for three years and which are subject to continued employment (i.e. 50% of the AIP

award for 2024). In 2024 £661,635 of Andy Briggs’s incentive payment is subject to three-year deferral delivered in shares, £258,142 of Rakesh Thakrar’s incentive payment and £50,200

of Nicolaos Nicandrou’s incentive payment is subject to a similar deferral (2023: Andy Briggs deferral was £613,644 and Rakesh Thakrar’s deferral was £344,706).

6 The 2024 value for long-term incentives is an estimate of the vesting outcomes for LTIP awards granted in 2022 which are due to vest once the Full Year results are announced.

This vesting level is at 51.1%, reflecting outcomes against the performance measures described on page 145 to 31 December 2024. This vesting outcome is then applied to the average

share price between 1 October 2024 and 31 December 2024 (511.06 pence) to produce the estimated long-term incentives figures shown for 2024 in the above table. The assumptions

will be trued up for actual share price at the day of vesting in the Directors’ Remuneration report for 2025. For Andy Briggs, the disclosed LTIP figure of £1,181k comprises £917k representing

the proportion of the original LTIP award which ultimately vested, plus the value of dividend roll-up on those shares of £264k. No portion of the award related to share price appreciation.

7 For 2021’s LTIP awards which are reflected in the 2023 long-term incentives column above, the performance conditions were met as to 41.1% of maximum. These values reflect the value of the

Company’s shares on the date of vesting which was 25 March 2024 (527.2 pence per share) multiplied by the number of shares vesting whereas the equivalent figure within the published 2023

Single Figure Table was an estimate which reflected the average share price between 2 October 2023 and 29 December 2023 (478.6 pence per share) and certain assumptions regarding the

cumulative value of dividends on the number of shares vesting. See footnote under the Share-based awards table on page 147 with regard to this vesting date.

8 Details for Rakesh Thakrar’s estimated vesting of his 2022 LTIP are shown in the ‘Payments for Loss of Office’ section on page 158 in line with market practice for leavers.

Annual report on remuneration

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Phoenix Group Holdings plc Annual Report and Accounts 2024

AIP outcomes for 2024 – Audited information

The overall weightings between Corporate measures and Strategic Scorecard for AIP in 2024 were:

• 80% – Corporate (financial and customer) performance measures.

• 20% – Strategic Scorecard (strategic company priorities).

As described in the Remuneration policy, 50% of 2024 AIP outcomes will be delivered as an award of deferred shares

under the DBSS which will vest after a three-year deferral period subject to continued employment or good leaver status.

Corporate (financial and customer) performance measures

The Corporate (financial and customer) measures represent 80% of the overall incentive opportunity. The table below details

the outcome against the measures and targets that were agreed by the Remuneration Committee at the start of the year.

Performance measure

Threshold

performance

level of

2024 AIP

Target

performance

level for

2024 AIP

Maximum

performance

level for

2024 AIP

Performance

level attained

for 2024

AIP

% of Corporate

element based

on performance

measure

achieved

Total Cash Generation (£m) 1,580 1,680 1,780 1,779 20.0% 19.9%

New Business Contribution (£m) 302 336 370 392 20.0% 20.0%

Cost Savings (£m) 40 50 60 63 20.0% 20.0%

Group Net Flows (£m) (5,926) (3,924) 80 (4,395) 15.0% 5.7%

Customer Satisfaction – Telephony (%)

86% 88% 90% 88% 6.3% 3.1%

Customer Satisfaction – Digital (%)

92% 94% 96% 94% 6.3% 3.1%

Service Levels (Demand Processed) (%)

88% 90% 92% 94% 6.3% 6.3%

Complaints Resolved in < 3 days (%)

31% 33% 35% 36% 6.3% 6.3%

Total of Corporate element 100.0% 84.4%

1 Customer Feedback scores as reported through a survey following telephony service, where customers can rate us between 1–5. The approach is now consistent across each platform/entity for 2024.

2 Customer Satisfaction scores as gathered immediately following Customer Digital journeys, where customers can rate their experience between 1–5. For Standard Life, all transactional journeys for

which feedback is live on our secure site including all transactional journeys for which feedback is live on our mobile app. For Phoenix Life, encashment journey for which survey is live on MyPhoenix.

3 Percentage of all back-office manual workflow completed within service level (services levels vary across entities). Across entities this includes Claims & Servicing, with Standard Life also including

new business acquisition and straight through processing.

4 Percentage of complaints that were closed within three days of the date of receipt. The target was reduced from 35% in 2023 to 33% in 2024 in light of a change in complaint makeup and a reducing

industry average; the Committee was satisfied the targets remained equivalently stretching to prior years and that good customer outcomes were protected through a series of supporting metrics.

Total Cash Generation in 2024 was £1,779 million above the top end of our target for the year.

New business contribution benefited from strong inflows and lower acquisition costs in our Pensions and Savings business. New business

contribution in our Retirement Solutions business benefited from progress with improving our capital efficiency in annuities, where a reduced

capital strain means we delivered broadly similar volumes to 2023 but with one-third less capital.

Our focus on driving cost efficiencies has enabled us to deliver £63 million of cost savings in 2024.

As described in the Committee Chair’s covering letter (page 136), the Group has achieved strong financial and non-financial performance and

progress on key strategic objectives during the year. The Committee is satisfied that the remuneration outcomes for 2024 are an appropriate

reflection of the year’s business performance and its trajectory providing strong alignment between pay and performance and with appropriate

regard to both the management of risk within our incentives and the broader stakeholder experience. Prior to confirming the outcomes for

the 2024 AIP, the Committee reviewed in detail the extent to which the Group had operated within its stated risk appetite during the year and

determined that no moderation of the 2024 formulaic outcome was necessary. Separately, the Committee made individual adjustments to the

AIP outcomes which are set out on page 145.

Whilst the performance measures for the 2025 AIP have been disclosed (see Implementation of Remuneration policy in 2025 on page 150),

theactual performance targets for these measures are regarded as commercially sensitive at the current time and accordingly are not disclosed.

However, as in previous years, the Group intends to disclose the performance targets for 2025’s AIP retrospectively in next year’s Remuneration

report on a similar basis to the disclosures made above in respect of 2024’s AIP.

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Directors’ Remuneration report continued

Strategic Scorecard

The Strategic Scorecard represents 20% of the overall incentive opportunity. Metrics and targets relating to this scorecard were agreed by the

Remuneration Committee at the start of the year. The table below details the outcome against targets of the Strategic Scorecard together with

weightings and outturn.

Strategic priority Weighting Description Base Performance Outcome

CEO and

CFO

outcome

Grow organically

and through M&A

by better addressing

customer needs

25% OCG £1,141m £1,403m Strong

75%

18.8%

Workplace new

scheme wins

£1,800m £1,804m

Optimise our

in-force business

25% BPA IRR 14% >14% Exceptional

100%

25.0%

Total Group management

actions – SII Surplus generating

£430m £745m

Solvency leverage 36% 36%

Enhance our

operating model

and our culture

25% GCM Action

delivery plan

Green (<=10%

overdue)

Amber Good

50%

12.5%

Employee Engagement eNPS 34 23

Female senior leaders (%) 40% 40%

Integrations – Capital synergies lifetime

(ReAssure and SLoC)

£1,190m £1,190m

Integrations – Cost synergies lifetime

(ReAssure and SLoC)

£72m £72m

Progress on transformation milestones Green Green

Planet 12.5% Roadmap developed to deliver

the full £40bn ambition

Roadmap

agreed

Complete Strong

75%

9.4%

Continue trajectory to 2025

carbon intensity target

To 83 tonnes

of CO

/£m by

end 2024

62 tonnes

e/£m

People 12.5% Standard Life brand awareness

– 45–65 year olds

83% 84% Strong

75%

9.4%

Pension savings gap awareness campaign 1 million people 1.4m

Total 100% 75.0%

As described on page 143 each year the Committee reviews the AIP outcomes in the context of the Group’s management of risk, overall business

performance and the broader stakeholder experience. Last year we reported that there had been problems relating to the implementation of IFRS

17 in 2023, as a consequence of which we reduced the bonus payments for Rakesh Thakrar and Andy Briggs. Those problems continued into 2024

and therefore had a greater impact than had been foreseen originally and resulted in a restatement of our prior year results. The Remuneration

Committee has therefore concluded that it is appropriate to reduce Rakesh’s bonus for the period until he stepped down from the Board on

8 September by £57k (10%). In addition, in discussion with the Committee, Andy Briggs recognised that as CEO he has overall accountability and

has suggested – and the Committee has agreed – that his own bonus should be reduced. The Committee has determined that a reduction of £70k

(5%) is appropriate. There were no adjustments to outcome for Nicolaos Nicandrou.

As a result of these discretionary adjustments, overall outcomes under the AIP were 78.3% of maximum for Andy Briggs, 74.3% of maximum for

Rakesh Thakrar, and 82.5% of maximum for Nicolaos Nicandrou.

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The Committee determined it was appropriate to pay the following outcomes under the AIP:

Name

Corporate

element outcome

(80% weighting)

% of maximum

and £000

Scorecard

element outcome

(20% weighting)

% of maximum

and £000

Total

outcome

% of maximum

and £000

Discretionary

adjustment

% of outcome

and £000

Actual

outcome

% of maximum

and £000

Maximum

opportunity as

% of salary

and £000

Andy Briggs 84.4% 75.0% 82.5% 5% 78.3% 200%

£1,140 £253 £1,393 £70 £1,323 £1,689

Rakesh Thakrar

84.4% 75.0% 82.5% 10% 74.3% 200%

£469 £104 £573 £57 £516 £695

Nicolaos Nicandrou

84.4% 75.0% 82.5% n/a 82.5% 200%

£82 £18 £100 n/a £100 £122

1 AIP figures for Rakesh Thakrar reflect the period from 1 January 2024 to 8 September 2024 when he stepped down from the Board.

2 AIP figures for Nicolaos Nicandrou reflect the period from 2 December 2024 when he joined the Board to 31 December 2024.

LTIP outcomes for 2022 awards – Audited information

Performance measure Weighting Target range

Performance

achieved

Vesting

outcome

achieved

Net Operating

Cash Receipts

20% Target range of £3.800bn to £4.100bn

£4.968bn 100% 20.0%

Return on

Shareholder Value

20% Target range between 3% CAGR and 5% CAGR

(3.5)% 0.0% 0.0%

Persistency 20% Target range between 7.6% and 6.2% 7.3% 41% 8.2%

Decarbonisation –

Operations

10% Target range of 15%–25% reduction year-on-year against 2019

carbon intensity of Scope 1 and 2 emissions from occupied

premises and Scope 3 emissions from business travel >25.0% 100% 10.0%

Decarbonisation –

Investment Portfolio

5% each Net zero strategy applied between target range

of 75% and 85% of assets in scope by 2025 <75.0% 0% 0.0%

Reduction of 18–22% in portfolios where a net zero

strategy has been applied

>22.0% 100% 5.0%

Relative TSR 20% Target range between median performance against the

constituents of the FTSE 350 (excluding Investment Trusts)

rising on a pro rata basis until full vesting for upper

quintile performance

56th

percentile 40% 7.9%

Total 51.1%

The above targets were all measured over the period of three financial years 1 January 2022 to 31 December 2024.

We have significantly outperformed our three year Net Operating Cash Receipts due to the strong performance in 2023 supported by the

c.£0.4billion benefit from the completion of the Phoenix Life and Standard Life Part VII, and the strong performance in 2024 due to the higher

thanexpected Operating Cash Generation delivered in the year.

Underpin and discretion

In addition to the above targets, the Committee confirmed that the underpin performance condition relating to risk management within

the Group, customer satisfaction and, in exceptional cases, personal performance had been achieved in the performance period.

Windfall gains

The Committee reviewed the grant price of the 2022 LTIP (635.9 pence) compared to the grant price of the 2021 LTIP (736.2 pence) and was

satisfied that no adjustments were required to the awards on grant for windfall gains. The Committee has again reviewed the position ahead of the

vesting, taking into account the Group’s share price as at 28 February 2025 (518.0 pence) and is satisfied that no windfall gains have occurred and

that no adjustment is required on vesting.

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Directors’ Remuneration report continued

Share-based awards

LTIP targets

The performance conditions for the 2022, 2023 and 2024 awards are set out below.

2022 award 2023 award 2024 award

Performance measure

20% Net Operating Cash Receipts

20% Return on Shareholder Value

20% Relative TSR

20% Persistency

20% Decarbonisation

20% Net Operating Cash Receipts

20% Group In-Force Long-Term

Free Cash

20% Relative TSR

20% Persistency

20% Decarbonisation

20% Net Operating Cash Receipts

20% Return on Capital

20% Cumulative Net Flows

20% Relative TSR

10% Decarbonisation (Investments)

10% Diversity & Inclusion

Net Operating Cash Receipts Target range of £3.800bn

to £4.100bn

Target range of £3.556bn

to £4.006bn

Target range of £3.848bn

to £4.298bn

Return on Shareholder Value Between 3% CAGR and 5% CAGR n/a n/a

Group In-Force Long-Term Free Cash n/a Target range between £14.7bn

and £15.4bn

n/a

Persistency Target range between 7.6%

and 6.2%

Target range between 7.10%

and 6.08%

n/a

Decarbonisation – Investment Portfolio

Net zero strategy applied between

target range of 75% to 85% of

assets in scope by 2025 Reduction

of 18%–22% in portfolios where a

net zero strategy has been applied

Net zero strategy applied to target

range of 80% to 90% of in-scope

assets and 25% reduction in carbon

intensity (provided in the best

interests of customers)

Target range of 29% to 35% carbon

intensity reduction of equity and

credit portfolio and target range

of 87.5% to 100% assets to have

agreed decarbonisation approach

taken through governance.

Decarbonisation – Operations Target range of 15% to 25%

reduction year on year against

2019 carbon intensity of Scope 1

and 2 emissions from occupied

premises and Scope 3 emissions

from business travel

Target range of 75% to 85%

reduction pre-offset, plus net

zero post offset

n/a

Relative TSR

Target range between median

performance against the

constituents of the FTSE 350

(excluding Investment Trusts) rising

on a pro rata basis until full vesting

for upper quintile performance

Target range between median

performance against the

constituents of the FTSE 350

(excluding Investment Trusts) rising

on a pro rata basis until full vesting

for upper quintile performance

Target range between median

performance against the

constituents of the FTSE 350

(excluding Investment Trusts) rising

on a pro rata basis until full vesting

for upper quintile performance

Return on Capital n/a n/a Target range between

12.6% and 14.7%

Cumulative Net Flows n/a n/a Target range between

£(7.1)bn and £3.8bn

Diversity and Inclusion –

Senior Leadership Black, Asian

and Ethnic Minority Representation

n/a n/a Target range between

>12% and >14%

1 For each measure above, 25% of the award vests at threshold performance rising on a pro rata basis until 100% vests. Measured over three financial years commencing with the year of award.

2 For the investment portfolio that is within control and influence.

3 Includes where the approved strategy can be to take no further action.

4 The Committee must also consider whether the TSR performance is reflective of the underlying performance of the Company measured over three financial years commencing with the year of award.

A consistent approach to target setting for the LTIP metrics has been taken each year with reference to the Group’s long range plan so that delivery

of target performance is considered to be comparably stretching for each award. As a result, the cash targets have not always increased and did

indeed reduce in 2023, reflecting our business model shifting from being a closed life consolidator to an organic growth business. The 2025 LTIP

cash targets disclosed on page 151 have been set with reference to the Group’s financial framework.

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Phoenix Group Holdings plc Annual Report and Accounts 2024

LTIP underpin

Awards are subject to an underpin relating to risk management within the Group, consideration of customer satisfaction and, to meet Solvency II

requirements, in exceptional cases, personal performance.

Share-based awards – Audited information

As at 31 December 2024, Executive Directors’ interests under long-term share-based arrangements were as follows:

LTIP

Name Date of grant

Share price

on grant

No. of

granted as at

1 Jan 2024

No. of

granted in

2024

No. of

dividend

accumulating

at vesting

No. of

exercised

No. of

lapsed

No. of

shares as at

31 Dec 2024

Vesting

date

Andy Briggs

LTIP 13 Mar 2020 620.5p 192,840 – – – – 192,840 13 Mar 2023

LTIP 12 Mar 2021 736.2p 298,831 – 76,600 _ (221,130) 154,301 25 Mar 2024

LTIP 18 Mar 2022 635.9p 351,133 – – – – 351,133 18 Mar 2025

LTIP 17 Mar 2023 576.6p 402,712 – – – – 402,712 17 Mar 2026

LTIP 28 Mar 2024 535.8p – 433,373 – – – 433,373 28 Mar 2027

1,245,516 433,373 76,600 (221,130) 1,534,359

Rakesh Thakrar

LTIP 11 Mar 2019 700.4p 37,466 – 5,675 (43,141) – – 11 Mar 2022

LTIP 13 Mar 2020 620.5p 73,628 – – – – 73,628 13 Mar 2023

LTIP 12 Mar 2021 736.2p 116,816 – 29,942 – (86,441) 60,317 25 Mar 2024

LTIP

18 Mar 2022 635.9p 152,530 – – – (26,556) 125,974 18 Mar 2025

LTIP

17 Mar 2023 576.6p 174,935 – – – (88,503) 86,432 17 Mar 2026

LTIP

28 Mar 2024 535.8p – 188,254 – – (159,912) 28,342 28 Mar 2027

555,375 188,254 35,617 (43,141) (361,412) 374,693

1 In addition to the share options awarded under the LTIP shown above, dividends are awarded as additional options at vest. Dividends calculated are based on the final vesting

figure (pre-performance) to reflect dividends paid from the date of award to the date of vest. Once the additional holding period of two years has been reached, further dividends

are awarded to reflect dividends paid from the date of vest to the end of the holding period.

2 Rakesh Thakrar exercised his 2019 LTIP on 29 March 2024 at a share price of 553.06 pence resulting in an overall gain of £238,596. The gain in 2023 was nil for both Directors

as whilst they had LTIP awards which had vested, they could not be exercised due to the additional two-year holding requirement.

3 The 2021 LTIP award vested at 41.1% of maximum. The 2020 LTIP award vested at 44.3% of maximum.

4 The vesting of the 2021 LTIP award granted on 12 March 2021 was delayed until the announcement of the 2023 Full Year results, with the final vesting on 25 March 2024.

Awards granted on 18 March 2022 will vest after the 2024 Full Year results are announced. LTIP awards made to all members of the Executive Committee are subject to

a three-year performance and a two-year holding period.

5 LTIP awards for Rakesh Thakrar have been adjusted to reflect the period between the date of grant to the date of stepping down from the Board on 8 September 2024.

DBSS

The DBSS is the share scheme used for the deferral of the AIP. Whilst no performance conditions are applicable, awards are subject to continued

employment or a good leaver status.

Name Date of grant

Share price

on grant

No. of

granted as at

1 Jan 2024

No. of

granted in

2024

No. of

dividend

accumulating

at vesting

No. of

exercised

No. of shares

lapsed/waived

No. of

shares as at

31 Dec 2024

Vesting

date

Andy Briggs

DBSS 12 Mar 2021 736.2p 67,269 – 17,241 (84,510) – – 12 Mar 2024

DBSS 18 Mar 2022 635.9p 73,610 – – – – 73,610 18 Mar 2025

DBSS 17 Mar 2023 576.6p 91,285 – – – – 91,285 17 Mar 2026

DBSS 28 Mar 2024 535.8p – 114,513 – – – 114,513 28 Mar 2027

232,164 114,513 17,241 (84,510) – 279,408

Rakesh Thakrar

DBSS 12 Mar 2021 736.2p 27,381 – 7,015 (34,396) – – 12 Mar 2024

DBSS 18 Mar 2022 635.9p 39,209 – – – – 39,209 18 Mar 2025

DBSS 17 Mar 2023 576.6p 52,071 – – – – 52,071 17 Mar 2026

DBSS 28 Mar 2024 535.8p – 64,326 – – – 64,326 28 Mar 2027

118,661 64,326 7,015 (34,396) – 155,606

1 In addition to the share options awarded under the DBSS shown above, dividends are awarded as additional options at vest. Dividends calculated are based the final vesting

figure to reflect dividends paid from the date of award to the date of vest.

2 Total gains of Directors from share options exercised under the DBSS in 2024 were £634,753 (2023: £102,537). Andy Briggs exercised on 26 March 2024 at a share price

of 526.00 pence. Rakesh Thakrar exercised on 29 March 2024 at a share price of 553.06 pence.

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Directors’ Remuneration report continued

Scheme interests awarded in the year – Audited information

Name

Date

of award

Type

of award

Nature of

the award

How the

award is

calculated

Face value

of award

Percentage

vesting at

threshold

performance

Vesting

date

Performance

measures

Andy Briggs 28 Mar 2024 LTIP Nil Cost Option 275% of salary £2,322,320 25% 28 Mar 2027

See page

146

Andy Briggs 28 Mar 2024 DBSS Nil Cost Option 50% of AIP £613,644 – 28 Mar 2027 None

Rakesh Thakrar 28 Mar 2024 LTIP Nil Cost Option 200% of salary £1,008,800 25% 28 Mar 2027

See page

146

Rakesh Thakrar 28 Mar 2024 DBSS Nil Cost Option 50% of AIP £344,706 – 28 Mar 2027 None

1 The DBSS awards have no threshold performance level.

2 Vesting at threshold is capped at 50% of salary.

The face value represents the maximum vesting of awards granted (before any dividends are applied) and is calculated using a three-day

average closing middle market share price prior to the date of grant (2024 LTIP and DBSS price was 535.87 pence).

ShareSave – Audited information

Name

As at

1 Jan 2024

Options

granted

Options

exercised

Options

lapsed

As at

31 Dec 2024

Exercise

price

Exercisable

from Date of expiry

Andy Briggs 3,056 – – (3,056) – 589.0p 01 Jun 2024 01 Dec 2024

Andy Briggs – 4,437 – – 4,437 418.0p 01 Dec 2027 01 Jun 2028

Rakesh Thakrar

8,359 – – (7,037) 1,322 378.0p – –

Nicolaos Nicandrou

– – – – – – – –

1 The figures above reflect the position at the point Rakesh Thakrar stepped down from the Board on 8 September 2024. Following his exit from the Group, his outstanding ShareSave lapsed

in line with HMRC rules for the treatment of leavers.

2 Nicolaos Nicandrou was not eligible to join the 2024 ShareSave due to his appointment date of 2 December 2024.

ShareSave options are granted at a 20% discounted option price, calculated using the three-day average share price immediately

before the invitation date.

Andy Briggs did not exercise his 2021 ShareSave and instead, opted to save the maximum amount permitted under ShareSave 2024.

There was nil gain in 2024 for both Directors (2023: nil).

Aggregate gains of Directors from share options exercised under all share plans in 2024 was £873,349 (2023: £102,537). This figure

relates to Andy Briggs and Rakesh Thakrar exercising their 2021 DBSS and Rakesh exercising his 2019 LTIP.

During the year ended 31 December 2024, the highest mid-market price of the Company’s shares was 576.5 pence and the lowest

mid-market price was 476.0 pence. At 31 December 2024, the Company’s share price was 510.0 pence.

Executive Directors’ interests – Audited information

The number of shares and share plan interests held by each Director and their connected persons are shown below:

Name

interests as at

1 January

2024 or date

of appointment

if later

interests as at

31 December

2024 or

retirement if

earlier

Total share plan

interests as at 31

December 2024 –

Subject to

performance

measures

Total share plan

interests as at 31

December 2024

– Not subject to

performance

measures

Total share plan

interests as at 31

December 2024 –

Vested but

unexercised

scheme interest

Andy Briggs 378,971 423,442 1,187,218 285,846 347,141

Rakesh Thakrar

124,779 165,581 240,748 163,934 133,945

Nicolaos Nicandrou 0 0 0 0 0

1 Share figures have been restated due to partnership under the Share Incentive Plan being previously included.

2 Figures include DBSS awards, shares purchased and awarded under the Share Incentive Plan and options granted under ShareSave.

3 Reflects the position at 8 September 2024 when Rakesh Thakrar stepped down from the Board.

The share interests of the following Directors have increased between 31 December 2024 and 14 March 2025 (being the latest practicable

date prior to the release of this Annual Report). Andy Briggs acquired 87 shares following purchases under the Group’s Share Incentive Plan.

Nicolaos Nicandrou joined the Share Incentive Plan in January 2025 and has acquired 28 shares following his first purchase in March 2025.

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Shareholding requirements – Audited information

The Executive Directors are subject to shareholding requirements during their employment with the Group and for a period of two years post

termination of employment. Andy Briggs, Nicolaos Nicandrou and Rakesh Thakrar are subject to a post-cessation shareholding of 100% of their

in-employment shareholding for a period of two years post-employment. The extent to which Executive Directors have achieved the requirements

by 31 December 2024 (using the share price of 510.0 pence as at 31 December 2024) is summarised below.

Vested share awards no longer subject to performance conditions and unvested DBSS awards (both discounted for tax liabilities) are included

within the Shareholding requirements. In addition to the share awards and shares previously acquired, Andy Briggs retained 44,471 net shares

following his 2021 DBSS exercise and, through participation in the Share Incentive Plan, acquired a further 554 shares (partnership and dividend)

during 2024. Rakesh Thakrar retained 18,100 net shares following his 2021 DBSS exercise and 22,702 net shares following his 2019 LTIP exercise.

A further 591 shares (partnership and dividend) were acquired through participation in the Share Incentive Plan (up to 8 September when he

stepped down from the Board).

The extent to which the Executive Directors have achieved their shareholding percentages are shown below:

Name

Shareholding

requirement

(minimum %

of salary)

Shareholding

held as at

31 December

2024

(% of salary)

Andy Briggs 350% 457%

Rakesh Thakrar

300% 330%

Nicolaos Nicandrou

300% 0%

1 Rakesh Thakrar’s shareholding at 8 September 2024 when he stepped down from the Board.

2 Nicolaos Nicandrou’s shareholding reflects his appointment date of 2 December 2024.

The post-cessation shareholding requirement is monitored and enforced by direct liaison and confirmation with the Executive Directors and their

brokers; all trades and transfers are notified to the Group by the relevant Director and registered accordingly.

The Executive Directors are required to sign a declaration that they have not, and will not at any time during their employment with the Group,

enter into any hedging contract in respect of their participation in the AIP, LTIP, ShareSave, Share Incentive Plan or any other incentive plan of the

Company, or pledge awards in such plans as collateral, and additionally that they will neither enter into a hedging contract in respect of, nor pledge

as collateral, any shares which are required to be held for the purposes of the Company’s shareholding requirements or any vested LTIP award

shares subject to a LTIP holding period.

Non-Executive Directors’ interests – Audited information

The number of shares held by each Director and their connected persons are shown below:

Name

Share interests as

at 1 January 2024

or date of

appointment

if later

Share interests as

at 31 December

2024 or

retirement

if earlier

Sir Nicholas Lyons 105,990 105,990

Karen Green – –

Eleanor Bucks – –

Mark Gregory – –

Hiroyuki Iioka – –

Katie Murray 9,780 9,780

John Pollock 14,666 14,666

Belinda Richards – –

David Scott – –

Maggie Semple – –

Nicholas Shott 182,146 182,146

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Directors’ Remuneration report continued

Implementation of Remuneration policy in 2025 – Non-auditable

A summary of the packages of the Executive Directors is set out in the table below.

As explained in the Chair’s letter to shareholders (page 136) Nicolaos Nicandrou was appointed as Group Chief Financial Officer

on 2 December 2024. His remuneration for 2025 is included below.

Andy Briggs Nicolaos Nicandrou

Salary

£866,500, increase of 2.6%, lower than

wider workforce pay budget of 3%.

£730,000 as stated in the announcement on 6 November

2024 and in subsequent communications to shareholders

and proxy advisers.

Benefits Benefits in line with the rest of the workforce including legacy car allowance of £10,000 for Andy Briggs. Other benefits

available to both Executive Directors are aligned to the wider workforce and include: Private Medical Insurance, Death in

Service, Group Income Protection, plus other voluntary benefits through our flexible benefits scheme. Executive Directors

are also entitled to receive benefits in accordance with our Directors’ Remuneration policy which will be reported in the

Single Figure Table each year.

Pension Contribution rate of 12% of base salary ((i) reduced for the impact of employers’ NIC if taken as a cash payment), and (ii)

rebate given of 10% of employers’ NIC saving if taken as contribution. Both approaches aligned to our wider workforce.

Annual bonus 200% of base salary at maximum. Details of the 2025 AIP are set out below.

LTIP 275% of base salary. Details of the 2025 LTIP awards are set out overleaf.

Shareholding requirement 350% of base salary. 300% of base salary.

Where any performance vested LTIP awards are subject to a holding period requirement, the relevant LTIP award shares

(discounted for anticipated tax liabilities) will count towards the shareholding requirements. Unvested awards under the

DBSS which are not subject to performance conditions are included in this assessment on a net of tax basis. Unvested

awards under the LTIP are not included in this assessment.

Post cessation

shareholding requirement

Executive Directors are expected to retain the lower of their shareholding on termination or their full in-employment

shareholding requirement for two years.

Element of Remuneration policy

Annual Incentive Plan (‘AIP’) The Committee regularly reviews the performance measures of the incentive plans to ensure they remain aligned with

our strategy, are appropriately challenging, support the Company’s culture and values, and create value for stakeholders.

As detailed in the Committee Chair’s covering letter on page 137 the metrics for the 2025 AIP are shown below.

The Strategic Scorecard reflects 20% of the Executive Directors’ AIP. This will include a number of the strategic priorities

for the year (but avoiding duplication with any outcomes under the Corporate element) and which can be clearly articulated

and measured. Sustainability remains at the heart of our purpose and ESG metrics continue to form part of the Strategic

Scorecard elements of the Executive Directors.

The overall weightings between Corporate measures and Strategic Scorecard for AIP in 2025 are:

• Corporate (financial and customer) performance measures – 80%; no change from 2024.

• Strategic Scorecard (strategic Company priorities ) – 20%; no change from 2024.

The weightings of the AIP performance measures for 2025 are summarised below:

Performance measure

Corporate measure % of incentive potential

Total Cash Generation 12% (15% of Corporate element)

SII Shareholder Own Funds Unrestricted Tier 1 (excluding

economics)

16% (20% of Corporate element)

Adjusted Operating Profit 16% (20% of Corporate element)

Cost Savings – Cumulative run rate 12% (15% of Corporate element)

Customer Experience 20% (25% of Corporate element)

Colleague Engagement eNPS 4% (5% of Corporate element)

Strategic Scorecard 20%

Total 100%

Whilst the performance measures for the 2025 AIP are disclosed above, the actual performance targets for these

measures are regarded as commercially sensitive at the current time and accordingly are not disclosed.

However, as in previous years, the Group intends to disclose the performance targets for 2025’s AIP retrospectively

in next year’s Remuneration report on a similar basis to the disclosures made above in respect of 2024’s AIP.

Outcomes from performance measures for 2025’s AIP may be moderated by the Remuneration Committee in line with

the approved Remuneration policy. This will include a review by the Remuneration Committee of the extent to which the

Group has operated within its stated risk appetite and that there are no other risk-related concerns that would necessitate

moderation before any 2025 AIP outcomes are confirmed. A further underpin is introduced in 2025 relating to Consumer

Duty; the Committee will review the extent to which the Group delivers on its holistic Consumer Duty obligations during

the period and consider whether any moderation of the Customer outturn is necessary.

50% of outcomes under the 2025 AIP will be delivered as an award of deferred shares under the DBSS which will vest

after a three-year deferral period.

Deferred Bonus Share

Scheme (‘DBSS’)

DBSS awards made in 2025 (in respect of 2024’s AIP outcome) will be granted at the end of March following the

announcement of the Group’s 2024 annual results.

The number of options awarded will be calculated using the three-day average closing middle market share price prior

to the date of grant. The deferral period will run to the three-year anniversary of granting the DBSS awards. Dividend

entitlements will accrue and will be awarded as additional options prior to vest.

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Long Term Incentive

Plan (‘LTIP’)

Awards under the LTIP will be granted at the end of March following the announcement of the Group’s 2024 annual

results under a procedure similar to that described above for awards under the DBSS.

The number of options awarded will be calculated using the three-day average closing middle market share price prior

to the date of grant. The vesting period will run to the three-year anniversary of granting the LTIP awards. At this time,

the performance conditions will be determined. Dividend entitlements will accrue and will be awarded as additional

options prior to vest (also subject to performance conditions).

All annual LTIP awards made to Executive Directors are subject to a holding period so that any LTIP awards for which the

performance conditions are satisfied will not be released for a further two years. Dividend accrual for LTIP awards will

continue until the end of the holding period.

The Committee reviews the performance measures and targets of the LTIP each year to ensure these are aligned to

our strategic priorities, are appropriately challenging, support the Company’s culture and values, and create value

for stakeholders. For the 2025 LTIP, 20% of the assessment will be based on Cumulative Operating Cash Generation.

This is our key cash measure, with externally disclosed targets, and is included in the LTIP rather than the AIP for alignment

with the long term nature of these targets. 20% will be based on a Solvency II Surplus metric recognising the importance

of a resilient balance sheet in supporting our investment to grow, optimise and enhance our business. There are no

proposed changes to the non-financial metrics which will continue to measure decarbonisation and ethnicity

representation amongst our senior leadership population.

Consistent with previous years, targets have been set with reference to the Group Business Plan and maximum payouts

will only be delivered in the event of exceptional performance.

The targets are measured over a period of three financial years, commencing with financial year 2025.

As detailed in the Committee Chair’s covering letter on page 137 the 2025 LTIP financial measures have changed.

Measures, weightings and targets are shown below:

Performance measure Weighting Threshold target Full vesting target

Cumulative Operating Cash Generation 20% £4,425m £4,650m

SII Surplus 20% £3,800m £4,100m

Cumulative Adjusted Operating Profit 20% £3,000m £3,225m

Relative TSR

20% 50th percentile 80th percentile

Decarbonisation – Investment Portfolio

5% 37% reduction

(equity and credit portfolio)

43% reduction

(equity and credit portfolio)

Decarbonisation – Investment Portfolio

5% 60% of private assets with

agreed approach taken

through governance

90% of private assets

with agreed approach

taken through governance

Diversity, Equity and Inclusion –

Senior Leadership Black, Asian

and Ethnic Minority Representation

10% >12.0% >14.0%

1 Measured against the constituents of the FTSE 350 (excluding Investment Trusts), subject to the Committee considering

whether the TSR performance is reflective of the underlying financial performance of the Company.

2 For the investment portfolio that is within control and influence.

3 Includes where the approved strategy can be to take no further action.

A consistent approach to target setting is taken each year with reference to the Group’s business plan so that delivery

of target performance is considered to be comparably stretching for each award.

All 2025 LTIP awards are subject to an underpin relating to risk management within the Group, consideration of customer

satisfaction and, to meet Solvency II requirements, in exceptional cases, personal performance. This underpin relating

to the formulaic outturn of the LTIP reflects the extent to which the Group has operated within its stated risk appetite and

ensures that Management is not incentivised to accept risk outside of appetite in the pursuit of improved delivery against

LTIP performance targets. It also offers a broader assessment than the previous focus on the management of the Group’s

debt position.

The rules of the Company’s LTIP reserve discretion for the Committee to adjust the outturn for any LTIP performance

measures (from zero to any cap) should it consider that to be appropriate. The Committee may operate this discretion

having regard to such factors as it considers relevant, including the performance of the Group, any individual or business.

For both Executive Directors, awards vesting under the LTIP will be subject to a cap on threshold performance of the lower

of 50% of salary or 25% of maximum vesting.

With regard to the 2025 LTIP grants to be made in March, the Committee will review the outcome at the point of vesting

in 2028 to consider if any windfall gains have been made.

All-Employee Share Plans Executive Directors have the opportunity to participate in HMRC tax advantaged ShareSave and Share Incentive Plan on

the same basis as all other UK employees. Employees based in the Republic of Ireland and Germany have the opportunity

to join the Irish Share Incentive Plan and International Purchase Plan.

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Directors’ Remuneration report continued

Malus and clawback

All incentive plans are subject to malus/clawback. The Notes to the Remuneration policy table on pages 122 to 125 of the 2023 Annual Report

provide details, however these are shown below for information.

Malus (being the forfeiture of unvested awards) and clawback (being the ability of the Company to claim repayment of paid amounts as a debt)

provisions apply to the LTIP, DBSS and LTIP. The provisions may be applied where the Remuneration Committee considers it appropriate

to do so following:

• a review of the conduct, capability or performance of an individual;

• a review of the performance of the Company or a Group member;

• any material misstatement of the Company’s or a Group member’s financial results for any period;

• any material failure of Risk Management by an individual, a Group member or the Company; or

• any other circumstances that have a sufficiently significant impact on the reputation of the Company or Group.

Non-executive fees – Audited information

The emoluments of the Non-Executive Directors for 2024 based on the current disclosure requirements were as follows:

Directors’ salaries/fees Benefits

Total

Name

2024

£000

2023

£000

2024

£000

2023

£000

2024

£000

2023

£000

Non-Executive Chair

Sir Nicholas Lyons 460 38 5 – 465 38

Non-Executive Directors

Karen Green 161 173 5 2 166 175

Eleanor Bucks 96 7 5 – 101 7

Mark Gregory 133 86 4 3 137 89

Hiroyuki Iioka

– – 8 – 8 –

Katie Murray 108 107 3 2 111 109

John Pollock

153 146 6 4 159 150

Belinda Richards 134 126 4 2 138 128

David Scott

– – 2 – 2 –

Maggie Semple 142 128 3 3 145 131

Nicholas Shott 164 159 7 2 171 161

Total

1,551 970 52 18 1,603 988

1 The amounts within the benefits columns reflect the fact that the reimbursement of expenses to Non-Executive Directors for travel and accommodation costs incurred

in attending Board and associated meetings represent a taxable benefit. This position has been clarified with HMRC and the amounts shown are for reimbursed travel

and accommodation expenses (and the related tax liability which is settled by the Group).

2 Hiroyuki Iioka has waived all current and future emoluments with regard to his Directors’ fees.

3 John Pollock retired as a Director of the Company on 31 December 2024.

4 David Scott has waived all current and future emoluments with regard to his Directors’ fees.

5 The increase in fees for Non-Executive Directors of the Company reflect either chairing a Committee and/or changes to Committee membership.

The aggregate remuneration of all Executive and Non-Executive Directors under salary, fees, benefits, cash supplements in lieu of pensions

and annual incentive was £6.128 million (2023: £5.963 million).

Implementation of Remuneration policy in 2025 – Non-auditable

A summary of the annual base fees of the Non-Executive Directors is set out below.

Fee from

1 April 2024

£000

Fee from

1 April 2025

£000

Chair of the Group Board 460 472

Non-Executive Director 78 78

Senior Independent Director 20 20

Designated NED for Workforce Engagement 15 15

Committee Chair 30 30

Committee Member 18 18

The Committee agreed to increase the Chair’s fee to £472,000 (an increase of £12,000) with effect from 1 April 2025. He had previously not received

a fee increase since April 2021. The increase is below the overall pay budget for the wider workforce of 3.0%. Non-Executive Directors have not

received an increase in fees since 1 April 2023.

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Performance graph and table

The graph below shows the value to 31 December 2024 on a TSR basis, of £100 invested in Phoenix Group Holdings plc on 31 December 2014

compared with the value of £100 invested in the FTSE 100 Index (excluding Investment Trusts).

The FTSE 100 Index (excluding Investment Trusts) is considered to be an appropriate comparator for this purpose as it is a broad equity index

of which the Group is a constituent.

Total Shareholder Return

Value of a 100 unit investment made on 31 December 2014.

250

200

150

100

CEO single figure of total remuneration

Phoenix Group Holdings

FTSE 100 Index

Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018

Dec 2019 Dec 2020 Dec 2021 Dec 2022 Dec 2023 Dec 2024

£3,500

£3,000

£2,500

£2,000

£1,500

£1,000

£500

£0

CEO single figure

of total remuneration (£000)

The total figure of remuneration for 2020 shown above is a combination of the single figures for Clive Bannister and Andy Briggs to reflect the

change in Group CEO in 2020.

The DRR regulations also require that this performance graph is supported by a table summarising aspects of the Group CEO’s remuneration

for the period covered by the above graph.

Group CEO remuneration

Single figure

of total

remuneration

(£000)

Annual variable

element award

rates against

maximum

opportunity

(‘AIP’)

Long-Term

incentive vesting

rates against

maximum

opportunity

(‘LTIP’)

2024 Andy Briggs 3,448 78.3% 51.1%

2023 Andy Briggs 2,975 73% 41.1%

2022 Andy Briggs 3,112 87% 44.3%

2021 Andy Briggs 1,831 78% n/a

2020 Andy Briggs

1,706 83% 0.0%

Clive Bannister

3,5

321 81% n/a

2019 Clive Bannister 2,715 92% 68.5%

2018 Clive Bannister 2,567 86% 49.5%

2017 Clive Bannister 2,888 86% 64.0%

2016 Clive Bannister 2,878 84% 55.0%

2015 Clive Bannister 2,867 82% 57.0%

1 Figures are restated for actual share price in year of vesting.

2 Andy Briggs was not in receipt of a 2019 LTIP due to the timing of his appointment.

3 Clive Bannister left the role of Group CEO on 10 March 2020 and left the Group on the same date. Andy Briggs was appointed to the Board on 10 February 2020

and remained as CEO-designate until 10 March 2020.

4 See footnote 11 on page 130 of the 2020 Annual Report and Accounts for details of Andy Briggs’s LTIP vesting.

5 Clive Bannister’s 2020 single figure of total remuneration does not include compensation for loss of office.

6 Clive Bannister’s 2020 single figure of total remuneration does not include any value in respect of the 2018 LTIP. LTIP awards which vested after Clive Bannister

stepped down from the Board have been reported as Payments to Past Directors on page 132 of the 2022 Annual Report and Accounts and are not included

in the single figure of total remuneration, in line with the reporting regulations.

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Directors’ Remuneration report continued

CEO pay ratio

The table below details the CEO pay ratio for the year ended 31 December 2024, in line with the UK regulatory requirements. The ratios compare the

CEO total pay against the pay of three UK employees, whose earnings represent the lower quartile, median, and upper quartile positions of the UK

employee population. The calculations are based on Option A of the three methodologies, which we believe is the most statistically robust approach.

The CEO value used is the total single figure remuneration data for 2024 (as detailed on page 142). For the 2024 ratio, the total compensation figure

for UK employees follows the same methodology as for the CEO and is based on a full-time equivalent of actual earnings including amounts due

from incentive plans.

The Group reviewed the pay of the three identified employees at the 25th percentile, 50th percentile (median) and 75th percentile and concluded

that they were a fair representation of pay at the relevant quartiles of the UK employee base. Each individual was a direct employee on a permanent

or fixed-term contract during 2024 and received remuneration in line with Group-wide remuneration policies. None received an exceptional award

that would otherwise inflate their pay figure.

The table below sets out the salary and total single figure remuneration for the Group CEO and percentile employees included in the below ratios.

Year Methodology CEO

25th

percentile

50th

percentile

(median)

75th

percentile

Salary 2024 Option A 844,480 33,070 47,819 72,000

Total remuneration (single figure) 3,448,015 42,058 66,117 96,510

2024 ratio (total compensation) 82:1 52:1 36:1

2023 ratio (total compensation) 87:1 54:1 34:1

2022 ratio (total compensation) 100:1 69:1 41:1

2021 ratio (total compensation) 66:1 46:1 26:1

2020 ratio (total compensation) 78:1 54:1 31:1

2019 ratio (total compensation) 94:1 62:1 40:1

The above figures show a reduction in median ratio for 2024. Salary and total compensation levels at the relevant data points have increased

reflecting our continuing Group-wide organisational review and capability uplift to deliver on our future strategy. The figures also reflect our

changed demographic which included a number of lower paid colleagues transferring out of the Group as part of our ongoing outsourced strategy.

Colleagues are also covered for Death in Service and Group Income Protection and are eligible to participate in our all-employee share

plans, These figures are not included in the total remuneration figures shown above. Over half of all employees participate in our growth

and success through either the ShareSave Scheme, the Share Incentive Plan or the International Purchase Plan. We are committed to attracting

best-in-class talent at all levels with a compelling and competitive total reward proposition. This includes a holistic core and flexible suite

of benefits with the ability to customise these to meet individual needs, as well as industry-leading people policies including equal parental leave.

We are confident that the median pay ratio reported this year is consistent with our approach to pay, reward, career progression and growth for all

colleagues. All colleagues have the opportunity for annual pay awards, performance-driven pay and recognition, as well as access to opportunities to

develop their careers at The Group, ensuring we create an environment for everyone to feel it is the best place our colleagues have ever worked.

Directors’ percentage change in pay 2023 to 2024

In accordance with the DRR regulations, the table below provides a comparison of the percentage change in the prescribed pay elements of each

individual who was a Director during the year (salary, taxable benefits and annual incentive outcomes) between financial years 2023 and 2024

and the equivalent percentage changes in the average of all staff employed by the Group. As no staff are employed directly by Phoenix Group

Holdings plc, we have disclosed information for an appropriate group that is representative of the employees of the Group and its subsidiaries,

in line with the regulatory guidance for this disclosure). This Group was selected as being representative of the wider workforce using the same

process as was used for this comparison in last year’s Annual Report and Accounts.

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Salary % Taxable benefits % Annual incentive %

Year-on-year % change

2024 2023 2022 2021 2020 2024 2023 2022 2021 2020 2024 2023 2022 2021 2020

Executive Directors

Andy Briggs 1.0 3.4 1.1 0.0 – 0.4 (0.96) 2.6 3.3 – 7.8 16.6 12.4 (5.5) –

Rakesh Thakrar

(30.4) 6.0 10.2 2.3 – (31.0) (15.8) 20.7 3.3 – (25.1) 14.8 20.4 (3.3) –

Nicolaos Nicandrou

n/a

– – – – n/a

– – – –

Chair

Sir Nicholas Lyons

1,100 (87.5) (17.1) 13.8 0.0 n/a

(100) 897.6 0.0 (100)

n/a

Non-Executive Directors

Karen Green (6.8) 8.9 12.8 12.8 6.8 142.1 (26.2) 362.9 0.0 (100)

Eleanor Bucks

1,377 – – – – n/a

– – – –

Mark Gregory

55.7 – – – – 61.2 – – – –

Hiroyuki Iioka 0.0 0.0 0.0 0.0 0.0 n/a

0.0 0.0 0.0 0.0

Katie Murray 0.7 45.4 0.0 – – 124.1 (3.3) 0.0 – –

John Pollock 5.2 3.4 0.0 4.4 0.7 54.1 56.0 0.0 0.0 (100)

Belinda Richards 6.6 8.4 4.5 5.7 0.0 89.8 (10.7) 0.0 0.0 (100)

David Scott 0.0 – – – – n/a

– – – –

Maggie Semple 10.4 102.8 0.0 – – 28.6 106.4 0.0 – –

Nicholas Shott 3 14.5 7.7 22.8 0.0 211.7 42.8 208.3 (100) (80)

Wider employee population 4.8 8.9 4.4 4.7 3.9 (9.6) (55.3) 57.2 1.4 7.4 7.3 11.5 27.6 9.1 n/a

1 The Taxable Benefits figures used for Andy Briggs and Rakesh Thakrar include ongoing taxable benefits only.

2 The reduction in salary, taxable benefits, and annual incentive for Rakesh Thakrar reflect the total received from the period 1 January 2024 until 8 September 2024

when he stepped down from the Board.

3 No taxable benefit received in the prior year and therefore not possible to calculate a percentage change.

4 The increase in fees for Sir Nicholas Lyons reflect his return as Chair of the Group Board on 01 December 2023 creating a higher percentage change.

5 The increase in fees for Non-Executive Directors of the Company reflect either chairing a Committee and/or changes to Committee membership.

See page 152 for further details on fees and taxable benefits for Non-Executive Directors.

6 The increase in fees for Eleanor Bucks reflect her appointment as a Director on 01 December 2023 creating a higher percentage change.

7 The increase in fees for Mark Gregory reflect his appointment as a Director on 01 April 2023 creating a higher percentage change.

8 Non-Executive Directors are not in receipt of payments relating to the Group’s Annual Incentive Plan.

The figures shown above in respect of salary for Andy Briggs reflects the full year on current salary (vs 2023 which reflected the increase effective

1 April 2023). The taxable benefits reflect the small increase in premium for private medical cover (same level of cover as in 2023), and the increase

in AIP reflects the higher outturn under the Corporate element compared to 2023 from which all colleagues benefit.

The significant reduction for Rakesh Thakrar for salary, benefits and AIP reflect the period from 1 January 2024 to 8 September 2024 when he

stepped down from the Board.

Figures for Nicolaos Nicandrou simply reflect there were no payments in 2023.

With regard to the figures for the wider employee population:

• The pay review in April 2024 was operated using a consistent approach with a pay budget of 4.4%. As in 2023, the pay budget firstly allocated

awards to bring all colleagues up to at least the minimum of the salary ranges we published, ensuring all colleagues are paid the market minimum

for the role they perform. Leaders were then empowered to make discretionary pay awards within the remaining pay award budget, ensuring

colleagues were remunerated for the skills knowledge and experience they bring to the role whilst also referring to how their pay aligns within

the published pay ranges and compared to internal peers. Salary awards for our most senior population were by exception only. Additional salary

increases were awarded throughout the year, where appropriate, to ensure consistency, internal relativities, and to retain talent. The salary changes

made in 2023 as a result of a full review of compensation inflated the 2023 figures; the 2024 figures show a normalisation of this exercise.

• The change to the taxable benefits figure compared to the previous year is again linked to the 2023 review described above as car allowances

were removed which reduced the benefit figure significantly in 2023. The 2024 figure again normalises the value of taxable benefits.

• The increase in annual incentive payments compared to 2023 relates to the higher corporate outturn in 2024.

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Directors’ Remuneration report continued

Distribution statement

The DRR Regulations require each quoted company to provide a comparison between profits distributed by way of dividend

and overall expenditure on pay.

Relative importance (£m)

2023 2024

527

664

540

750

Profits distributed by way of dividend (% change +2.5%)

Overall expenditure on pay (% change +13%)

Profits distributed by way of dividend has been taken as the dividend paid and proposed in respect of the relevant financial year. For 2024 this is

the interim dividend paid (£266 million) and the recommended final dividend of 27.35 pence per share multiplied by the total share capital issued

at the date of the Annual Report and Accounts as set out in note D1 in the notes to the consolidated financial statements. No share buy-backs were

made in the year.

Overall expenditure on pay has been taken as employee costs as set out in note C5 Expenses in the notes to the consolidated financial statements.

Expenditure on pay has increased by 13% in the period, reflecting the impact of inflationary pay increases to the wider workforce and the

resulting higher share scheme costs; higher bonus outturn; the increase in headcount in areas of the business as a result of the reduction in the

use of contractors; and the higher level of redundancy costs following on from the launch of the Group’s operational simplification programme.

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Wider workforce pay

Alignment to wider workforce

The Committee considers a range of factors when setting the remuneration for Executive Directors, one of which is the alignment with

remuneration practices across the wider workforce. We provide colleagues across the Group with a competitive reward package with details

of each element included in the table below.

Executive Directors and Executive Committee Senior Management Wider workforce

Salary Salaries are reviewed annually and increases are typically

in line with or less than the wider employee population.

Base salary is the basis for a

competitive total reward package

for all employees, and these are

reviewed annually with engagement

from employee representatives.

Regular benchmarking exercises are

carried out to ensure salaries remain

competitive against the market.

We are an accredited Living Wage

employer and all employees are paid

at least the Real Living Wage.

Benefits and Pension All employees are eligible to participate in our range of flexible benefits and wellbeing initiatives in respective markets.

Core benefits include private medical cover, life assurance cover, group income protection and a range of flexible benefits.

The level of core benefits is the same across all grades.

Colleagues can participate in a share matching plan under the Phoenix SIP and, in the UK, the Phoenix ShareSave Scheme.

All employees are automatically enrolled in the Company’s Master Trust pension scheme with a 10% core contribution and 2%

matching contribution (plus salary sacrifice uplift of 10% of the employee contribution). Payment in lieu of contribution, reduced

for the impact of employers’ NIC is permitted where lifetime or annual limits are reached. Separate occupational pension

schemes with varying contribution rates operate in Ireland and Germany.

AIP All permanent and fixed-term employees are eligible to participate in an AIP which is based on Group measures, business unit

performance (where applicable) and personal objectives. Malus and clawback provisions apply.

Deferral Half of any AIP award is

subject to deferral into shares

for a three- year period.

Malus and clawback provisions apply.

One-third of any AIP award is

subject to deferral into shares

for a three-year period.

Malus and clawback provisions apply.

Deferral where required

on an individual basis for

Solvency II purposes.

Malus and clawback provisions apply.

LTIP Senior executives participate in a LTIP with a three-year performance

period and vesting is subject to Group performance outcomes.

Measures and targets for long-term incentive plans are consistent

for all participants and measured over a three-year period.

Malus and clawback provisions apply.

A number of colleagues with exceptional

achievements during the performance

year were awarded a 2024 long-term

incentive award in the form of Group

shares with a vesting period of three years.

Holding period A two-year holding period after the

vesting date also applies for LTIPs.

No holding period. Not applicable.

Shareholding

requirement

Shareholding requirements ensures

greater alignment with interests

of shareholders.

• 350% of salary for Group CEO

• 300% of salary for Group CFO

• 150% of salary for ExCo members

Not required. Not applicable.

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Directors’ Remuneration report continued

Consideration of employee pay

When determining the Remuneration policy and remuneration for our Executive Directors, the Committee took into consideration the pay and

benefits of the wider workforce to ensure that our reward offering remains competitive, attractive, and suitably aligned to our Group performance,

while supporting our values and purpose of helping people secure a life of possibilities.

We have a reward policy that is broadly consistent for all levels of employees, with the same remuneration principles guiding reward decisions for

all Group colleagues, including Executive Directors. The AIP and LTIP performance metrics are the same for Executive Directors as for other eligible

colleagues, with a higher proportion of total remuneration for the Executive Directors linked to corporate performance. For certain areas, business

unit aligned metrics are also included in their AIP. Pay for the wider colleague base is driven primarily by market practice and there is a standard

benefit offering across all levels, except where the external market drives differences based on role accountability. Colleagues are also eligible

to participate in the Group’s success through our share schemes (ShareSave and Share Incentive Plan) on the same basis as those offered

to Executive Directors.

We offer benefits which engage and retain our existing colleagues, as well as attract new talent to the organisation. To support this, we offer a

transparent flexible and tailored reward package that is competitive in the market, with clear principles around pay, alongside comprehensive

benefits and wellbeing support. Our Diversity, Equity and Inclusion agenda remains an integral underpin to our approach to reward. The launch

of our diversity data questionnaire within our HR system, moving away from an annual survey, enables us to continually understand the diversity

and needs of our colleagues. This data is also integral to our gender and ethnicity pay gap reporting and provides insight to where we may need

to implement targeted and focused initiatives to make real change.

Following our 2023 review of our reward framework to ensure it is appropriate for a business of our size, scale and potential, we continue to provide

transparent salary ranges for our colleagues. We ensured that all colleagues below the minimum of their pay range had their fixed pay increased

to that minimum level. This is an ongoing commitment that will see all colleagues receive increases to the minimum level of our pay ranges each

year as part of our annual pay review. We continue to be a proud Real Living Wage employer, and are committed to ensuring that these pay ranges,

which are reviewed annually, will always be at or above the Real Living Wage.

Equal pay and consistency of treatment for all colleagues, irrespective of gender or ethnicity, are integral guiding principles of the reward practices

across the Group. The remuneration principles and framework are reviewed on a regular basis to ensure these are aligned with the Group’s purpose,

values and sustainability strategy. Maggie Semple, our Designated Non-Executive Director for Workforce Engagement, joined the Remuneration

Committee in 2024 and provided additional input to the Committee on the views of the wider workforce. Further details of Maggie Semple’s

engagement with the workforce throughout 2024 are shown on pages 101 to 102 of the Corporate governance report.

Payments for loss of office – Audited information

As set out in the Chair’s letter, Rakesh Thakrar stepped down from the Board and his position as Group Chief Financial Officer and Executive

Director on 8 September 2024 and went on garden leave effective from this date to his initial termination date of 13 May 2025. At Rakesh’s request,

his termination date was brought forward to 30 November 2024 as a result of securing employment elsewhere.

For the period from stepping down to 30 November 2024, Rakesh received salary of £114,891, benefits of £2,391 and pension contributions and

allowance of £12,391. In the period from 1 December 2024 to 31 December 2024, Payment in Lieu of Notice (‘PILON’) was paid, but was reduced

by the level of remuneration paid by his new employer. This reduced PILON approach will continue to 13 May 2025. PILON payments in respect

of the 2024 financial year totalled £861 and will continue to be paid in instalments, with an estimated £3,874 to be paid in respect of the period

from 1 January 2025 to 13 May 2025.

In line with the Remuneration policy, Rakesh was deemed to be a good leaver in respect of the AIP and LTIP plans and as such the good leaver

provisions apply.

Rakesh’s 2024 AIP was pro-rated to 8 September 2024, the date he stepped down from the Board. Unvested deferred bonus awards (including

the pro-rated 2024 AIP) will continue to vest on normal vesting dates and will remain subject to malus and clawback.

Rakesh’s in-flight LTIP awards (which includes the 2022, 2023 and 2024 LTIPs) were pro-rated to his termination date of 30 November 2024.

Final vesting of the LTIP awards will be determined by the Committee at the conclusion of each performance period upon assessment of the

achievement of the conditions set out for each award. Unvested LTIP awards will continue to vest on the normal vesting dates and will remain

subject to their respective holding periods and malus and clawback provisions.

In line with the performance conditions as set out on page 145, the estimated value of Rakesh’s 2022 LTIP that is due to vest in March 2025

totals £462k. This is based on the average share price between 1 October 2024 and 31 December 2024 (511.06 pence). An updated figure

based on the actual share price at the date of vesting will be disclosed in the 2025 Directors’ Remuneration Report.

In respect of the employee share plans, Rakesh’s outstanding Share Incentive Plan and ShareSave were forfeited in line with HMRC rules

for the treatment of leavers.

Rakesh will be subject to a two-year post-cessation shareholding requirement of 300% of salary.

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Payments to past Directors – Audited information

No payments were made to past Directors in 2024.

Executive Directors’ service contracts

The dates of contracts and letters of appointment and the respective notice periods for Executive Directors are as follows:

Name Date of service contract Notice period from either party (months)

Andy Briggs 7 November 2019 12

Rakesh Thakrar 6 March 2020 12

Nicolaos Nicandrou 5 November 2024 12

External directorships

Details of external directorships held by Executive Directors can be found on pages 86 and 87 of the Annual Report.

Non-Executive Directors’ letters of appointment

Name

Date of current appointment

/re-appointment letter

Date of expiry of current

appointment/

re-appointment letter

Unexpired term

(months)

Sir Nicholas Lyons 8 November 2023 31 October 2025 6

Karen Green 12 May 2023 30 June 2026 1

Eleanor Bucks 23 November 2023 30 November 2026 1

Sherry Coutu 13 March 2025 30 April 2028 1

Mark Gregory 9 March 2023 31 March 2026 1

Hiroyuki Iioka 22 July 2023 22 July 2026 1

Katie Murray 1 April 2022 31 March 2025 1

Belinda Richards 30 September 2023 30 September 2026 1

David Scott 11 May 2023 10 May 2026 1

Maggie Semple 9 May 2022 31 May 2025 1

Nicholas Shott 31 October 2022 31 August 2025 1

1 The date of expiry refers to each individual Directors’ letter of appointment which covers a three-year term. All Directors are subject to annual re-election at the AGM on 13 May 2025.

The tables above have been included to comply with UKLA Listing Rule 6.6.6(7). In the event of cessation of a Non-Executive Director’s

appointment (excluding the Chair of the Group Board) they would be entitled to a one-month notice period. The Chair of the Group Board,

as detailed in his letter of appointment, would be entitled to a six-month notice period.

Dilution

Awards granted under the Long Term Incentive Plan and International Purchase Plan are satisfied through shares purchased in the market and held

in the Employee Benefit Trust. A dividend waiver is in place for all shares. ShareSave and the Deferred Bonus Share Scheme are satisfied through

newly issued shares. The Group monitors the number of shares issued, and their impact on dilution limits as stipulated by the Investment Association

(all plans, 10% and executive share plans 5% in any rolling ten-year period). At 31 December 2024, dilution was 1.64% and 0.63% respectively.

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Directors’ Remuneration report continued

Advice provided to the Committee

During the year, the Committee received independent remuneration advice from its appointed adviser, PwC, which is a member of the

Remuneration Consultants Group (the professional body for remuneration consultants) and adheres to its code of conduct. The Remuneration

Committee was satisfied that the advice provided by PwC was objective and independent.

PwC also provided general consultancy services to Management during the year including support on other Board and Risk matters and technical

advice regarding share schemes. Separate teams within PwC provided unrelated services in respect of tax, assurance, risk consulting and advisory

during the year. The Committee is satisfied that these activities did not compromise the independence or objectivity of the advice it has received

from PwC as Remuneration Committee advisers. PwC’s fees for work relating to the Committee for 2024 were £211,126 which included review of

the changes to variable pay metrics and support for the Board changes. These were charged on the basis of the firm’s standard terms of business

foradvice provided.

The Committee assesses the performance of its advisers regularly, the associated level of fees and reviews the quality of advice provided to ensure

that it is independent of any support provided to Management.

The Group CEO, Chief People Officer, Executive Reward Director and Group Finance Director, attend by invitation various Committee meetings

during the year. No Executive is ever permitted to participate in discussions or decisions regarding his or her own remuneration.

The Committee consults with the Group Chief Risk Officer (without Management present) on a regular basis. The Group Chief Risk Officer is

asked to detail theextent to which the Group has operated within its stated risk appetite during the year and to keep the Committee informed

of any risk-related concerns that required the Committee to consider using its judgement to moderate incentive plan outcomes. The Chair of

the Remuneration Committee also sits on the Risk Committee to enable additional linkage between risk matters and remuneration outcomes.

Voting outcomes on remuneration matters

The table below shows the votes cast to approve the Directors’ Remuneration report for the year ended 31 December 2023 at the 2024 AGM held

on 14 May 2024 and the Directors’ Remuneration policy at the 2023 AGM held on 04 May 2023.

For Against Abstentions

Number % of votes cast Number % of votes cast Number

To approve the Directors’ Remuneration report for the

year ended 31 December 2023 (2024 AGM) 750,082,851 99.00 7,593,675 1.00 190,155

To approve the Directors’ Remuneration policy (2023 AGM) 764,184,513 98.81 9,241,995 1.19 216,361

Approval

This report in its entirety has been approved by the Remuneration Committee and the Board of Directors and signed on its behalf by:

Nicholas Shott

Chair of the Remuneration Committee

Approved by the Board on 16 March 2025

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This appendix contains the Directors’ Remuneration

policy approved by the Group’s shareholders at the

Group’s 2023 AGM. It applies for a period of three

years, until the 2026 AGM, unless a revised policy

is approved by shareholders before then.

General policy

The Remuneration policy for Executive Directors is summarised in the table below along with the policy on the Chair’s and the Non-Executive

Directors’ fees. Further details on the Remuneration policy can be found in the 2022 Annual Report and Accounts on pages 122 to 125.

Remuneration principles

The Group’s overall positioning on remuneration for Executive Directors has been set with reference to the provisions of the UK Corporate

Governance Code, best practice and feedback received from shareholders during consultation.

An appropriate balance is maintained between fixed and variable components of remuneration.

Remuneration is aligned to the long-term success of the Group.

Remuneration takes account of the risk profile of the Group.

Remuneration supports a strong pay for performance culture.

Our Remuneration policy benchmarks the total target remuneration for the Executive Directors using appropriate market data sets which are

consistent with those used for other roles in the Group.

This section does not form part of the Remuneration policy and is for information only.

How our Remuneration policy addresses the following factors set out in the UK Corporate Governance Code

Clarity and simplicity

• The reward framework seeks to embed simplicity and transparency in the design and delivery of remuneration. Both the Corporate

element and the Strategic Scorecard relating to the AIP have transparent, measurable metrics.

• We have included diagrams and charts in this Remuneration report to improve clarity for readers regarding the alignment of Executive

remuneration with shareholders and our strategy.

Risk

• The Committee undertakes an annual review of risk before confirming the outcomes for the AIP to ensure that there are no risk-related

concerns that require the moderation of AIP outcomes.

• Malus and clawback operate in respect of the AIP and LTIPs (see page 123 in the 2022 Annual Report and Accounts for details on trigger events).

• The Committee may apply discretion to override formulaic outcomes if they are considered inconsistent with the underlying performance

of the Group.

Proportionality

• A high percentage of rewards are delivered in the form of shares, meaning Executive Directors are strongly aligned with shareholders.

• Executive Directors are required to hold shares from LTIP awards for two years following vesting which provides focus on sustainable share

price growth. Significant deferral levels under the AIP further align remuneration outcomes to shareholders.

Predictability

• The range of potential award levels to individual Executive Directors is set out in the scenario charts on page 141 which also demonstrates

the impact of potential share price growth by 50% over the three-year performance period until LTIP vesting.

Alignment to culture

• We have engaged with our employees through Peakon (our employee engagement survey), PCRF (our colleague representative forum),

our many employee networks, and our Designated Non-Executive Director for Workforce Engagement to develop our values and to improve

our understanding of what is required to become a high-performing organisation. Our remuneration philosophy supports our purpose and

core values.

The Directors’ Remuneration policy

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Directors’ Remuneration report continued

Remuneration policy table

Element and purpose in

supporting strategic objectives

Policy and operation Maximum Performance measures

Base Salary

This is the core element of pay

which supports the recruitment

and retention of Executive Directors

and reflects the individual’s role

and position within the Group as well

as their capability and contribution.

• Base salaries are reviewed each year

against companies of similar size and

complexity. Both salary levels and

overall remuneration are set by

reference to the median data of

comparators which the Remuneration

Committee considers to be suitable

based on index, size and sector.

• The Remuneration Committee uses

thisdata as a key reference point

in considering the appropriate level

ofsalary. Other relevant factors

includingcorporate and individual

performance and any changes in an

individual’s role and responsibilities,

and the level of salary increases

awarded to other employees of

the Group are also considered.

• Base salary is paid monthly in cash.

• Changes to base salaries normally

takeeffect from 1 April.

• Salary levels are specific

to the roleand individual.

• Maximum salary will be the median

level of salaries for CEOs in the

FTSE31–100 (currently £812,000),

provided that this figure may be

increased in line with UK RPI inflation

for the duration of this policy.

• However, when reviewing salaries

forExecutive Directors, the

Remuneration Committee will

alsoreview the salaries, and salary

increases, for senior management

andemployees in relevant countries

tomaintain consistency. Percentage

increases for Executive Directors

willnot exceed that of the broader

employee population, other than in

specific circumstances identified by

the Remuneration Committee (e.g.

inresponse to a substantial change

inresponsibilities).

• N/A

Benefits

To provide other benefits

valued by recipient.

• The Group provides market

competitive benefits in kind. Details

of the benefits provided in each year

will be set out in the Implementation

Report. The Remuneration Committee

reserves discretion to introduce new

benefits where it concludes that it is

in the interests of the Group to do

so, having regard to the particular

circumstances and to market practice.

• Where appropriate, the Group will

meet certain costs relating to Executive

Director relocations and other

exceptional expenses.

• It is not possible to prescribe the

likely change in the cost of insured

benefits or the cost of some of the

other reported benefits year-to-year,

but the provision of benefits will

normally operate.

• The Remuneration Committee

will monitor the costs in practice

and ensure that the overall costs

do not increase by more than

the Remuneration Committee

considers to be appropriate in

all the circumstances.

• Relocation expenses are subject

to a maximum limit of £50,000.

• N/A

Pension

To provide retirement benefits

which keep Phoenix Group

competitive within the

marketplace and provide for

the future of our employees.

• The Group provides a competitive

employer sponsored defined

contribution pension plan.

• All Executive Directors are eligible to

participate in the Defined Contribution

Pension Plan available to all new

joiners or they may opt to receive

the contribution in cash if they are

impacted by the relevant lifetime

or annual limits. Any such cash

payments are reduced for the

effect of employers’ National

Insurance Contributions.

• Phoenix will honour the pensions

obligations entered into under all

previous policies in accordance

with the terms of such obligations.

• Pension contributions for Executive

Directors are aligned with the wider

workforce rate which is currently 12%

of salary (reduced to 10.6% when

taken as cash in lieu of contribution).

• N/A

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Remuneration policy table

Element and purpose in

supporting strategic objectives

Policy and operation Maximum Performance measures

Annual Incentive Plan (‘AIP’)

and Deferred Bonus Share

Scheme (‘DBSS’)

To motivate employees and incentivise

delivery of annual performance targets

aligned to strategy.

• AIP levels and the appropriateness

of measures are reviewed annually

to ensure they continue to support

the Group’s strategy.

• AIP outcomes are paid in cash in one

tranche (less the deferred share award).

• At least 50% of any annual AIP award is

to be deferred into shares for a period of

three years although the Remuneration

Committee reserves discretion to alter

the current practice of deferral (whether

by altering the portion deferred, the

period of deferral or whether amounts

are deferred into cash or shares). Such

alterations may be required to ensure

compliance with regulatory guidelines

for pay within the insurance sector, but

will not otherwise reduce the current

deferral level or the period of deferral.

• Deferral of AIP outcomes into shares

is currently made under the DBSS.

• Awards under DBSS will be in the form

of awards to receive shares for nil-cost.

• DBSS awards are typically made

automatically each year on the fourth

dealing day following the announcement

of annual results, using the average

of the preceding three dealing days’

share prices to calculate the number

of shares in awards.

• The three-year period of deferral

will run to the third anniversary

of the award date.

• Dividend entitlements will accrue over

the three-year deferral period and be

delivered as additional vesting shares.

• Malus/clawback provisions apply

to the AIP and to amounts deferred

under DBSS as explained in the notes

to this table.

• The maximum annual incentive level

for an Executive Director is 200%

of base salary per annum.

• The performance measures applied

to AIP will be set by the Remuneration

Committee and may be financial or

non-financial and corporate, divisional

or individual and in such proportions

as it considers appropriate.

However, the weighting of financial

performance measures will not be

reduced below 60% of total AIP

potential in any year for the duration

of this policy.

• In respect of the financial and

non-financial performance

measures, attaining the threshold

performance level produces a

£nil annual incentive payment.

• On-target performance on all

measures produces an outcome of

50% of maximum annual incentive

opportunity. However, the

Remuneration Committee reserves

the right to adjust the threshold and

target levels for future financial years

in light of competitive practice.

• The AIP operates subject to three

levels of moderation:

– Either through management

guidance or consensus forecasts).

Recognising that the business of

the Group is to engage in corporate

activity, the Remuneration

Committee may adjust targets

during the year to take account of

such activity and ensure the targets

continue to reflect performance

as originally intended.

– There is a specific adjustment

factor of 80%–120% of the

provisional outturn whereby the

Remuneration Committee may

adjust the provisional figure (but

subject to any over-riding cap)

to take account of its broad

assessment of performance

both against pre-set targets,

risk considerations, and more

generally, of the wider universe

of stakeholders. With respect to

financial performance measures,

this assessment will include

consideration of the quality of how

particular outcomes were achieved.

– The AIP remains a discretionary

arrangement and the Remuneration

Committee reserves discretion to

adjust the outturn (from zero to any

cap) should it consider that to be

appropriate. In particular, the

Remuneration Committee may

operate this discretion in respect

of any risk concern.

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Directors’ Remuneration report continued

Remuneration policy table

Element and purpose in

supporting strategic objectives

Policy and operation Maximum Performance measures

Long Term Incentive Plan (‘LTIP’)

To motivate and incentivise delivery

of sustained performance over the

long-term in line with our strategy

and purpose, and to promote

alignment with shareholders’ interests,

the Group operates the Phoenix Group

Holdings plc LTIP.

• Awards under the LTIP may be in

any of the forms of awards to receive

shares for nil-cost (as described

for DBSS above).

• LTIP awards are typically made

automatically each year on the fourth

dealing day following the

announcement of annual results, using

the average of the preceding three

dealing days’ share prices to calculate

the number of shares in awards.

• The vesting period will be at least three

years and run until the third anniversary

of the award date (unless a longer

vesting period is introduced).

• A holding period will apply so that

Executive Directors may not normally

exercise vested LTIP awards until the

fifth anniversary of the award date.

• Dividend entitlements will accrue

until the end of the holding period

in respect of performance vested

shares and be delivered as additional

vesting shares.

• Malus/clawback provisions apply on

a basis consistent with the equivalent

provisions in the AIP and DBSS and

as explained in the notes to this table.

• The Group will honour the vesting

of all awards granted under previous

policies in accordance with the terms

of such awards.

• The formal limit under the LTIP

is 300% of base salary per annum

(and 400% per annum in

exceptional cases).

• The Remuneration Committee’s

practice is to make LTIP awards to

Executive Directors each year over

shares with a value (as at the award

date) of up to 275% of the CEO’s

annual base salary and 200% of the

CFO’s annual base salary although

discretion is reserved to make awards

up to the maximum levels for the

policy as stated above.

• The Remuneration Committee may

set such performance measures

for LTIP awards as it considers

appropriate (whether financial or

non-financial and whether corporate,

divisional or individual).

• The Remuneration Committee retains

discretion to adjust the weightings or

substitute metrics but would expect

to consult with its major shareholders

regarding any material changes of

the current performance measures

applied for LTIP awards made to

Executive Directors or the relative

weightings between these

performance measures.

• For every LTIP award, appropriate

disclosures regarding the proposed

performance conditions will be made

in the annual Implementation Report.

• Once set, performance measures and

targets will generally remain unaltered

unless events occur which, in the

Remuneration Committee’s opinion,

make it appropriate to make

adjustments to the performance

measures to ensure alignment with

strategic objectives, provided that

any adjusted performance measure

is, in its opinion, neither materially

more nor less difficult to satisfy than

the original measure.

• For each part of an LTIP award subject

to a specific performance condition,

the threshold level of vesting will be

no more than 25% of that part of the

LTIP award.

• The performance period for LTIP

awards will be at least three years,

but the Remuneration Committee

reserves discretion to lengthen the

applicable performance periods for

LTIP awards.

All-employee share plans

To encourage share ownership by

employees, thereby allowing them

to participate in the long-term success

of the Group and align their interests

with those of the shareholders.

• Executive Directors are able to

participate in all-employee share

plans on the same terms as other

Group employees as required

by HMRC legislation.

• ShareSave – the Remuneration

Committee has the facility to allow

individuals to save up to a maximum of

£500 each month (or such other level

as permitted by HMRC legislation) for

a fixed period of three or five years.

At the end of the savings period,

individuals may use their savings to

buy ordinary shares in the Group at a

discount of up to 20% of the market

price set at the launch of each scheme.

• Share Incentive Plan (‘SIP’) – the

Remuneration Committee has the

facility to allow individuals to have the

opportunity to purchase, out of their

pre-tax salary, shares in the Group and

receive one matching share for every

purchased share up to a maximum of

£50. The maximum saving is £150 each

month (or up to such level as permitted

by the Group in line with HMRC

legislation). SIP also has the facility to

allow for reinvestment of dividends

in further shares, or the award of

additional free shares (up to the limits

as permitted by HMRC legislation).

• Consistent with normal practice,

such awards are not subject to

performance conditions.

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Remuneration policy table

Element and purpose in

supporting strategic objectives

Policy and operation Maximum Performance measures

Shareholding guidelines

To encourage share ownership

by the Executive Directors over the

long-term, including post cessation

of employment, and ensure interests

are aligned.

• Executive Directors are expected to

retain all shares (net of tax) which vest

under the DBSS and under the LTIP

(or any other discretionary long-term

incentive arrangement introduced in

the future) until such time as they hold

a minimum of 350% of base salary

in shares for the CEO and 300% of

base salary in shares for the CFO.

• Only beneficially owned shares,

vested share awards, and unvested

share awards not subject to

performance conditions (discounted

for anticipated tax liabilities), may

be counted for the purposes of the

guidelines. Share awards subject

to performance conditions do not

count prior to vesting.

• Once shareholding guidelines have

been met, individuals are expected

to retain these levels as a minimum.

The Remuneration Committee will

review shareholdings annually in the

context of this policy.

• Post cessation of employment,

Executive Directors are expected to

retain the lower of their full level of

employment shareholding guideline or

their actual shareholding at termination

for a period of two years.

• N/A • N/A

Chair of the Group Board and

Non-Executive Director fees

• The fees paid to the Chair of the

Group Board and the fees of the

other Non-Executive Directors

are set to be competitive with other

listed companies of equivalent

size and complexity.

• The Group does not adopt a

quantitative approach to pay

positioning and exercises

judgement as to what it considers

to be reasonable in all the

circumstances as regards quantum.

• Additional fees are paid to Non-

Executive Directors who chair or

are a member of a Board committee,

or sit on the board of a subsidiary

company or on the Solvency II Model

Governance Committee, and to the

Senior Independent Director

(‘SID’) and Designated NED for

Workforce Engagement.

• Fees are paid monthly in cash.

• Fee levels for Non-Executive Directors

are reviewed annually with any changes

normally taking effect from 1 January.

Additional reviews may take place in

exceptional circumstances, such as

following major corporate events, to

ensure that fees remain appropriate

in the context of the Group’s size and

complexity and to reflect the time

commitment required.

• The aggregate fees of the Chair of

the Group Board and Non-Executive

Directors will not exceed the limit

from time to time prescribed within

the Group’s Articles of Association

for such fees (currently £2 million

per annum in aggregate).

• The Group reserves the right to vary

the structure of fees within this limit

including, for example, introducing

time-based fees or reflecting the

establishment of new Board or

subsidiary company committees.

• N/A

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Directors’ report

The Directors present their report for the year ended 31 December 2024.

Phoenix Group Holdings plc is incorporated in England and Wales

(registered no. 11606773) and is listed on the London Stock Exchange

under the ‘Equity shares (commercial companies)’ category.

Shareholders

Dividends

Dividends for the year ended

31 December 2024

Dividends for the year are as follows:

Ordinary shares

Paid Interim dividend 26.65p per share (2023: 26.0p per share)

Recommended Final dividend 27.35p per share (2023: 26.65p per share)

Total ordinary dividend 54.00p per share (2023: 52.65p per share)

Dividends declared in respect of the Company’s ordinary shares must be capable of being cancelled and

withheld or deferred at any time prior to payment. This is so that the Company’s ordinary shares can be

counted towards Group capital. Accordingly, the Final dividend will be declared on a conditional basis and

the Directors reserve the right to cancel or defer the recommended dividend. The Directors do not expect

to exercise this right other than where they believe that it may be necessary to do so as a result of legal or

regulatory requirements.

Share capital

Issued share capital The issued share capital of the Company increased by 1,573,419 shares during 2024 which related

to the Company’s ShareSave and Deferred Bonus Share Scheme.

At 31 December 2024, the issued ordinary share capital totalled 1,003,111,838. Subsequently, 53,047

ordinary shares have been issued in 2025 in connection with the Company’s ShareSave Scheme to bring

the total in issue to 1,003,164,885 at the date of this Directors’ report. Full details of the issued and fully

paid share capital as at 31 December 2024 and movements in share capital during the period are presented

in note D1 to the IFRS consolidated financial statements.

Authority to purchase own shares At the Company’s 2024 AGM, shareholders approved the renewal of the Company’s authority to make

purchases of up to 100,154,788 of its own shares and make payment for the redemption or purchase of its

own shares in any manner permitted by the Companies Act 2006 including without limitation, out of capital,

profits, share premium or the proceeds of a new issue of shares. The authority was not used and none of the

Company’s ordinary shares were purchased by the Company during 2024. The authority will expire at the

2025 AGM. A resolution to renew this authority shall be proposed in the 2025 AGM Notice of Meeting.

Treasury shares The Company held no treasury shares during the year or up to the date of this Directors’ report.

Rights and obligations attached The rights and obligations attaching to the Company’s ordinary shares are set out in the Company’s Articles

of Association (the ‘Articles’) which are available on the Company’s website at www.thephoenixgroup.com.

Phoenix Group Employee

Benefit Trust (‘EBT’)

Where the EBT holds shares for unvested awards, the voting rights for these shares are exercisable

by the trustees of the EBT at their absolute discretion, ensuring that it would be in the best interest

of the beneficiaries of the Trust and taking into account the recommendations of the Group.

Restrictions on transfer of shares Under the Articles, the Directors may, in certain circumstances, refuse to register transfers of shares.

Certain restrictions on the transfer of shares may be imposed from time to time by applicable laws

and regulations (for example, insider trading laws), and pursuant to the Listing Rules of the FCA and

Phoenix Group’s own share dealing rules whereby Directors and certain employees of the Group

require individual authorisation to deal in the Company’s ordinary shares.

Substantial shareholdings Information provided to the Company pursuant to Chapter 5 of the FCA’s Disclosure Guidance and

Transparency Rules (‘DTR’) is published on a Regulatory Information Service and on the Company’s website.

As at 31 December 2024, the following interests with voting rights in the ordinary share capital of the

Company had been notified to it under DTR 5. No changes have occurred in respect of the holdings below

between 31 December 2024 and 14 March 2025.

Name

Number of voting

rights in shares

Percentage of shares

in issue

MS&AD Insurance Group Holdings Inc. 144,877,304 14.50%

Aberdeen Group plc 107,025,201 10.70%

BlackRock, Inc. 59,271,117 5.91%

Kingdom Holding Company 50,051,192 5.00%

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Shareholders continued

AGM

2025 AGM The AGM of the Company will be held at Floor 9, 20 Old Bailey, London, EC4M 7AN on 13 May 2024

at 10:30am. A separate Notice of Meeting convening this AGM will be distributed to shareholders

in due course and will include an explanation of the items of business to be considered at the meeting.

Investor communications

Investor communications The Company’s Annual Report, together with the Company’s Half Year Report and other public

announcements and presentations, are designed to present a fair, balanced and understandable

view of Phoenix Group’s activities and prospects. These are available on the Company’s website

at www.thephoenixgroup.com, along with a wide range of relevant information for private and

institutional investors, including the Company’s financial calendar.

Board

Board membership The membership of the Board of Directors during 2024 is given within the Corporate governance

report on pages 86 to 89, which is incorporated by reference into this Directors’ report.

During 2024, and up to the date of this Directors’ report, the following changes to the Board took place:

• Rakesh Thakrar stepped down as a Director on 8 September 2024

• Nicolaos Nicandrou was appointed as a Director on 2 December 2024

• John Pollock retired as a Director on 31 December 2024

• Sherry Coutu will be appointed as a Director on 1 May 2025

Related party transactions Details of related party transactions which took place during the year with Directors of the Company and

consolidated entities where Directors are deemed to have significant influence, are provided in note I4

to the IFRS consolidated financial statements.

Appointment, re-election

and removal of Directors

The rules about the appointment and replacement of Directors are contained in the Articles. These state

that a Director may be appointed by an ordinary resolution of the shareholders or by a resolution of the

Directors. If appointed by a resolution of the Directors, the Director concerned holds office only until the

conclusion of the next AGM following their appointment.

In accordance with the 2024 Code, all Directors must stand for election/re-election annually.

The Board of Directors will be unanimously recommending that all of the Directors included in the Notice

of Meeting for the AGM should be put forward for election/re-election at the forthcoming AGM to be held

on 13 May 2025.

The Articles give details of the circumstances in which Directors will be treated as having automatically

vacated their office and also state that the Company’s shareholders may remove a Director from office

by passing an ordinary resolution.

Director powers and authorities The powers of the Directors are determined by the Companies Act 2006, the provisions of the Articles

and by any valid directions given by shareholders by way of special resolution.

The Directors have been authorised to allot and issue securities and grant options over or otherwise

dispose of shares under the Articles.

Directors’ remuneration

and interests

A report on Directors’ remuneration is presented within the Directors’ Remuneration report on pages

134 to 160 including details of their interests in shares and share options or any rights to subscribe for

shares in the Company.

Directors’ indemnities The Company has entered into deeds of indemnity with each of its Directors whereby the Company

has agreed to indemnify each Director against all losses incurred by them in the exercise, execution

or discharge of their powers or duties as a Director of the Company, provided that the indemnity shall

not apply when prohibited by any applicable law.

The deeds of indemnity remain in force as at the date of signature of this Directors’ report.

Directors’ conflicts of interest The Board has established procedures for handling conflicts of interest in accordance with the

Companies Act 2006 and the Articles. See page 92 of the Corporate governance report for more detail.

On an ongoing basis, Directors are responsible for informing the Group Company Secretary of any new,

actual or potential conflicts that may arise.

Directors’ and Officers’

liability insurance

The Company maintains Directors’ and Officers’ liability insurance cover which is renewed annually.

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Directors’ report continued

Governance

Going concern

Phoenix Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in

the Strategic report. The Strategic report includes details of Phoenix Group’s cash flow and solvency position, alongside details of any key events

affecting the Company (and its consolidated subsidiaries) since the end of the financial year. Principal risks and their mitigation are detailed on pages

46 to 49. In addition, the IFRS consolidated financial statements include, amongst other things, notes on Phoenix Group’s borrowings (note E5),

management of its financial risk including market, credit and liquidity risk (note E6), its commitments and contingent liabilities (notes I5 and I6)

and its capital management (note I3). The Strategic report (on pages 16 to 19) sets out the business model and how Phoenix Group creates value

for shareholders and policyholders.

As part of its comprehensive assessment as to whether Phoenix Group is a Going concern, the Board has considered financial projections over

the period to 31 March 2026, which demonstrate the ability of Phoenix Group to withstand market shocks in a range of severe but plausible stress

scenarios. Further details of these stress scenarios are included in the Viability statement on pages 50 and 51. The projections demonstrate that

appropriate levels of capital would remain in the Life Companies under both the base and reasonably foreseeable stress scenarios, thus supporting

cash generation in the Going concern period. In addition, the Board noted Phoenix Group’s access to additional funding through its undrawn

£1.5billion revolving credit facility. The stresses do not give rise to any material uncertainties over Phoenix Group’s ability to continue as a

Going concern.

The Directors therefore have a reasonable expectation that Phoenix Group has adequate resources to meet its liabilities as they fall due and continue

in operational existence over the period to 31 March 2026, the period covered by the Going concern assessment. Thus, they continue to adopt the

Going concern basis of accounting in preparing the annual financial statements.

The Directors have acknowledged their responsibilities in the Statement of Directors’ Responsibilities in relation to the IFRS financial statements

for the year ended 31 December 2024.

Viability statement

The Viability statement, as required by the 2018 Code, has been undertaken for a period of three years to align to Phoenix Group’s business

planning and is detailed on pages 50 and 51.

Corporate governance statement

The disclosures required by section 7.2 of the FCA’s DTRs can be found in the Corporate governance report on pages 84 to 172 which

is incorporated by reference into this Directors’ report and comprises the Company’s Corporate governance statement.

The 2018 Code applied to the Company for Full Year 2024 and details on the Company’s compliance with the Code are included in the

Corporate governance report on page 90. The 2018 Code is available on the website of the FRC – www.frc.org.uk. The new UK Corporate

Governance Code 2024 was published in January 2024 and became effective on 1 January 2025. Provision 29 will become effective on

1 January 2026. Phoenix Group will ensure that compliance with the 2024 Code is appropriately measured and disclosed.

The disclosures required by the Companies Act 2006 in respect of the following matters are set out in the Strategic report, as below:

Our strategy and

future developments

The Company’s strategy and priorities for 2025 are highlighted

in the Our strategic priorities section of the Strategic report.

• See pages 26 to 31

of the Strategic report.

Our people and diversity The Company’s People strategy for colleagues is detailed

in the Group’s Sustainability Report. The Company’s diversity

and inclusion targets for colleagues are also detailed in the

Group Sustainability Report, with highlights set out in the

Strategic report.

• See pages 30, 31 and 105.

• See the Sustainability Report

on the Company’s website.

As part of its comprehensive assessment as to whether

Phoenix Group is a Going concern, the Board has considered

financial projections over the period to 31 March 2026, which

demonstrate the ability of Phoenix Group to withstand market

shocks in a range of severe but plausible stress scenarios.

Nicolaos Nicandrou

Group Chief Financial Officer

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Governance continued

Disability Phoenix Group has an Equal Opportunities and Diversity

Framework which ensures full and fair consideration is given to

applications from, and the continuing employment and training

of, disabled people. Phoenix Group also has a Reasonable

Adjustments guidelines which sets out Phoenix Group’s duty to

make reasonable adjustments to help ensure that all colleagues

can access opportunities and thrive in employment. In addition,

Phoenix Group has a Dignity at Work policy which sets out

its commitment to creating a work environment free of

discrimination where everyone is treated with dignity and

respect. One of our colleague inclusion networks, ‘Enable’

promotes the interests of colleagues with disabilities and other

long-term health conditions.

• See the Company’s website

for more information.

Our people and engagement Details of how the Company has engaged with, and considered

the interests of, employees in key decision-making can be

found in the Stakeholder engagement and Workforce

engagement sections of the Corporate governance report.

During the year, information about Phoenix Group’s performance

and market trends impacting Phoenix Group was shared via an

all-employee intranet. In addition, colleagues were invited to

participate in Phoenix Group’s ShareSave Scheme, advertised

through the all-employee intranet.

• See pages 98 to 100 of the

Corporate governance report

(for Stakeholder engagement)

and pages 101 to 102 (for

Workforce engagement).

Our business relationships Details of how the Company has engaged with stakeholders,

along with details of how the Board has considered the need

to foster the Company’s business relationships with suppliers,

customers and others, in line Section 172 of the Companies Act

2006, can be found in the Stakeholder engagement section

of the Corporate governance report.

• See pages 98 to 100 of the

Corporate governance report.

Greenhouse gas

(‘GHG’) emissions

All disclosures concerning Phoenix Group’s GHG emissions

are contained in the Group’s Streamlined Energy and Carbon

Reporting (‘SECR’) statement forming part of the Strategic report.

• See pages 80 and 81

of the Strategic report.

Other disclosures required within this Corporate governance statement are set out below:

Task Force on Climate related

Financial Disclosures (‘TCFD’)

In accordance with UKLR 6.6.6R, climate-related financial disclosures consistent with the TCFD

Recommendations and Recommended Disclosures are contained in the Strategic report on

pages 54 and 55.

Given the progress we have made with embedding the recommendations of the TCFD across the business

and the increasing need for transparent reporting, we have opted to integrate our TCFD disclosures into

our Annual Report and Accounts. In response to UKLR 6.6.12G, we have also published a standalone

Net Zero Transition Plan which sets out our approach to achieving net zero across our business by 2050.

Board diversity –

gender and ethnicity

In accordance with UKLR 6.6.6R, a statement on Board diversity targets and numerical data on the

ethnicbackground and gender of the Board of Directors and Executive Committee are included in the

Corporate governance report on page 112. Data was collated through the standard process for preparing

Phoenix Group’s annual submission to the Department for Business and Trade in respect of the Parker

Review: FTSE 350 Ethnic Diversity Data Submission and FTSE Women Leaders Review, under applicable

data protection laws.

Energy usage and Carbon

Emissions under the Companies

(Directors’ Report) and Limited

Liability Partnerships (Energy

and Carbon Report) Regulations

2018 (SI 2018/1155)

Phoenix Group’s SECR statement on the Group’s UK and global energy consumption and GHG emissions

for the financial year 1 January 2024 to 31 December 2024, and the 2023 comparative year is contained

in the Strategic report on pages 80 and 81.

Branches The Company, through its subsidiaries, has established branches in Germany, Hong Kong and Ireland.

169

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Directors’ report continued

Governance continued

Political donations Phoenix Group is a politically neutral organisation and, as further explained below, did not make any political

donations or incur any political expenditure (within the ordinary meaning of those words) in 2024. The Company

regularly engages with regulators and policymakers (including those associated with political parties and

governments) to listen and to contribute to discussions on a wide range of matters. Such engagement is an

important part of our strategy and contributes to initiatives enabling the UK in its goal of reaching net zero

by 2050. Further information on how we engage with stakeholders can be found on pages 98 to 100; and

our Sustainability Report, which includes information on our own net zero ambitions can be found on our

website at www.thephoenixgroup.com.

Due to the broad definition of political donations under the Companies Act 2006 (the ‘Act’) and as a matter

of good governance and transparency, we have provided information on areas of expenditure incurred

as a result of this engagement which may be regarded as falling within the scope of the Act.

During the year ended 31 December 2024, Phoenix Group exhibited at, sponsored, and held events at,

conferences organised by political parties, spending a total of £49,105. This included sponsorship of events

at the Labour Party Annual Conference, Conservative Party Annual Conference, Liberal Democrat Party

Conference, Scottish Labour Conference, Scottish National Party Annual Conference and Scottish

Conservation Conference. These events allow Phoenix Group to present its views on a non-partisan basis

to politicians from across the political spectrum and non-political stakeholders such as Non-Government

Organisations (‘NGO’) and other listed and non-listed companies. These payments do not indicate support

for any political party. At the 2025 AGM, Phoenix Group will be seeking renewal from shareholders of the

existing authority approved at the 2024 AGM. Moredetails are contained in the Notice of Meeting which

will be available on the Company’s website at www.thephoenixgroup.com.

Articles of Association Changes to the Articles require prior shareholder approval by special resolution. Updated Articles will

be put to shareholders for approval at the AGM on 13 May 2025. The proposed new Articles, together

with a copy showing all of the proposed changes to the existing Articles, are available for inspection on

the Company’s website at www.thephoenixgroup.com.

Re-appointment of

the External Auditor

KPMG was appointed as Auditor of the Company on 14 May 2024. KPMG has indicated its willingness

to continue in office and shareholder approval will be sought at the AGM on 13 May 2025.

There is no cap on Auditor liability in place in relation to audit work carried out on the IFRS

consolidated financial statements and the Group’s UK subsidiaries’ individual financial statements.

Details of fees paid to KPMG during 2024 for audit and non-audit work are disclosed in note C6

to the IFRS consolidated financial statements.

Disclosure of information

to External Auditor

The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they are

aware, there is no relevant audit information of which the Company’s External Auditor is unaware and that

each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of

any relevant audit information and to establish that the Company’s External Auditor is aware of that information.

Group Company Secretary The Group Company Secretary during the period was Kulbinder Dosanjh.

Fair, balanced

and understandable

In accordance with the 2024 Code, the Directors confirm that they have reviewed the Annual Report and

Accounts and consider that it is fair, balanced and understandable and provides the information necessary

for shareholders to assess Phoenix Group’s position, performance, business model and strategy. Further

information on the activity undertaken by the Board Audit Committee can be found on page 118.

170

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Contractual/Other

Significant agreements

impacted by a change

of control of the Company

The £1.5 billion revolving credit facility has provisions which would enable the lending banks to require

repayment of all amounts borrowed following a change of control.

All of the Company’s employee share and incentive plans contain specific provisions relating to a change

of control. Outstanding awards and options would normally become exercisable/available on the date of

notification, subject to the satisfaction of any performance conditions and pro rata reduction as may be

applicable under the rules of the employee share incentive plans.

Apart from the aforementioned, there are a number of agreements that take effect, alter or terminate upon

a change of control of the Company, such as commercial contracts. None is considered to be significant

in terms of their potential impact on the business of Phoenix Group.

Important post balance

sheet events

Details of important events affecting the Company which have occurred since the end of the financial year

are contained in note I7 to the IFRS consolidated financial statements.

Disclosures under UK Listing

Rule 6.6.1R

For the purposes of UKLR 6.6.4R, the information required to be disclosed by UKLR 6.6.1R, where applicable,

can be found within the following sections of the Annual Report:

Requirement Location

Statement of interest capitalised Note E5 to the consolidated financial statements

Details of long-term incentive schemes Directors’ Remuneration report

Waiver of emoluments by a Director Directors’ Remuneration report

Waiver of any future emoluments by a Director Directors’ Remuneration report

171

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Statement of Directors’ responsibilities

Statement of Directors’ responsibilities in respect

of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report, and the

Group and Parent Company financial statements in accordance with

applicable law and regulations.

Company law requires the Directors to prepare Group and Parent

Company financial statements for each financial year. Under that law

they are required to prepare the Group financial statements in

accordance with UK-adopted international accounting standards and

applicable law and have elected to prepare the Parent Company

financial statements on the same basis.

Under company law, the Directors must not approve the financial

statements unless they are satisfied that they give a true and fair view

ofthe state of affairs of the Group and Parent Company and of the

Group’s profit or loss for that period. In preparing each of the Group

and Parent Company financial statements, the Directors are

requiredto:

• select suitable accounting policies and then apply

them consistently;

• make judgements and estimates that are reasonable,

relevant and reliable;

• state whether they have been prepared in accordance

with UK-adopted international accounting standards;

• assess the Group and parent Company’s ability to continue

as a going concern, disclosing, as applicable, matters related

to going concern; and

• use the going concern basis of accounting unless they either

intend to liquidate the Group or the Parent Company or to

cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the Parent Company’s

transactions and disclose with reasonable accuracy at any time the

financial position of the Parent Company and enable them to ensure

that its financial statements comply with the Companies Act 2006.

They are also responsible for such internal control as they determine

is necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error, and

have general responsibility for taking such steps as are reasonably open

to them to safeguard the assets of the Group and prevent and detect

fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible

for preparing a Strategic report, Directors’ report, Directors’ Remuneration

report and Corporate governance statement that complies with that

law and those regulations.

The Directors are responsible for the maintenance and integrity of

the corporate and financial information included on the Company’s

website. Legislation in the UK governing the preparation and

dissemination of financial statements may differ from legislation

in other jurisdictions.

In accordance with Disclosure Guidance and Transparency Rule (‘DTR’)

4.1.16R, the financial statements will form part of the annual financial

report prepared under DTR 4.1.17R and 4.1.18R. The External Auditor’s

report on these financial statements provides no assurance over

whether the annual financial report has been prepared in accordance

with those requirements.

Responsibility statement of the Directors in respect

of the annual financial report

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable

set of accounting standards, give a true and fair view of the assets,

liabilities, financial position and profit or loss of the Company and

the undertakings included in the consolidation taken as a whole; and

• the Strategic report, includes a fair review of the development and

performance of the business and the position of the issuer and the

undertakings included in the consolidation taken as a whole,

together with a description of the principal risks and uncertainties

that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair,

balanced and understandable and provides the information necessary

for shareholders to assess the Group’s position and performance,

business model and strategy.

Andy Briggs Nicolaos Nicandrou

Group Chief Group Chief

Executive Officer Financial Officer

16 March 2025

172

Corporate governance

Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

174 Independent auditor’s report

190 IFRS consolidated financial statements

197 Notes to the consolidated financial statements

311 Parent company financial statements

314 Notes to the parent company financial statements

325 Additional life company asset disclosures

329 Additional capital and segmental disclosures

334 Alternative performance measures

Additional information

340 Shareholder information

342 Glossary

348 Forward looking statements

173

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Phoenix Group Holdings plc Annual Report and Accounts 2024

Independent Auditor’s Report

to the members of Phoenix Group

Holdings plc

Independent auditor’s report

1. Our opinion is unmodified

In our opinion:

• the financial statements of Phoenix Group Holdings plc

give a true and fair view of the state of the Group’s and

of the Parent Company’s affairs as at 31 December 2024,

and of the Group’s loss for the year then ended;

• the Group financial statements have been properly prepared

in accordance with UK-adopted international accounting standards;

• the Parent Company financial statements have been properly

prepared in accordance with UK-adopted international accounting

standards as applied in accordance with the provisions of the

Companies Act 2006; and

• the Group and Parent Company financial statements have been

prepared in accordance with the requirements of the Companies

Act 2006.

What our opinion covers

We have audited the Group and Parent Company financial statements

of Phoenix Group Holdings plc (‘“the Company”’) for the year ended

31 December 2024 included in the Annual Report and Accounts,

which comprise:

Group Parent Company

(Phoenix Group Holdings plc)

Consolidated income statement,

statement of comprehensive

income, statement of consolidated

financial position, statement of

consolidated changes in equity

and statement of consolidated

cash flows.

Notes A1 to I7 to the Group

financial statements, including

the accounting policies in note A,

except for the information marked

as unaudited.

Statement of financial position,

statement of changes in equity

and statement of cash flows.

Notes 1 to 22 to the Parent

Company financial statements,

including the accounting policies

in note 1.

Basis for opinion

We conducted our audit in accordance with International Standards

on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities

are described below. We believe that the audit evidence we have

obtained is a sufficient and appropriate basis for our opinion. Our audit

opinion and matters included in this report are consistent with those

discussed and included in our reporting to the Audit Committee (“AC”).

We have fulfilled our ethical responsibilities under, and we

remain independent of the Group in accordance with, UK ethical

requirements including the FRC Ethical Standard as applied

to listed public interest entities.

2. Overview of our audit

Factors driving our view of risks

The risk associated with the valuation of insurance contract liabilities

Key Audit Matter (“KAM”) (4.1) is predominantly driven by the inherent

subjectivity associated with the longevity, expense and discount rate

assumptions for insurance contract liabilities as well as the ongoing

change in the control environment as the Group continues to embed

the processes and controls following the implementation of IFRS 17.

Weconsider the impact of external factors such as the current

uncertain economic conditions including higher market interest

rates affecting the credit risk of assets backing annuity liabilities and

the trends in demographic experience on longevity assumptions.

The risk associated with the valuation of certain illiquid financial

investments KAM (4.2) is predominantly driven by the significant

estimation uncertainty associated with valuing Level 3 investments,

specifically modelled debt securities and equity release mortgages.

The financial significance of the Parent company’s investment in

subsidiaries drives the identification of its recoverability as a KAM

for the Parent company’s audit (4.3).

Key Audit Matters Item

Valuation of insurance contract liabilities 4.1

Valuation of certain illiquid financial investments 4.2

Parent Company’s recoverability of investments

in its subsidiaries

4.3

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Financials

Phoenix Group Holdings plc Annual Report and Accounts 2024

Audit Committee interaction

During the year, the Audit Committee (“AC”) met 9 times.

KPMG are invited to attend all AC meetings and are provided

with an opportunity to meet with the ACin private sessions

without the Executive Directors being present. For each Key Audit

Matter, we have set out communications with the AC in section 6,

including matters that required particular judgement for each.

The matters included in the Audit Committee Chair’s report

on page120 are materially consistent with our observations

of those meetings.

Our independence

We have fulfilled our ethical responsibilities under, and we

remain independent of the Group in accordance with, UK ethical

requirementsincluding the FRC Ethical Standard as applied to

listed public interest entities.

We have not performed any non-audit services during 2024 or

subsequently which are prohibited by the FRC Ethical Standard.

We were appointed as auditor by the shareholders for the year ended

31 December 2024.

The Group engagement partner is required to rotate every five years.

Asthese are the first set of the Group’s financial statements signed

byStuart Crisp, he will be required to rotate off after the FY28 audit.

These are the first set of the Group’s financial statements that the

partners signing component reporting are involved in.

Total audit fee £22.4m

Audit related fees (including interim review) £2.96m

Other services £0.2m

Non-audit fee as a % of total audit

and audit related fee %

0.78%

Date first appointed 14 May 2024

Uninterrupted audit tenure 1 year

Next financial period which requires a tender 2034

Tenure of Group engagement partner 1 year

Average tenure of component signing partners 1 year

Materiality

(Item 6 below)

The scope of our work is influenced by our view of materiality

and our assessed risk of material misstatement (‘RMM’).

We have determined overall materiality for the Group financial

statements as a whole to be £65m and for the Parent Company

financialstatements as a whole to be £62m.

A key judgement in determining materiality was the most relevant

metric to select as the benchmark, by considering factors including

which metrics have the greatest bearing on shareholder decisions.

We determined that Group IFRS adjusted shareholders’ equity,

beingshareholders’ equity adjusted for the contractual service

margin(‘CSM’) net of tax, as disclosed on page 336 is the most

relevantbenchmark for the Group. Group materiality represents

1.77%of this benchmark.

We applied a higher materiality for certain balances relating to the

unit-linked and with-profits business in the statement of consolidated

Balance Sheet financial position, Consolidated Income statement

and related notes as follows:

• For unit linked assets and corresponding unit linked liabilities we

applied materiality of £1.4bn which represents 0.73% of the total

unit linked asset balance.

• For unsupported with-profit fund assets and liabilities we applied

materiality of £540m which represents 1.05% of the total with profits

asset balance.

Materiality for the Parent Company financial statements was

determined with reference to a benchmark of Parent Company

net assets, of which it represents 0.92%.

2.9

Group

GPM

HCM

PLC

LCM

AMPT

Group

GPM

HCM

PLC

LCM

AMPT

Group Materiality

Group Performance Materiality

Highest Component Materiality

Parent Company Materiality

Lowest Component Materiality

Audit Misstatement Posting Threshold

175

Financials

Phoenix Group Holdings plc Annual Report and Accounts 2024

12%

88%

Components where audit procedures

were performed

Remaining out of scope components

97%

Independent auditor’s report continued

Group scope

(Item 7 below)

We have performed risk assessment procedures to determine which

of the Group’s components are likely to include risks of material

misstatement to the Group financial statements, what audit procedures

to perform at these components and the extent of involvement

required from our component auditors.

In total, we identified seven components, having considered

our evaluation of the Group’s legal and operational structure,

the existence of common information systems and the existence

of common risk profiles across divisions and our ability to perform

audit procedures centrally.

Of these, we identified two quantitatively significant components,

andfive other components included in the scope of our work for

otherreasons.

In addition, for the remaining components for which we performed no

audit procedures, we performed analysis at an aggregated Group level

to re-examine our assessment that there is not a reasonable possibility

of a material misstatement in these components.

We consider the scope of our audit, as communicated to the

Audit Committee, to be an appropriate basis for our audit opinion.

The impact of climate change on our audit

In planning our audit, we have considered the potential impact of

climate change on the Group’s business and its financial statements.

Climate change, and the associated initiatives and commitments,

impact the Group in a variety of ways including the potential financial

risks which could arise from the associated physical and transition

risks and the greater narrative and disclosure of the impact of climate

change risk that is incorporated into the Annual Report and Accounts.

The Group’s exposure to climate change is primarily through climate

related transition risks which potentially impact the carrying amount of

investments and potential reputational risk associated with the Group’s

delivery of its climate related commitments.

As a part of our audit we have made enquiries of management to

understand the extent of the potential impact of climate change

risk on the Group’s financial statements, including how climate

is considered as part of the investment making and monitoring

processes, and the Group’s preparedness for this.

We have performed a risk assessment of how the impact of climate

change may affect the financial statements and our audit. This included

evaluating the impact of management’s stress test scenarios and

holding discussions with our own climate change professionals to

challenge our risk assessment.

Coverage of Group financial statements

Our audit procedures covered 88%

of Group revenue:

Group Total assets

We performed audit procedures in

relation to components that accounted

for the following percentages:

176

Financials

Phoenix Group Holdings plc Annual Report and Accounts 2024

3. Going concern, viability and principal risks

anduncertainties

The Directors have prepared the financial statements on the going

concern basis as they do not intend to liquidate the Group or the Parent

Company or to cease their operations, and as they have concluded that

the Group’s and the Parent Company’s financial position means that

this is realistic. They have also concluded that there are no material

uncertainties that could have cast significant doubt over their ability

to continue as a going concern for at least a year from the date of

approval of the financial statements (‘the going concern period’).

Going concern

We used our knowledge of the Group, its industry, and the general

economic environment to identify the inherent risks to its business

model and analysed how those risks might affect the Group’s financial

resources or ability to continue operations over the going concern

period. The risks that we considered most likely to adversely affect

the Group’s available financial resources over this period were:

• Adverse impacts arising from fluctuations or negative trends in the

economic environment including, but not limited to, interest rates

and inflation, wider credit spreads, defaults and property price

movements which affect regulatory capital solvency coverage

ratios, liquidity ratios, the valuations of the Group’s illiquid financial

investments and valuation of insurance contract liabilities; and

• Severely adverse policyholder lapse or claims experience.

We also considered less predictable but realistic second order impacts,

such as political or policy changes that could affect demand in the

Group’s markets.

We considered whether these risks could plausibly affect the liquidity

and solvency in the going concern period by comparing severe,

but plausible downside scenarios that could arise from these risks

individually and collectively against the level of financial resources

indicated by the Group’s financial forecasts.

Our procedures also included:

• Critically assessing actuarial assumptions used in management’s

three-year Annual Operating Plan (‘AOP’), which forms the basis for

management’s going concern projections and determining whether

the models are appropriate to enable management to make an

assessment on the going concern of the Group

• Critically assessing assumptions in base case and downside scenarios

relevant to liquidity and solvency.

• Assessing whether downside scenarios applied mutually consistent

and severe assumptions in aggregate, using our assessment of

the possible range of each key assumption and our knowledge

of inter-dependencies.

• Comparing past budgets to actual results to assess the Directors’

track record of budgeting accurately.

• Evaluating the achievability of the contingent actions the

Directors consider they would take to improve the position

should the risks materialise.

• Assessing the entity’s debt covenants and ability to meet maturities

arising during the going concern period.

• We considered whether the going concern disclosure in note A1

to the financial statements gives a full and accurate description

of the Directors’ assessment of going concern, including the

identified risks and dependencies.

Accordingly, based on those procedures, we found the Directors’

use of the going concern basis of accounting without any material

uncertainty for the Group and Parent Company to be acceptable.

However, as we cannot predict all future events or conditions and

as subsequent events may result in outcomes that are inconsistent

with judgements that were reasonable at the time they were made,

the above conclusions are not a guarantee that the Group or the

Parent Company will continue in operation.

Our conclusions

• We consider that the directors’ use of the going concern basis

of accounting in the preparation of the financial statements

is appropriate;

• We have not identified, and concur with the Directors’ assessment

that there is not, a material uncertainty related to events or conditions

that, individually or collectively, may cast significant doubt on the

Group’s or Parent Company’s ability to continue as a going concern

for the going concern period;

• We have nothing material to add or draw attention to in relation

to the Directors’ statement on page 197 to the financial statements

on the use of the going concern basis of accounting with no material

uncertainties that may cast significant doubt over the Group and

Parent Company’s use of that basis for the going concern period,

and we found the going concern disclosure in note 1 to be

acceptable; and

• The related statement under the Listing Rules set out on page 172

is materially consistent with the financial statements and our

auditknowledge.

177

Financials

Phoenix Group Holdings plc Annual Report and Accounts 2024

Independent auditor’s report continued

Disclosures of emerging and principal risks

and longer-term viability

Our responsibility

We are required to perform procedures to identify whether there is

a material inconsistency between the directors’ disclosures in respect

of emerging and principal risks and the viability statement, and the

financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or draw

attention to in relation to:

• the Directors’ confirmation within the viability statement on

page 51 that they have carried out a robust assessment of the

emerging and principal risks facing the Group, including those

that would threaten its business model, future performance,

solvency and liquidity;

• the Principal risks and uncertainties disclosures describing these

risks and how emerging risks are identified and explaining how

they are being managed and mitigated; and

• the Directors’ explanation in the viability statement of how they have

assessed the prospects of the Group, over what period they have

done so and why they considered that period to be appropriate,

and their statement as to whether they have a reasonable

expectation that the Group will be able to continue in operation

and meet its liabilities as they fall due over the period of their

assessment, including any related disclosures drawing attention

to any necessary qualifications or assumptions.

We are also required to review the viability statement set out

on pages 50–51 under the Listing Rules.

Our work is limited to assessing these matters in the context of only

the knowledge acquired during our financial statements audit. As we

cannot predict all future events or conditions and as subsequent events

may result in outcomes that are inconsistent with judgements that were

reasonable at the time they were made, the absence of anything to

report on these statements is not a guarantee as to the Group’s and

Parent Company’s longer-term viability.

Our reporting

We have nothing material to add or draw attention to in relation

to these disclosures.

We have concluded that these disclosures are materially consistent

with the financial statements and our audit knowledge.

4. Key audit matters

What we mean

Key audit matters are those matters that, in our professional judgement,

were of most significance in the audit of the financial statements and

include the most significant assessed risks of material misstatement

(whether or not due to fraud) identified by us, including those which

had the greatest effect on:

• the overall audit strategy;

• the allocation of resources in the audit; and

• directing the efforts of the engagement team.

We include below the Key Audit Matters in decreasing order of audit

significance together with our key audit procedures to address those

matters and our results from those procedures. These matters were

addressed, and our results are based on procedures undertaken,

for the purpose of our audit of the financial statements as a whole.

We do not provide a separate opinion on these matters.

178

Financials

Phoenix Group Holdings plc Annual Report and Accounts 2024

4.1 Valuation of insurance contract liabilities (Group)

Financial Statement Elements

£109,354m

Estimates of present value of future cash flows

£5,231m

CSM

Our results

Acceptable

FY24

Description of the Key Audit Matter Our response to the risk

Subjective valuation

The valuation of insurance contract liabilities is an inherently subjective area, requiring

management judgement in the setting of key assumptions. The discount rate, longevity

and expense assumptions involve the greatest level of subjectivity. A small change in

these assumptions can have a significant impact on the estimates of future cash flows.

Discount rate methodology including allowance for credit defaults

andtargeted asset mix

The Group’s current discount rates for its annuity portfolios are derived by applying

an illiquidity premium to the risk-free rate. This illiquidity premium is determined

based on the yield of a reference asset portfolio which has been adjusted for risks

that are not present in the related insurance liabilities, in particular the risk of credit

default. The credit risk deduction methodology is judgmental and small changes in

this can have a significant impact on the present value of future cash flows. In addition,

the reference portfolio is a derived from a targeted asset mix, the selection of which

is judgemental requiring consideration of current and future asset portfolios.

The assumptions surrounding this deduction require significant judgement

and there is a risk that actual default experience and anticipated trends are

not appropriately reflected. This is particularly significant during the current

uncertain economic conditions of higher market interest rates and higher inflation.

Longevity assumptions

Longevity assumptions have two main components: longevity base assumptions and

the rate of longevity improvements. The changing trends in longevity and emerging

medical trends mean there is a high level of uncertainty in the assumptions. This

uncertainty is considered to be heightened due to the potential medium and long-term

impacts of COVID-19, pressures on the NHS and the economic outlook. There is also

a high degree of expert judgement in the calibration of the Cause-of-Death model

which management uses to derive the mortality improvement assumptions.

Expense assumptions

Judgement is required in setting the maintenance expense assumption which is

based on management’s long-term view of the expected future costs of administering

the underlying policies and is also informed by expected inflation in costs and

the allocation between cost centres and determination of costs that are directly

attributable to the maintenance of insurance contracts, rather than other activities

such as the acquisition of new business.

Additional judgement is required to be applied where the future costs of administering

policies include the expected benefits from cost saving initiatives and ongoing

transition, transformation and policy administration transfer programmes

(‘“transformation programmes”’).

In the period until those programmes are complete, judgement is required as

to the provisions required for the short-term additional running costs and project

costs required to complete the programmes.

Actuarial model overlays

There are numerous and significant manual overlay adjustments that are applied to

the modelled actuarial valuations. This is particularly the case for the IFRS specific

manuals and overlay adjustments made in the downstream CSM reporting processes.

Many of these overlays are material in amount, complex and calculated through

manual processes in a control environment which is continuing to embed processes

and controls following the implementation of IFRS17.

Estimation uncertainty

The effect of these matters is that, as part of our risk assessment, we determined that

the valuation of insurance contract liabilities has a high degree of estimation uncertainty,

with a potential range of reasonable outcomes greater than our materiality for the

financial statements as a whole, and possibly many times that amount. The financial

statements disclose the sensitivities (Note F11.1) estimated by the Group.

We performed the tests below rather than seeking to rely on any of the Group’s

controls because the nature of the balance is such that we would expect to obtain audit

evidence primarily through the detailed procedures described. We used our own

actuarial specialists in order to assist us in performing procedures over methodology

choice and assumptions in this area.

Our procedures to address the risk included:

• Control design and implementation: testing of the design and implementation

of key controls over the valuation process, including the setting of assumptions,

for insurance contract liabilities.

• Methodology choice: Assessing the appropriateness of the methodology for

selecting assumptions by applying our understanding of developments in the business

and expectations derived from market experience, including consideration of the

effects of uncertain economic conditions on policyholder longevity and credit risk.

• Accounting analysis: Assessing whether management’s proposed methodology

for determining the discount rate, and in particular the credit deductions and

reference portfolios which underpin it, is consistent with the requirements of IFRS 17.

• Historical comparisons: Evaluating the longevity base assumptions used in the

valuation of the liabilities by comparing to historic mortality experience.

• Benchmarking assumptions: Assessing longevity improvement assumptions

against industry data on expected future mortality rate improvements and industry

historical mortality improvement rates and assessing the appropriateness of the

credit risk assumptions by comparing to industry practice and our expectations

derived from market experience.

• Test of detail: Evaluating whether the expense assumptions reflect the expected

future costs of administering the underlying policies by considering the historical

accuracy of management’s forecast expenses, analysing the allocations of the

forecast costs to directly attributable maintenance expenses with reference

to the historical allocations and future plans, and inclusion of benefits arising

from cost saving initiatives and ongoing transformation programmes.

• Test of detail: Evaluating whether the short-term provisions for expenses

appropriately reflect the additional running costs and project costs associated

with ongoing transformation programmes.

• Test of detail: Assessing the appropriateness of the methodologies used in

calculating the actuarial model IFRS specific overlay adjustments. For certain

overlays, selected based on risk criteria, test the accuracy of the input data and

either reperform the calculation of the overlay adjustment or develop our own

expectation of the value of the overlay. Considering, through our resting of other

parts of the IFRS17 process, whether these indicate that additional overlay

adjustments are required.

• Assessing transparency: Considering whether the disclosures in relation to the

assumptions used in the calculation of the valuation of insurance contract liabilities

are compliant with the relevant accounting requirements and appropriately

represent the sensitivities of these assumptions to alternative scenarios and inputs.

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Independent auditor’s report continued

Communications with the Phoenix Group Holdings plc’s

AuditCommittee

Our discussions with and reporting to the Audit Committee included:

• Our approach to the audit of insurance contract liabilities including

the extent of our control reliance.

• Our conclusions on the appropriateness of the Group’s methodology

for setting assumptions.

• Our conclusions on the appropriateness of the discount rate

methodology including allowance for credit defaults, longevity,

and expense assumptions, including challenge of the assumptions

using our sector experience and market knowledge.

• Our conclusions on the appropriateness of the manuals and

overlay adjustments applied to the modelled actuarial valuations.

• The adequacy and appropriateness of the disclosures, including

the sensitivity of insurance contract liabilities to key assumptions.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor judgement:

• The appropriateness of the methodology used in determining

the discount rate including the credit default deduction.

• The significance of the inputs into the actuarial models and the

consequent impact on the valuation of policyholder liabilities.

• The approach and methods applied to determine the longevity,

and expense assumption.

Our results

We found the resulting estimate of the valuation of insurance contract

liabilities to be acceptable.

Further information in the Annual Report and Accounts: See the

Audit Committee Report on page 124 for details on how the Audit

Committee considered valuation of insurance contract liabilities

as an area of significant attention, pages 204 to 245 for the accounting

policy on valuation of insurance contract liabilities, and note F for the

financial disclosures.

4.2 Valuation of certain illiquid financial investments (Group)

Financial Statement Elements

£15,146m

Debt securities FY24

Our results

Acceptable

FY24

Description of the Key Audit Matter Our response to the risk

Subjective valuation

6.37% of the investment portfolio as at 31 December 2024 was classified as Level 3

assets. Of this we consider the valuation of modelled debt securities and equity

release mortgages backing insurance contract liabilities in the shareholder (rather

than with profits or unit-linked) fund to involve the greatest level of subjectivity.

The subjectivity of the asset valuations remains heightened due to the current

economic conditions caused by the ongoing uncertainties as a result of higher

inflation and higher market interest rates.

For these positions a reliable third-party price from a recent market transaction

isnot readily available and therefore the application of expert judgement from

management in the valuations adopted is required.

The key assumptions underlying the valuations are:

• Modelled debt securities: credit ratings that are not provided by external

credit rating agencies.

• Equity release mortgages: illiquidity premium.

Estimation uncertainty

The effect of these matters is that, as part of our risk assessment, we determined

that the valuation of certain illiquid financial investments has a high degree of

estimation uncertainty, with a potential range of reasonable outcomes greater

than our materiality for the financial statements as a whole, and possibly many

times that amount.

Our procedures to address the risk included:

We used our own actuarial, valuation and credit specialists in order to assist

us in performing procedures over methodology and assumptions in this area.

Our procedures to address the risk included:

• Control design and implementation: Testing of the design and implementation

ofkey controls over the valuation process for modelled debt securities and equity

release mortgages.

• Control operation: Testing of the operating effectiveness of key controls over

the credit rating process for modelled debt securities.

• Our valuation expertise:

– Using our own valuation specialists to assess the suitability of the valuation

and credit rating methodologies used by the Group, and to independently

recalculate asample of the credit ratings derived from credit rating models; and

– Using our own actuarial specialists to evaluate the appropriateness of the

assumptions used in the valuation of equity release mortgages with reference

to data on the Group’s recent mortgage originations.

• Methodology choice: Assessing the appropriateness of the credit rating

methodologies for modelled debt securities investments and Equity release

mortgages with reference

to relevant accounting standards and the Group’s own valuation guidelines

as well as industry practice.

• Assessing transparency: Assessing whether the disclosures in relation to the

valuation of illiquid financial investments are compliant with the relevant financial

reporting requirements and that the sensitivities of the valuation to alternative

assumptions are appropriately presented.

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Communications with the Phoenix Group Holding plc’s

AuditCommittee

Our discussions with and reporting to the Audit Committee included:

• Our approach to the valuation of modelled debt securities and

equity release mortgages, including details of our planned

substantive procedures and the extent of our control reliance.

• Our conclusions on the appropriateness of the methodology

adopted by the Group to the valuation of modelled debt

securities and equity release mortgages.

• The adequacy of disclosures, particularly as they relate

to the sensitivity of Level 3 investments to key assumptions.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor judgement:

• Determination of the valuation methodology where external

pricing sources are not readily available or unreliable.

• The appropriateness of the internally-generated credit ratings

and valuation of internally rated investments.

• The appropriateness of the illiquidity premium used in the valuation

of equity release mortgages.

Our results

We found the resulting estimate of the valuation of certain illiquid

financial investments to be acceptable

Further information in the Annual Report and Accounts: See the

Audit Committee Report on page 124 for details on how the

Audit Committee considered the valuation of certain illiquid financial

investments as an area of significant attention, pages 216 to 218 for the

accounting policy on valuation of certain illiquid financial investments,

and note E for the financial disclosures.

4.3 Recoverability of investments in subsidiaries (Parent Company)

Financial Statement Elements

£9,247m

Investment in subsidiaries FY24

Our results

Acceptable

FY24

Subjective valuation

The carrying amount of the Parent Company’s investments in subsidiaries is at

risk of irrecoverability given the carrying value is significantly in excess of market

capitalisation of the Group. Management perform an impairment test which for

certain of the subsidiaries utilises cash flow based on the emergence of surplus

for in-force business on a Solvency II basis, together with new business cash flows

on a Solvency II basis to determine a value in use. The estimated recoverable amount

of these balances is subjective due to the inherent uncertainty in forecasting and

discounting cash flows used in the valuations of these subsidiaries.

The effect of these matters is that, as part of our risk assessment, we determined that

the recoverable amount of the cost of investment in subsidiaries has a high degree

of estimation uncertainty, with a potential range of reasonable outcomes greater

than our materiality for the financial statements as a whole and possibly many times

that amount. The financial statements (note 11) disclose the sensitivity estimated by

the Parent Company.

We performed the tests below rather than seeking to rely on any of the Parent

Company’s controls because the nature of the balance is such that we would expect

to obtain audit evidence primarily through the detailed procedures described.

Our procedures included:

Test of detail: Comparing the carrying amount of each subsidiary with the relevant

subsidiaries’ financial statements/draft balance sheet to identify whether their net

assets, being an approximation of their minimum recoverable amount, were in excess

of their carrying amount.

For investments where the carrying amount exceeded the net asset value,

comparing the carrying amount of the investment with our procedures included:

• Benchmarking assumptions: Comparing the Group’s assumptions to externally

derived data in relation to key inputs such as Weighted Average Cost of Capital

(“WACC”) and terminal growth rates, with the support of our valuation specialists;

• Our sector experience: Evaluating the assumptions used, in particular those

relating to the cash flows, discount rate and terminal growth rate based on

our knowledge of the Group and the markets that the subsidiaries operate in;

• Historical comparisons: Assessing the reasonableness of the budgets by

considering the historical accuracy of the previous forecasts;

• Sensitivity analysis: Assessing the sensitivity of the headroom on the

Parent Company’s investment in subsidiaries. This was performed considering

reasonable possible changes in key assumptions underlying the business plans,

including the discount rate and terminal growth rate;

• Assessing transparency: Assessing the whether the Parent Company’s disclosures

about the sensitivity of the outcome

of the impairment assessment to changes in key assumptions reflected the risks

inherent in the recoverable amount of the investment in subsidiaries.

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Communications with the Phoenix Group Holdings plc’s

AuditCommittee

Our discussions with and reporting to the Audit Committee included:

• Our approach to the audit of the recoverability

of the Parent company’s investment in subsidiaries.

• Our conclusions on the appropriateness of the valuation

of the Parent company’s investment in subsidiaries.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor judgement:

• The appropriateness of the methodology used in calculating

therecoverable amount.

• The appropriateness of the methodology used in determining

thediscount rate applied.

Our results

We found the Parent Company’s investment in subsidiaries and

the related impairment charges in the period to be acceptable.

Further information in the Annual Report and Accounts: See the

Audit Committee Report on page 125 for details on how the Audit

Committee considered the Parent Company’s recoverability of

investments in subsidiaries as an area of significant attention, page 314

for the accounting policy on the Parent Company’s recoverability of

investments in subsidiaries, and note 11 for the financial disclosures.

5. Our ability to detect irregularities, and our response

Fraud – identifying and responding to risks of material misstatement due to fraud

Fraud risk

assessment

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (‘fraud risks’) we assessed events or conditions that could

indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment

procedures included:

• Enquiring of Directors, the Audit Committee, Internal Audit and inspection of policy documentation as to the

Group’s high-level policies and procedures to prevent and detect fraud, including the internal audit function,

and the Group’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected

or alleged fraud.

• Reading Board, Audit Committee, and Risk Committee minutes.

• Considering remuneration incentive schemes and performance targets for management.

• Using analytical procedures to identify any unusual or unexpected relationships. Using our own professionals with

forensic knowledge to assist us in identifying fraud risks based on discussion of the circumstances of the Group.

• Inspecting correspondence with regulators to identify instances or suspected instances of fraud.

• Reviewing the audit misstatements from prior period to identify fraud risk factors.

• Reading broker reports and other public information to identify third-party expectations and concerns.

Risk

communications

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud

throughout the audit. This included communication from the Group auditor to component auditors of relevant

fraud risks identified at the Group level and requesting component auditors performing procedures at the

component level to report to the Group auditor any identified fraud risk factors or identified or suspected

instances of fraud

Fraud risks As required by auditing standards, and taking into account possible pressures to meet profit targets,

we perform procedures to address the risk of management override of controls, in particular the risk that

Group and component management may be in a position to make inappropriate accounting entries and

exercise bias in accounting estimates and judgements.

We do not believe there is a fraud risk related to Group revenue because there is limited management judgement

involved in the recognition of and measurement of material revenue streams.

We identified a fraud risk related to insurance contract liabilities, illiquid financial investments and Parent

Company’s investment in subsidiaries in response to possible pressures to meet profit targets.

Link to KAMs Further detail in respect of insurance contract liabilities, illiquid financial investments and Parent Company’s

investment in subsidiaries is set out in the key audit matter disclosures in section 4 of this report.

Procedures

toaddress

fraudrisks

We also performed procedures including:

• Identifying journal entries and other adjustments to test at the Group level and for selected components based

on risk criteria and comparing the identified entries to supporting documentation. These included but were not

limited to those posted by senior finance management, those posted to seldom used accounts and are linked

to an estimate, those posted to unusual accounts and journals impacting cash balances that were identified

as unusual or unexpected in our risk assessment procedure.

• Evaluating the business purpose of significant unusual transactions.

• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.

Independent auditor’s report continued

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Laws and regulations – identifying and responding to risks of material misstatement relating to compliance with laws and regulations

Laws and

regulations

risk assessment

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the

financial statements from our general commercial and sector experience, through discussion with the Directors

and other management (as required by auditing standards), and from inspection of the Group’s regulatory and legal

correspondence and discussed with the Directors and other management the policies and procedures regarding

compliance with laws and regulations.

As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment

including the entity’s procedures for complying with regulatory requirements.

Risk

communications

We communicated identified laws and regulations throughout our team and remained alert to any indications of

non-compliance throughout the audit. This included communication from the Group auditor to component auditors

of relevant laws and regulations identified at the Group level, and a request for component auditors to report to

the Group audit team any instances of non-compliance with laws and regulations that could give rise to a material

misstatement at the Group level.

Direct laws

context and

link to audit

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial

reporting legislation (including related companies legislation), distributable profits legislation, taxation legislation

and pension legislation and we assessed the extent of compliance with these laws and regulations as part of our

procedures on the related financial statement items.

Most significant

indirect law/

regulation areas

Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance

could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition

of fines or litigation or the loss of the Group’s license to operate.

We identified the following areas as those most likely to have such effect:

• Specific aspects of regulatory capital and liquidity;

• Consumer duty;

• Financial crime and customer conduct regulations;

• Market abuse regulations;

• Data protection laws;

• Employment legislation;

• Environmental protection legislation;

• Health and safety legislation; and

• Certain aspects of company legislation, recognising the financial and regulated nature of the group’s activities and

certain regulated subsidiaries.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations

to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any.

Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence,

an audit will not detect that breach.

Actual or suspected

breaches discussed

withAC

We discussed with the audit committee matters related to actual or suspected breaches of laws or regulations,

for which disclosure is not necessary, and considered any implications for our audit.

Context

Context of the

ability of the audit

to detect fraud

or breaches of law

or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some

material misstatements in the financial statements, even though we have properly planned and performed our audit

in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations

is from the events and transactions reflected in the financial statements, the less likely the inherently limited

procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher

risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,

or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not

responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws

and regulations.

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Independent auditor’s report continued

6. Our determination of materiality

The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative considerations

to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in evaluating the effect of misstatements,

both individually and in the aggregate, on the financial statements as a whole.

£65m Materiality for the group financial statements as a whole

What we mean

A quantitative reference

for the purpose of planning

and performing our audit.

Basis for determining materiality and judgements applied

We determined materiality for the Group financial statements as a whole at £65m, with reference to a benchmark

of Group IFRS adjusted shareholders’ equity (shareholders’ equity adjusted for the contractual service margin

(CSM) net of tax). Adjusting Group IFRS adjusted shareholders’ equity for CSM net of tax reflects the deferral of

day 1 gains on annuity contracts, and so measures the ongoing value of the policies written to date. It is a measure

of solvency, so is relevant to users because surplus funds above capital requirements are necessary to fund

investment and pay returns to debt and equity holders.

Our Group materiality of £65m was determined by applying a percentage to Group IFRS adjusted shareholders’

equity. When using a benchmark of IFRS adjusted shareholders’ equity to determine overall materiality, KPMG’s

approach for listed entities considers a guideline range 0.5%–2% of the measure. In setting Group materiality,

we applied a percentage of 1.77% to the benchmark.

We applied a higher materiality for certain balances relating to the unit-linked and with-profits business

in the Consolidated Balance Sheet, Consolidated Income Statement and related notes, in accordance with

FRC Practice Note 20. This is because changes in these balances are offset by changes in related balances

such that the impact on the profit attributable to the shareholder is eliminated (in the case of unit-linked asset)

or significantly reduced (in the case of with profit funds). The higher materiality amounts were as follows:

• For unit linked assets and corresponding unit linked liabilities we applied materiality of £1.4bn which represents

0.73% of the total unit linked asset balance.

• For unsupported with-profit fund assets and liabilities we applied materiality of £540m which represents

1.05% of the total with profits asset balance.

For the purposes of our Group audit the materiality of the parent company is limited, such that it is lower than

the materiality for the Group financial statements. Materiality for the Parent Company financial statements

was set at £62m. This is lower than the materiality we would otherwise have determined with reference to

Parent Company net assets, of which it represents 0.92%.

£42.3m Performance materiality

What we mean

Our procedures on

individual account balances

and disclosures were

performed to a lower

threshold, performance

materiality, so as to reduce

to an acceptable level the risk

that individually immaterial

misstatements in individual

account balances add up to

a material amount across the

financial statements as a whole.

Basis for determining performance materiality and judgements applied

We have considered performance materiality at a level of 65% of materiality for Phoenix Group Holdings plc

financial statements as a whole to be appropriate.

We applied this percentage in our determination of performance materiality based on our expectation

of an increased level of identified misstatements and driven by the level of change within the business and

the potential for that to impact the control environment during the period.

The Parent Company performance materiality was set at £46.3m, which equates to 75% of materiality

for the Parent Company financial statements as a whole.

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£2.9m Audit misstatement posting threshold

What we mean

This is the amount below which

identified misstatements are

considered to be clearly trivial

from a quantitative point of

view. We may become aware

of misstatements below this

threshold which could alter

the nature, timing and scope

of our audit procedures,

for example if we identify

smaller misstatements which

are indicators of fraud.

This is also the amount

above which all

misstatements identified

are communicated to the

Group’s Audit Committee.

Basis for determining the audit misstatement posting threshold and judgements applied

We set our audit misstatement posting threshold at 4.5% of our materiality for the Group financial

statements. We also report to the Audit Committee any other identified misstatements that warrant

reporting on qualitative grounds.

The overall materiality for the Group financial statements of £65m compares as follows

to the main financial statement caption amounts:

Total Group Revenue FY24

£6,166m

Financial statement Caption

1.05%

Group Materiality as % of caption

Total Group Assets FY24

£307,857m

Financial statement Caption

0.02%

Group Materiality as % of caption

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Independent auditor’s report continued

7. The scope of our Audit

Group scope

What we mean

How the Group auditor determined

the procedures to be performed

across the Group.

We applied the revised group auditing standard in our audit of the consolidated financial statements.

The revised standard changes how an auditor approaches the identification of components, and how

the audit procedures are planned and executed across components.

In particular, the definition of a component has changed, shifting the focus from how the entity prepares

financial information to how we, as the group auditor, plan to perform audit procedures to address group

risks of material misstatement. Similarly, the group auditor has an increased role in designing the audit

procedures as well as making decisions on where these procedures are performed (centrally and/or at

component level) and how these procedures are executed and supervised. As a result, we assess scoping

and coverage in a different way and comparisons to prior period coverage figures are not meaningful.

In this report we provide an indication of scope coverage on the new basis.

We performed risk assessment procedures to determine which of the Group’s components are likely to

include risks of material misstatement to the Group financial statements and which procedures to perform

at these components to address those risks.

In total, we identified seven components, having considered our evaluation of the Group’s operational and

legal structure, the existence of common information systems and the existence of common risk profiles

across components and our ability to perform audit procedures centrally.

Of those, we identified quantitatively significant components which contained the largest percentages

of either total revenue or total assets of the Group, for which we performed audit procedures.

Additionally, having considered qualitative and quantitative factors, we selected additional components

with accounts and/or disclosures contributing to the specific risks of material misstatement of the Group

financial statements.

The below summarises where we performed audit procedures:

Component type

Number of components

where we performed

audit procedures

Range of materiality

applied

Quantitatively significant components 2 £38m – £56m

Other components where we performed procedures 5 £11m – £56m

Total 7

We involved component auditors in performing the audit work on six components. We set the component

materialities having regard to the mix of size and risk profile of the Group across the components. We also

performed the audit of the Parent Company.

Our audit procedures covered 88% of Group revenue.

We performed audit procedures in relation to components that accounted for 97% of total assets.

For the remaining components for which we performed no audit procedures, no component represented

more than 6% of Group total revenue, Group loss before tax or Group total assets. We performed analysis

at an aggregated Group level to re-examine our assessment that there is not a reasonable possibility of

a material misstatement in these components.

The Group also operates a shared service centre that is relevant to our audit in the UK. This service centre

performs accounting and reporting activities alongside related controls and processes a substantial portion

of the Group’s expense transactions. We have identified this service centre as a component and performed

audit procedures over it.

We identified a number of IT systems to be relevant to our audit, including those supporting the consolidation,

policy administration, actuarial data processing, financial reporting, investment management and expense

payments. We used our IT auditors, including in the components, to assist us in assessing the design and

operating effectiveness of the general IT controls of the relevant systems.

Following our testing, including additional testing performed to determine if deficiencies noted had

resulted in exceptions, we relied on general IT controls over certain policy administration systems and the

general ledger in determining the work to be performed in the audit. In other areas, we were not able to rely

on general IT controls as we identified deficiencies and we expanded the scope of our substantive testing.

This included increased direct manual testing over the completeness and reliability of data used in our

approach to testing journals.

We tested operating effectiveness and placed reliance on manual controls in some areas of our audit,

including over outsourced service providers, the valuation of level 3 debt securities and certain balance

sheet accounts. As the Group has continued to embed its processes and controls associated with the newly

implemented IFRS 17 Insurance contracts and IFRS 9 Financial instruments reporting requirements, we did

not plan to place reliance on controls in these areas and our audit was fully substantive.

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Group Auditor oversight

What we mean

The extent of the Group auditor’s

involvement in work performed by

component auditors.

In working with component auditors, we:

• Included the component auditors’ engagement partners and managers in the Group planning discussions

to facilitate inputs from component auditors in the identification of matters relevant to the Group audit.

• Issued Group audit instructions to component auditors on the scope and nature of their work.

• Held meetings with component auditors as the audit progressed to understand and evaluate their work,

and organised weekly video conferences and in person meetings with the component auditors. At these

meetings and video conferences, the results of the planning procedures and further audit procedures

communicated to us were discussed in more detail and any further work required by us was then

performed by the component auditors.

• We inspected the work performed by the component auditors for the purpose of the Group audit and

evaluated the appropriateness of conclusions drawn from the audit evidence obtained and consistencies

between communicated findings and work performed.

• We inspected component teams’ key work papers in-person and using remote technology capabilities

to evaluate the quality of execution of the audits of the components with a particular focus on insurance

contract liabilities and illiquid financial investments.

8. Other information in the Annual Report

The Directors are responsible for the other information presented in the Annual Report together with the financial statements.

Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit

opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

All other information

Our responsibility Our reporting

Our responsibility is to read the other information and, in doing

so, consider whether, based on our financial statements audit work,

the information therein is materially misstated or inconsistent with

the financial statements or our audit knowledge.

Based solely on that work we have not identified material misstatements

or inconsistencies in the other information.

Strategic report and directors’ report

Our responsibility and reporting

Based solely on our work on the other information described above we report to you as follows:

• we have not identified material misstatements in the Strategic Report and the Directors’ Report;

• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

• in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ remuneration report

Our responsibility Our reporting

We are required to form an opinion as to whether the part of the

Directors’ Remuneration Report to be audited has been properly

prepared in accordance with the Companies Act 2006.

In our opinion the part of the Directors’ Remuneration Report

to be audited has been properly prepared in accordance with

the Companies Act 2006.

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Corporate governance disclosures

Our responsibility Our reporting

We are required to perform procedures to identify whether there

is a material inconsistency between the financial statements and

our audit knowledge, and:

• the directors’ statement that they consider that the Annual Report

and financial statements taken as a whole is fair, balanced and

understandable, and provides the information necessary for

shareholders to assess the Group’s position and performance,

business model and strategy;

• the section of the Annual Report describing the work of the

Audit Committee, including the significant issues that the

Audit Committee considered in relation to the financial

statements, and how these issues were addressed; and

• the section of the Annual Report that describes the review

of the effectiveness of the Group’s risk management and

internal control systems.

Based on those procedures, we have concluded that each of these

disclosures is materially consistent with the financial statements and

our audit knowledge.

We are also required to review the part of the Corporate Governance

Statement relating to the Group’s compliance with the provisions of

the UK Corporate Governance Code specified by the Listing Rules

for our review.

We have nothing to report in this respect.

Other matters on which we are required to report by exception

Our responsibility Our reporting

Under the Companies Act 2006, we are required to report to you if,

in our opinion:

• adequate accounting records have not been kept by the Parent

Company, or returns adequate for our audit have not

been received from branches not visited by us; or

• the Parent Company financial statements and the part

of the Directors’ Remuneration Report to be audited are not

in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified

by law are not made; or

• we have not received all the information and explanations

we require for our audit.

We have nothing to report in these respects.

Independent auditor’s report continued

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9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 172,

theDirectors are responsible for: the preparation of the financial

statements including being satisfied that they give a true and fair

view; such internal control as they determine is necessary to enable

the preparation of financial statements that are free from material

misstatement, whether due to fraud or error; assessing the Group

and Parent Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern; and

using the going concern basis of accounting unless they either

intend to liquidate the Group or the Parent Company or to

cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about

whetherthe financial statements as a whole are free from

materialmisstatement, whether due to fraud or error, and to issue

our opinion in an auditor’s report. Reasonable assurance is a high

levelof assurance, but does not guarantee that an audit conducted

in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud

or error and are considered material if, individually or in aggregate,

they could reasonably be expected to influence the economic

decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s

website at www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these financial statements

in an annual financial report prepared under Disclosure Guidance

and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report

provides no assurance over whether the annual financial report

has been prepared in accordance with those requirements.

10. The purpose of our audit work and to whom we owe

our responsibilities

This report is made solely to the Company’s members, as a body,

in accordance with Chapter 3 of Part 16 of the Companies Act

2006. Our audit work has been undertaken so that we might state

to the Company’s members those matters we are required to state

to them in an auditor’s report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility

to anyone other than the Company and the Company’s members,

as a body, for our audit work, for this report, or for the opinions we

have formed.

Stuart Crisp (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square,

London E14 5GL

16 March 2025

189

Financials

Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

190 Phoenix Group Holdings plc Annual Report and Accounts 2024

Notes

			2023
		2024	restated 1
		£m	£m
Insurance revenue	C1	5,139	4 ,861
Insurance service expenses	C5	(4 ,493)	(4, 335)
Insurance service result before reinsurance contracts		646	526
Net expenses from reinsurance contracts		(245)	(18 0)
Insurance service result		4 01	346
Fees and commissions	C2	1 , 0 27	9 67
Net investment income	C3	1 8, 852	20 ,838
Other operating income		89	86
Gain on acquisition	H2	–	66
Total income		20, 369	22, 30 3
Net finance expense from insurance contracts	C4	(3 ,656)	(7, 0 5 8)
Net finance (expense)/income from reinsurance contracts	C4	(10 9)	17 9
Net insurance finance expense		(3,7 6 5)	(6,879)
Change in investment contract liabilities		(15, 719)	(13, 605)
Change in reinsurers’ share of investment contract liabilities		681	873
Amortisation and impairment of acquired in-force business	G2	(26 6)	(31 8)
Amortisation of other intangibles	G2	(7)	(6)
Administrative expenses	C5	(1 , 825)	(1, 662)
Net expense attributable to unit holders		(285)	(186)
(Loss)/profit before finance costs and tax		(817)	520
Finance costs	C7	(29 0)	(258)
(Loss)/profit for the year before tax		(1 , 107)	26 2
Tax charge attributable to policyholders’ returns	C8	(3 47)	(184)
(Loss)/profit before the tax attributable to owners		(1 ,4 54)	78
Tax credit/(charge)	C8	29	(17 8)
Add: tax attributable to policyholders’ returns	C8	3 47	184
Tax credit attributable to owners	C8	37 6	6
(Loss)/profit for the year attributable to owners		(1 , 078)	84
Attributable to:
Owners of the parent		(1 ,0 90)	56
Non-controlling interests	D5	12	28
		(1 , 078)	84
Earnings per ordinary share
Basic (pence per share)	B3	(111.8)p	3.3p
Diluted (pence per share)	B3	(111.8)p	3.3p

1 See note A3 for further details of the prior year restatements.

Consolidated income statement

For the year ended 31 December 2024

Financials

191Phoenix Group Holdings plc Annual Report and Accounts 2024

Notes

			2023
		2024	restated 1
		£m	£m
(Loss)/profit for the year		(1 , 078)	84
Other comprehensive income/(expense):
Items that are or may be reclassified to profit or loss:
Cash flow hedges:
Fair value gains/(losses) arising during the period	D3	24	(107)
Reclassification adjustments for amounts recognised in profit or loss	D3	(15)	75
Exchange differences on translating foreign operations		33	4
Items that will not be reclassified to profit or loss:
Remeasurements of owner-occupied property	D3	(2)	2
Remeasurements of net defined benefit asset/liability	G1	10 9	(94)
Tax (charge)/credit relating to other comprehensive income items	C8	(36)	28
Total other comprehensive income/(expense) for the year		113	(92)
Total comprehensive expense for the year		(965)	(8)
Attributable to:
Owners of the parent		(977)	(36)
Non-controlling interests	D5	12	28
		(965)	(8)

1 See note A3 for further details of the prior year restatements.

Statement of comprehensive income

For the year ended 31 December 2024

Financials

192 Phoenix Group Holdings plc Annual Report and Accounts 2024

Notes

			31 December 2023
		31 December 2024	restated 1
		£m	£m
ASSETS
Pension scheme asset	G1	35	26
Reimbursement right assets	G1	183	21 5
Intangible assets
Goodwill		10	10
Acquired in-force business		1 ,646	1 , 912
Other intangibles		128	10 6
	G2	1 ,7 8 4	2 ,0 28
Property, plant and equipment	G3	91	10 6
Investment property	G4	4 , 370	3,6 98
Investment in associate accounted for using the equity method	H4	4	–
Financial assets
Loans and deposits		261	248
Derivatives	E3	2,6 00	2 ,76 6
Equities		9 6, 351	8 7, 6 2 8
Investment in associate		–	349
Debt securities		8 8, 322	9 3 , 3 74
Collective investment schemes		8 2 ,74 0	78, 9 09
Reinsurers’ share of investment contract liabilities		9, 265	9,6 72
Insurance assets	E1	279,539	272 ,9 4 6
Reinsurance contract assets	F1	5 ,1 87	4 ,876
Deferred tax assets	G8	146	14 3
Current tax	G8	523	502
Prepayments and accrued income		399	439
Other receivables	G5	3,0 43	2 ,6 52
Cash and cash equivalents	G6	9, 453	7, 1 6 8
Assets classified as held for sale	H3	3,10 0	4,59 4
Total assets		3 0 7, 8 5 7	29 9,393

1 See note A3 for details of the prior year restatements.

Approved by the Board on 16 March 2025.

Andy Briggs Nicolaos Nicandrou

Chief Executive Officer Chief Financial Officer

Company registration number 11606773.

Statement of consolidated financial position

As at 31 December 2024

Financials

193Phoenix Group Holdings plc Annual Report and Accounts 2024

Notes

			31 December 2023
		31 December 2024	restated 1
		£m	£m
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital	D1	100	100
Share premium		16	16
Shares held by employee benefit trust	D2	(18)	(15)
Foreign currency translation reserve		1 24	91
Merger relief reserve	D1	593	1 , 819
Other reserves	D3	23	16
Retained earnings		375	715
Total equity attributable to owners of the parent		1 , 213	2 ,742
Tier 1 Notes	D4	49 4	49 4
Non-controlling interests	D5	539	549
Total equity		2 ,24 6	3 ,7 85
Liabilities
Pension scheme liability	G1	1 , 312	2, 557
Reimbursement right liabilities	G1	34	79
Insurance liabilities
Insurance contract liabilities	F1	115,791	1 1 5 ,7 27
Reinsurance contract liabilities	F1	158	147
Financial liabilities		115,949	1 1 5 , 8 74
Investment contracts		17 0 ,747	157 , 715
Borrowings	E5	3,6 22	3,8 92
Derivatives	E3	4,08 5	3 , 342
Net asset value attributable to unit holders		2,486	2 , 921
Obligations for repayment of collateral received		8 49	1,0 05
	E1	1 8 1 ,78 9	16 8, 875
Provisions	G7	206	155
Deferred tax liabilities	G8	198	320
Current tax	G8	21	41
Lease liabilities	G9	64	74
Accruals and deferred income	G10	583	579
Other payables	G11	2 ,28 0	2, 272
Liabilities classified as held for sale	H3	3 , 175	4 ,7 8 2
Total liabilities		30 5,61 1	295,6 08
Total equity and liabilities		3 0 7, 8 5 7	29 9,393

1 See note A3 for details of the prior year restatements.

Financials

194 Phoenix Group Holdings plc Annual Report and Accounts 2024

			Shares
			heldby
			employee	Foreign	Merger					Non-
	Share	Share	benefit	currency	relief	Other			Tier 1	controlling
	capital	premium	trust	translation	reserve	reserves	Retained		Notes	interests	Total
	(note D1)	(note D1)	(noteD2)	reserve	(note D1)	(note D3)	earnings	Total	(note D4)	(note D5)	equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2023
asreported	10 0	16	(1 5)	91	1 ,81 9	16	469	2, 496	49 4	5 49	3,539
Restatements 1	–	–	–	–	–	–	24 6	24 6	–	–	24 6
At 1 January 2024 (restated)	10 0	16	(1 5)	91	1 ,81 9	16	715	2 ,74 2	49 4	5 49	3 ,7 85
(Loss)/profit for the year	–	–	–	–	–	–	(1 ,0 9 0)	(1 ,09 0)	–	12	(1 , 078)
Other comprehensive income/(expense) for theyear	–	–	–	33	–	7	73	113	–	–	11 3
Total comprehensive income/
(expense) for theyear	–	–	–	33	–	7	(1,017)	(977)	–	12	(96 5)
Dividends paid on ordinaryshares	–	–	–	–	–	–	(533)	(53 3)	–	–	(533)
Dividends paid to non- controlling interests	–	–	–	–	–	–	–	–	–	(12)	(1 2)
Credit to equity for equity- settled share-based payments	–	–	–	–	–	–	26	26	–	–	26
Reserve movement
onexercise of share
schemeawards	–	–	13	–	–	–	(13)	–	–	–	–
Shares acquired by the employee benefit trust	–	–	(16)	–	–	–	–	(16)	–	–	(16)
Decrease in non-controlling interests	–	–	–	–	–	–	–	–		(10)	(10)
Coupon paid on Tier 1 Notes	–	–	–	–	–	–	(29)	(29)	–	–	(29)
Transfer of merger
reliefreserve	–	–	–	–	(1 ,226)	–	1 , 226	–	–	–	–
At 31 December 2024	10 0	16	(1 8)	1 24	593	23	37 5	1 , 213	49 4	539	2 ,24 6

1 See note A3 for details of the prior year restatements.

Statement of consolidated changes in equity

For the year ended 31 December 2024

Financials

195Phoenix Group Holdings plc Annual Report and Accounts 2024

			Shares
			held by the
			employee	Foreign	Merger					Non-
	Share	Share	benefit	currency	relief	Other				controlling
	capital	premium	trust	translation	reserve	reserves	Retained		Tier 1	interests	Total
	(note D1)	(note D1)	(note D2)	reserve	(note D1)	(note D3)	earnings 1	Total	Notes	(note D5)	equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2022
asreported	10 0	10	(1 3)	87	1 , 819	46	1 ,162	3 ,21 1	494	532	4 ,237
Restatements 1	–	–	–	–	–	–	95	95	–	–	95
At 1 January 2023 (restated)	10 0	10	(13)	87	1 , 819	46	1 , 257	3,3 06	49 4	5 32	4, 332
Profit for the year	–	–	–	–	–	–	56	56	–	28	84
Other comprehensive income/(expense) for theyear	–	–	–	4	–	(30)	(66)	(9 2)	–	–	(92)
Total comprehensive income/
(expense) for theyear	–	–	–	4	–	(30)	(10)	(36)	–	28	(8)
Issue of ordinary share capital, net of associated commissions
and expenses	–	6	–	–	–	–	–	6	–	–	6
Dividends paid on ordinaryshares	–	–	–	–	–	–	(52 0)	(520)	–	–	(520)
Dividends paid to non- controlling interests	–	–	–	–	–	–	–	–	–	(11)	(11)
Credit to equity for equity- settled share-based payments	–	–	–	–	–	–	22	22	–	–	22
Reserve movement
onexercise of share
schemeawards	–	–	12	–	–	–	(1 2)	–	–	–	–
Shares acquired by the employee benefit trust	–	–	(14)	–	–	–	–	(14)	–	–	(14)
Coupon paid on Tier 1 Notes, net of tax relief	–	–	–	–	–	–	(22)	(22)	–	–	(22)
At 31 December 2023
(restated)	10 0	16	(15)	91	1 , 81 9	16	71 5	2 ,742	49 4	549	3 ,78 5

1 See note A3 for further details of the prior year restatements.

Statement of consolidated changes in equity

For the year ended 31 December 2023

Financials

196 Phoenix Group Holdings plc Annual Report and Accounts 2024

Notes

		2024	2023
		£m	£m
Cash flows from operating activities
Cash generated/(utilised) by operations	I2	3 ,549	(770)
Taxation paid		(177)	(93)
Net cash flows from operating activities		3, 37 2	(8 63)
Cash flows from investing activities
Capitalised software development costs	G2	(29)	–
Acquisition of Phoenix Life CA Holdings Limited (Formerly known as SLF of Canada UK Limited), net of cash acquired	H2	–	(20)
Net cash flows from investing activities		(29)	(20)
Cash flows from financing activities
Proceeds from issuing ordinary shares, net of associated commission and expenses		–	6
Acquisition of non-controlling interests	D5	(10)	–
Ordinary share dividends paid	B4	(533)	(520)
Dividends paid to non-controlling interests	D5	(12)	(11)
Repayment of policyholder borrowings	E5.2	(96)	(58)
Repayment of shareholder borrowings	E5.2	(643)	(350)
Repayment of lease liabilities	G9	(11)	(14)
Proceeds from new shareholder borrowings, net of associated expenses	E5.2	39 0	346
Proceeds from new policyholder borrowings, net of associated expenses	E5.2	85	64
Coupon paid on Tier 1 Notes		(29)	(29)
Interest paid on policyholder borrowings		(8)	(3)
Interest paid on shareholder borrowings		(21 0)	(20 0)
Net cash flows from financing activities		(1 , 077)	(76 9)
Net increase/(decrease) in cash and cash equivalents		2,2 66	(1 , 652)
Cash and cash equivalents at the beginning of the year (before reclassification of cash and cash
equivalents as held for sale)		7, 2 2 0	8 ,872
Less: cash and cash equivalents of operations classified as held for sale	H3	(33)	(52)
Cash and cash equivalents at the end of the year		9,45 3	7, 1 6 8

Statement of consolidated cash flows

For the year ended 31 December 2024

Financials

197Phoenix Group Holdings plc Annual Report and Accounts 2024

Notes to the consolidated financial statements

A. Significant accounting policies

A1. Basis of preparation

The consolidated financial statements for the year ended 31 December 2024 set out on pages 190 to 310 comprise the financial statements

of Phoenix Group Holdings plc (‘the Company’) and its subsidiaries (together referred to as ‘the Group’) and were authorised by the Board

of Directors for issue on 16 March 2025.

The consolidated financial statements have been prepared under the historical cost convention except for investment property, owner-occupied

property and those financial assets and financial liabilities (including derivative instruments) that have been measured at fair value.

The consolidated financial statements are presented in sterling (£) rounded to the nearest million except where otherwise stated.

Assets and liabilities are offset and the net amount reported in the statement of consolidated financial position only when there is a legally

enforceable right to offset the re cognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liability

simultaneously. Income and expenses are not offset in the consolidated income statement unless required or permitted by an International Financial

Reporting Standard (‘IFRS’) or interpretation, as specifically disclosed in the accounting policies of the Group.

Statement of compliance

The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards (‘IASs’) and the

legal requirements of the Companies Act 2006.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings, including collective

investment schemes, where the Group exercises overall control. In accordance with the principles set out in IFRS 10 Consolidated Financial

Statements, the Group controls an investee if and only if the Group has all of the following:

• power over the investee;

• exposure, or rights, to variable returns from its involvement with the investee; and

• the ability to use its power over the investee to affect its returns.

The Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including relevant activities,

substantive and protective rights, voting rights and purpose and design of an investee. The Group reassesses whether or not it controls an investee if

facts and circumstances indicate that there are changes to one or more of the three elements of control. Further details about the consolidation of

subsidiaries, including collective investment schemes, are included in note H1.

Going concern

The consolidated financial statements have been prepared on a going concern basis. The Directors have, at the time of approving the consolidated

financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for

the period covered by the assessment having assessed the principal risks, forecasts, projections and other relevant evidence for a period of at least,

but not limited to, 12 months from the date of approval of these consolidated financial statements, using the information available up to the date of

issue of this Annual Report and Accounts. Further details of the going concern assessment are included in the Directors’ Report on page 168.

A2. Adoption of new accounting pronouncements in 2024

In preparing the consolidated financial statements, the Group has adopted the following amendments to standards effective from 1 January 2024

and which have been endorsed by the UK Endorsement Board (‘UKEB’):

• Supplier Finance Arrangements (Amendments to IAS 7 & IFRS 7);

• Lease Liability in a Sale and Leaseback (Amendments to IFRS 16);

• Classification of Liabilities as Current or Non-Current (Amendments to IAS 1); and

• Non-current Liabilities with Covenants (Amendments to IAS 1).

None of the above amendments to standards are considered to have a material effect on these consolidated financial statements. The Group has

not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

A3. Restatement of prior year primary statements

Following the introduction of IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments in the Group’s financial statements for the year ended

31 December 2023, the Group has continued to embed its processes and controls associated with this significant change. In doing so, the Group

has identified material corrections to previously reported results, resulting in the restatement of comparative information included in these

consolidated financial statements. In addition, it has made an accounting policy change associated with IFRS 17. Further details on these items and

their impact on the consolidated financial statements are set out below.

A third balance sheet, as at 1 January 2023, has not been provided within the statement of consolidated financial position as the restatement to the

opening position has been assessed as immaterial in the context of the statement of consolidated financial position as at that date. Total assets

reported of £281,040 million increased by £75 million to £281,115 million, total liabilities reported of £276,803 million reduced by £20 million to

£276,783 million and total equity reported of £4,237 million increased by £95 million to £4,332 million.

The following table sets out the impact of the restatements on opening retained earnings and the results as at 31 December 2023:

Financials

Notes to the consolidated financial statements continued

198 Phoenix Group Holdings plc Annual Report and Accounts 2024

			Correction of errors
		Valuation of IFRS	Deferred	Valuation of	Change in
		17 and IFRS 9	acquisition costs	reimbursement	accounting
	As reported	liabilities	('DAC')	right	policy	Restated
	£m	£m	£m	£m	£m	£m
Consolidated income statement:
Insurance service expenses	(4,354)	–	–	–	19	(4,335)
Net investment income	20,840	–	–	(2)	–	20,838
Net finance expense from insurance contracts	(6,982)	(76)	–	–	–	(7,058)
Change in investment contract liabilities	(13,894)	289	–	–	–	(13,605)
Administrative expenses	(1,674)	–	12	–	–	(1,662)
Tax charge	(108)	(66)	–	1	(5)	(178)
(Loss)/profit for the year attributable to owners	(88)	147	12	(1)	14	84
Statement of comprehensive income:
Remeasurements of net defined benefit asset/liability	(66)	–	–	(28)	–	(94)
Tax credit relating to other comprehensive income items	21	–	–	7	–	28
Total other comprehensive expense for the year	(71)	–	–	(21)	–	(92)
Statement of consolidated financial position:
Reimbursement right assets	204	–	–	11	–	215
Other receivables	2,578	–	74	–	–	2,652
Total assets	299,308	–	74	11	–	299,393
Reimbursement right liabilities	–	–	–	79	–	79
Insurance contract liabilities	115,741	5	–	–	(19)	115,727
Investment contracts	158,004	(289)	–	–	–	157,715
Deferred tax liabilities	257	75	–	(17)	5	320
Total Liabilities	295,769	(209)	–	62	(14)	295,608
Retained earnings as at 1 January 2023	1,162	62	62	(29)	–	1,257
Retained earnings as at 31 December 2023	469	209	74	(51)	14	715
Total equity	3,539	209	74	(51)	14	3,785

• Valuation of IFRS 17 and IFRS 9 liabilities – As a result of the continued embedding of processes and controls following the implementation of

IFRS 17 the Group has identified a number of corrections to previously reported IFRS 17 insurance contract liabilities, IFRS 9 investment contract

liabilities and associated deferred tax. This included errors identified in the calculation of inputs to the IFRS 17 liability calculation, and an

overstatement of liabilities arising from the inclusion of the liability for a group of contracts erroneously in both IFRS 17 and IFRS 9 liabilities. As at

1 January 2023 insurance contract liabilities were overstated by £71 million, deferred tax liabilities understated by £9 million, and consequently

opening retained earnings were understated by £62 million.

• Deferred acquisition costs (‘DAC’) – On transition to IFRS 17, DAC recognised in respect of insurance contracts was derecognised. It was

identified that the DAC on a portfolio of IFRS 9 contracts, which should remain, was derecognised in error and acquisition costs on new business

to this portfolio were not deferred in line with the Group’s accounting policy. During 2023 incurred DAC on the portfolio of IFRS9 contracts was

not deferred but was expensed in error. At 1 January 2023 other receivables was understated by £62 million and consequently opening retained

earnings were understated by £62 million.

• Valuation of reimbursement rights – It has been identified that the calculation of reimbursement rights used an out-of-date input resulting in an

understatement of net reimbursement rights at 1 January 2023 of £38 million and an associated overstatement of deferred tax liabilities of

£9 million consequently overstating opening retained earnings by £29 million.

• Tax-free cash methodology – The Group has made a change to its accounting policies such that it now treats tax-free cash payments on deferred

annuities as a settlement of a non-distinct investment component (if a guaranteed annuity exists) and a premium refund where a non-distinct

investment component does not exist or to the extent that the tax-free cash amount exceeds the value of the non-distinct investment component.

This approach aligns with the requirements of IFRS 17 and therefore is no less relevant or reliable and simplifies internal processes. The impact is a

decrease in insurance service expenses of £19 million and an increase in the tax charge of £5 million for the year ended 31 December 2023 (year

ended 31 December 2024: £47 million decrease in insurance service expenses and £12 million increase in tax charge), and a corresponding

decrease in the CSM within insurance contract liabilities and increase in deferred tax liabilities by the same amounts.

The impact on earnings per share of the tax-free cash methodology change in the year to 31 December 2024 is an increase in basic earnings per

share and an increase in diluted earnings per share of 3.5 pence per share (year ended 31 December 2023: increase in basic earnings per share and

an increase in diluted earnings per share of 1.4 pence per share). There was no impact on either basic operating earnings net of financing costs per

share or diluted operating earnings net of financing costs per share in either period.

A. Significant accounting policies continued

A3. Restatement of prior year primary statements continued

Financials

199Phoenix Group Holdings plc Annual Report and Accounts 2024

Disclosures

In addition, corrections have been made to the disclosures in respect of fair value hierarchy of corporate bonds in note E2.2, the allocation of BEL

between disclosure groups in note F1, the illiquidity premiums and future costs of guaranteed annuity options in note F11.2, the sensitivities in notes

E6.2 and F11.1 the analysis of the fair value of underlying items in note F9 and deferred tax assets not recognised in note G8. Further details of these

corrections are set out in the relevant note.

A4. Accounting policies

The principal accounting policies have been consistently applied in these consolidated financial statements. Where an accounting policy can be

directly attributed to a specific note to the consolidated financial statements, the policy is presented within that note, with a view to enabling

greater understanding of the results and financial position of the Group. All other significant accounting policies are disclosed below.

A4.1 Foreign currency transactions

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in

which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in sterling, which is the Group’s

presentation currency.

The results and financial position of all Group companies that have a functional currency different from the presentation currency are translated

into the presentation currency as follows:

• assets and liabilities are translated at the closing rate at the period end;

• income, expenses and cash flows denominated in foreign currencies are translated at average exchange rates; and

• all resulting exchange differences are recognised through the statement of consolidated comprehensive income.

Foreign currency transactions are translated into the functional currency of the transacting Group entity using exchange rates prevailing at the date

of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets

and liabilities denominated in foreign currencies are recognised in the consolidated income statement. Translation differences on non-monetary

items at fair value through profit or loss are reported as part of the fair value gain or loss.

A4.2 Other operating income

Other operating income includes income from all other operating activities which are incidental to the principal activities of the Group.

A5. Critical accounting estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of

policies and reported amounts of assets and liabilities, income and expenses. Disclosures of judgements made by management in applying the

Group’s accounting policies include those that have the most significant effect on the amounts that are recognised in the consolidated financial

statements. Disclosures of estimates and associated assumptions include those that have a significant risk of resulting in a material change to the

carrying value of assets and liabilities within the next year. The estimates and associated assumptions are based on historical experience and various

other factors that are believed to be reasonable under the circumstances, the results of which form the basis of the judgements as to the carrying

values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Critical accounting estimates are those which involve the most complex or subjective judgements or assessments. The areas of the Group’s business

that typically require such estimates are the measurement of insurance and investment contract liabilities with discretionary participation features

(‘DPF’), determination of the fair value of certain financial assets and liabilities, and valuation of pension scheme assets and liabilities.

The application of critical accounting judgements that could have the most significant effect on the recognised amounts include classification of

contracts to be accounted for as insurance or investment contracts and amortisation of those contracts, the determination of adjusted operating

profit and determination of control with regard to underlying entities.

Details of all critical accounting estimates and judgements are included below and further consideration is also given to how climate risk affects our

account judgements and estimates.

A5.1 Insurance contract and investment contract with DPF liabilities

The Group applies significant judgement and estimation when classifying and measuring insurance contracts, including determination of the

inputs, assumptions and techniques it uses to determine the BEL, risk adjustment and CSM at each reporting period to measure the insurance

contract and reinsurance contact liabilities/assets. The main areas where significant judgement and estimation were required are:

Contract classification

Classification of contracts as insurance (or reinsurance) is based upon an assessment of the significance of insurance risk transferred to the Group.

Insurance contracts are defined by IFRS 17 as those containing significant insurance risk if, and only if, an insured event could cause an insurer to

make significant additional payments in any scenario, excluding scenarios that lack commercial substance, at the inception of the contract.

Classification of contracts as investment with DPF is based upon an assessment of whether the discretionary amount of benefits is expected to be

a significant amount of the total benefits.

Measurement of insurance contract liabilities

In applying IFRS 17 requirements for the measurement of insurance contract liabilities, the following inputs and methods were used that include

significant estimates:

• the present value of future cash flows is estimated using deterministic scenarios, except where stochastic modelling involves projecting future

cash flows under a large number of possible economic scenarios for market variables such as interest rates and equity returns and where the cash

flows reflect a series of interrelated options that are implicit or explicit;

• the approach and assumptions used to derive discount rates, including any illiquid premiums (see note F11.2.1);

• the approach and confidence level for estimating risk adjustments for non-financial risk (see note F11.2.2); and

• the assumptions about future cash flows relating to mortality, morbidity, policyholder behaviour, and expense inflation (see note F11.2.3).

Details of how insurance contract liabilities are accounted for are included within the accounting policies in note F1.

Financials

Notes to the consolidated financial statements continued

200 Phoenix Group Holdings plc Annual Report and Accounts 2024

Amortisation of the CSM

The Group applies judgements when determining the amount of CSM for a group of insurance contracts to be recognised in profit or loss as

insurance revenue in each period to reflect the insurance contract services provided in that period. The amount is determined by considering for

each group of contracts the quantity of benefits provided and the expected coverage period. Determining the coverage unit requires significant

judgement, taking into consideration a number of areas, including:

• identification of a coverage unit that is deemed to be a suitable proxy for the service provided. This is particularly relevant for products that

provide a combination of different types of insurance coverage, investment-related service and investment-return service; and

• the allowance for time value of money in the release of the coverage unit (i.e. whether or not the coverage units should be discounted).

For deferred annuities the weighting between the deferral phase and the payment phase coverage units is calculated so that the services provided

in the deferral phase reflect the investment return and those in the payment phase reflect the annuity payment with the total services adjusted to

provide a consistent level of service when transitioning between the deferral phase and the payment phase.

Following an assessment, the Group has determined the quantity of the benefits provided under each contract to be a suitable proxy for the service

provided as follows:

Type of business/products	Coverage unit (quantity of benefits)
Term life assurance	Sum assured in force
Endowment
Non-participating whole-life
Other protection products
Immediate annuity	Annuity payments
Deferred annuity	Fund size during deferred period and annuity payments for the payment period
Unit linked	Annual management charge and insurance charges
Conventional with-profits (‘CWP’) & Unitised with-profits (‘UWP’)	Maximum of the guaranteed benefit and asset share

In relation to the application of discount rate in determining the coverage units, the Group has elected to apply discounting as this gives a more

even allocation of profit as services are provided over the life of a group of contracts. The discount rate is the locked-in rate for insurance contracts

measured under the general model (‘GM’) and current rates for insurance contracts measured under the variable fee approach (‘VFA’).

A5.2 Fair value of financial assets and liabilities

A significant portion of the Group’s financial assets and liabilities are measured at fair value and accounted for as set out in the accounting policies

in note E1. Financial instruments valued where valuation techniques are based on observable market data at the period end are categorised as Level

2 financial instruments. Financial instruments valued where valuation techniques are based on non-observable inputs are categorised as Level 3

financial instruments. Level 2 and Level 3 financial instruments therefore involve the use of estimates.

Further details of the estimates made are included in note E2. In relation to the Level 3 financial instruments, sensitivity analysis is performed in

respect of the key assumptions used in the valuation of these financial instruments. The details of this sensitivity analysis are included in note E2.4.

A5.3 Pension scheme obligations

The valuation of pension scheme obligations is determined using actuarial valuations that depend upon a number of assumptions, including

discount rate, inflation and longevity. External actuarial advice is taken with regard to setting the financial assumptions to be used in the valuation.

As defined benefit pension schemes are long-term in nature, such assumptions can be subject to significant uncertainty.

Further details of these estimates and the sensitivity of the defined benefit obligation to key assumptions are provided in note G1.

A5.4 Adjusted operating profit

Adjusted operating profit is the Group’s non-GAAP measure of performance and provides stakeholders with a comparable measure of the

underlying performance of the Group. The Group is required to make judgements as to the appropriate longer-term rates of investment return for

the determination of adjusted operating profit based on yields at the start of the financial year, as detailed in note B2, and as to whether items are

included within adjusted operating profit or excluded as an adjustment to adjusted operating profit in accordance with the accounting policy

detailed in note B1. Items excluded from adjusted operating profit are referred to as ‘non-operating items’.

A5.5 Control and consolidation

The Group has invested in a number of collective investment schemes and other types of investment where judgement is applied in determining

whether the Group controls the activities of these entities. These entities are typically structured in such a way that owning the majority of the voting

rights is not the conclusive factor in the determination of control in line with the requirements of IFRS 10 Consolidated Financial Statements. The

control assessment therefore involves a number of further considerations such as whether the Group has a unilateral power of veto in general

meetings and whether the existence of other agreements restrict the Group from being able to influence the activities. Further details of these

judgements are given in note H1.

A5.6 How climate risk affects our accounting judgments and estimates

In preparation of these financial statements, the Group has considered the impact of climate change across a number of areas, predominantly

in respect of the valuation of financial instruments, insurance and investment contract liabilities and goodwill and other intangible assets.

Many of the effects arising from climate change will be longer-term in nature, with an inherent level of uncertainty, and have been assessed as

having a limited effect on accounting judgments and estimates for the current period.

The majority of the Group’s financial assets are held at fair value and use quoted market prices or observable market inputs in their valuation. The

use of quoted market prices and market inputs to determine fair value reflects current information and market sentiment regarding the effect of

climate risk. For the valuation of level 3 financial instruments, there are no material unobservable inputs in relation to climate risk. Note E6 provides

A. Significant accounting policies continued

A5. Critical accounting estimates and judgements continued

A5.1 Insurance contract and investment contract with DPF liabilities continued

Financials

201Phoenix Group Holdings plc Annual Report and Accounts 2024

further risk management disclosures in relation to financial risks including sensitivities in relation to credit and market risk. In addition, further details

on managing the related climate change risks are provided in the Task Force for Climate-related Financial Disclosures (‘TCFD’) on page 54 of the

Annual Report and Accounts.

Insurance and investment contract liabilities with DPF use economic assumptions taking into account market conditions at the valuation date as

well as non-economic assumptions such as future expenses, longevity and mortality, which are set based on past experience, market practice,

regulations and expectations about future trends. Due to the level of annuities written by the Group, it is particularly exposed to longevity risk.

While the impact of climate change on longevity assumptions has been considered, as at 31 December 2024 there are no adjustments made to the

longevity assumptions to specifically allow for the impact of climate change on annuitant mortality. Further details as to how assumptions are set and

of the sensitivity of the Group’s results to annuitant longevity and other key insurance risks are set out in note F11.

The assessment of impairment for goodwill and intangible assets is based on value in use calculations. Value in use represents the value of future

cash flows and uses the Group’s three-year annual operating plan and the expectation of long-term economic growth beyond this period. The

three-year annual operating plan reflects management’s current expectations on competitiveness and profitability and reflects the expected

impacts of the process of moving towards a low carbon economy. Note G2 provides further details on goodwill and other intangible assets and

on impairment testing performed.

A6. New accounting pronouncements not yet effective

The IASB has issued the following standards or amended standards and interpretations which apply from the dates shown. The Group has decided

not to early adopt any of these standards, amendments or interpretations where this is permitted.

Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates) (1 January 2025)

The amendments clarify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when

exchangeability is lacking, as well as require the disclosure of information that enables users of financial statements to understand the impact of a

currency not being exchangeable. These amendments are not expected to have any impact on the Group.

Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 (1 January 2026)

The IASB issued targeted amendments to IFRS 9 and IFRS 7 to respond to recent questions arising in practice. These amendments:

• clarify the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities settled

through an electronic cash transfer system;

• clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal and interest (‘SPPI’) criterion;

• add new disclosures for certain instruments with contractual terms that can change cash flows (such as some financial instruments with features

linked to the achievement of environment, social and governance targets); and

• update the disclosures for equity instruments designated at fair value through other comprehensive income (‘FVOCI’).

The Group does not expect these amendments to have a material impact on its operations or consolidated financial statements.

Annual Improvements to IFRS Accounting Standards — Volume 11 (1 January 2026)

As part of the IASB’s Annual Improvements process it has issued minor amendments to address potential areas of confusion within the following

standards: IFRS 1 First-time Adoption of International Financial Reporting Standards – hedge accounting by a first-time adopter); IFRS 7 Financial

Instruments: Disclosures – gain or loss on derecognition and clarifications within implementation guidance; IFRS 9 Financial Instruments – lessee

derecognition of lease liabilities and transaction price; IFRS 10 Consolidated Financial Statements – determination of a ’de facto agent’; and IAS 7

Statement of Cash Flows – cost method.

The Group does not expect these amendments to have a material impact on its operations or consolidated financial statements.

IFRS 18 Presentation and Disclosure in Financial Statements (1 January 2027)

The new standard will replace IAS 1 Presentation of financial statements, introducing new requirements that will help to achieve comparability of the

financial performance of similar entities and provide more relevant information and transparency to users. Even though IFRS 18 will not impact the

recognition or measurement of items in the financial statements, its impacts on presentation and disclosure are expected to be pervasive,

particularly those related to the statement of financial performance and the identification and disclosure of management-defined performance

measures within the financial statements. Management is currently assessing the detailed implications of applying the new standard on the Group’s

consolidated financial statements. From the high-level preliminary assessment performed, the following potential impacts have been identified:

• Although the adoption of IFRS 18 will have no impact on the Group’s net profit, the Group expects that grouping items of income and expenses in

the consolidated income statement into the new categories will impact how operating profit is calculated and reported. For example, the Group

is likely to specify investing activities as a main business activity which will result in income and expenses from investing activities being grouped

within the operating category of the consolidated income statement, rather than in the investing category. Furthermore, the line items in the

primary financial statements might change to achieve the objective of a ‘useful structured summary’ as defined in IFRS 18, and the Group may

choose to include additional sub-totals, where permitted, in order to provide more understandable information.

• The Group’s Alternative Performance Measure (‘APM’) of adjusted operating profit is considered to meet the definition in IFRS 18 of a

management -defined performance measure and whilst the Group currently provides substantial information about adjusted operating profit,

including a reconciliation to the most directly comparable total in the consolidated income statement, IFRS 18 contains more prescriptive

disclosure requirements.

• There will be two new defined sub-totals in the consolidated income statement; operating profit and profit before financing and income taxes.

• The Group does not expect there to be a significant change in the information that is currently disclosed in the notes because the requirement to

disclose material information remains unchanged; however, the way in which the information is grouped might change as a result of the enhanced

aggregation/disaggregation principles, particularly for items currently labelled as ‘other’. For the first annual period of application of IFRS 18, a

reconciliation for each line item in the consolidated income statement between the restated amounts presented by applying IFRS 18 and the

amounts previously presented applying IAS 1.

• From a cash flow statement perspective, the Group is required to use the operating profit sub-total as a starting point for the statement of cash

flows when presenting operating cash flows under the indirect method.

Financials

Notes to the consolidated financial statements continued

202 Phoenix Group Holdings plc Annual Report and Accounts 2024

The Group will apply the new standard from its mandatory effective date of 1 January 2027. Retrospective application is required, and so the

comparative information for the financial year ending 31 December 2026 will be restated in accordance with IFRS 18, including a reconciliation for

each line item in the consolidated income statement between the restated amounts applying IFRS 18 and the amounts previously presented

applying IAS 1.

During 2025 the Group will carry out a detailed impact assessment to identify the actions required and set milestones for implementation activities.

IFRS 19 Subsidiaries without Public Accountability (1 January 2027)

IFRS 19 allows for certain eligible subsidiaries of parent entities that report under IFRS Accounting Standards to apply reduced disclosure

requirements. The Group does not expect this standard to have an impact on its operations or consolidated financial statements.

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)

(Effective date deferred)

The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an

associate or joint venture. These amendments are not expected to have any impact on the Group.

The following amendments to standards listed above have been endorsed for use in the UK by the UK Endorsement Board:

• Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates); and

• Annual Improvements to IFRS Accounting Standards — Volume 11.

B. Earnings performance

B1. Segmental analysis

The Group defines and presents operating segments in accordance with IFRS 8

Operating Segments

which requires such segments to be based

on the information which is provided to the Board, and therefore segmental information in this note is presented on a different basis from profit or

loss in the consolidated financial statements.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,

including revenues and expenses relating to transactions with other components of the Group. For management purposes the Group is

organised into value centres and has five operating segments comprising Retirement Solutions, Pensions & Savings, With-Profits, SunLife &

Protection, and Europe & Other. For reporting purposes, operating segments are aggregated where they share similar economic characteristics

including the nature of products and services, types of customers and the nature of the regulatory environment. The SunLife & Protection

operating segment has been aggregated with the Europe operating segment into the Europe & Other reportable segment.

The Retirement Solutions segment includes new and in-force individual annuity and Bulk Purchase Annuity contracts written within shareholder

funds, with the exception of individual annuity contracts written as a result of Guaranteed Annuity Options on with-profit contracts. Such contracts

remain in the With-Profits segment following the transition to IFRS 17, as they fall within the contract boundary of the original savings or pension

contract. The Retirement Solutions segment also includes UK individual annuity business written within the Standard Life Heritage With-Profits

Fund as the profits are primarily attributable to the shareholder through the Recourse Cash Flow mechanism established on demutualisation.

The Pensions & Savings segment includes new and in-force life insurance and investment unit-linked policies in respect of pensions and savings

products that the Group continues to actively market to new and existing policyholders. This includes products such as workplace pensions and

Self-Invested Personal Pension (‘SIPPs’) distributed through the Group’s strategic partnership with Aberdeen Group plc (formerly abrdn plc) now

trading as Aberdeen. In addition, it includes in-force insurance and investment unit-linked products from legacy businesses which no longer

actively sell products to policyholders and which therefore run-off gradually over time. The Pensions & Savings segment also includes UK unitised

business written in the Standard Life Heritage With-Profits funds, as profits are primarily attributable to the shareholder through the Recourse

Cash Flow mechanism.

The With-Profits segment includes all policies written by the Group’s with-profits funds, with the exception of Standard Life Heritage With-Profits

Fund contracts reflected in other segments as noted above for Retirement Solutions and Pensions & Savings where profits are primarily

attributable to the shareholder through the Recourse Cash Flow mechanism.

The Europe & Other segment includes business written in Ireland and Germany. This includes products that are actively being marketed to new

policyholders and legacy in-force products that are no longer being sold to new customers. The segment also includes protection products and

products sold under the SunLife brand.

The Corporate Centre segment, which is not a reportable segment, principally comprises central head office costs that are not directly

attributable to the Group’s insurance or investment contracts. Management services costs are allocated to the four reportable segments.

Inter-segment transactions are set on an arm’s length basis in a manner similar to transactions with third parties. Segmental results include those

transfers between business segments which are then eliminated on consolidation.

Segmental measure of performance: Adjusted operating profit

The Group uses a non-GAAP measure of performance, being adjusted operating profit, to evaluate segmental performance. Adjusted operating

profit is considered to provide a comparable measure of the underlying performance of the business as it excludes the impact of short-term

economic volatility, one-off items and certain other items.

The following sets out the adjusted operating profit methodology:

For unit-linked business accounted for under IFRS 9, adjusted operating profit includes the fees collected from customers less operating

expenses including overheads.

For unit-linked and with-profits business accounted for under IFRS 17, adjusted operating profit includes the release of the risk adjustment,

amortisation of CSM, and demographic experience variances in the period.

A. Significant accounting policies continued

A6. New accounting pronouncements not yet effective continued

Financials

203Phoenix Group Holdings plc Annual Report and Accounts 2024

For shareholder annuity, other non-profit business and with-profits funds receiving shareholder support accounted for under IFRS 17, adjusted

operating profit includes the release of the risk adjustment, amortisation of CSM, and demographic experience variances in the period. Adjusted

operating profit also incorporates an expected return on the financial investments backing this business and any surplus assets, with allowance

for the corresponding movement in liabilities.

Adjusted operating profit excludes the above items for non-profit business written in a with-profits fund where these amounts do not accrue

directly to the shareholder.

Adjusted operating profit includes the effect of experience variances relating to the current period for non-economic items, such as mortality

and expenses. It also incorporates the impacts of asset trading and portfolio rebalancing where not reflected in the discount rate used in

calculating expected return.

Adjusted operating profit is reported net of policyholder finance charges and policyholder tax.

Adjusted operating profit excludes the impacts of the following items:

Economic variances

• the difference between actual and expected experience for economic items recognised in the consolidated income statement, impacts

of economic assumptions on the valuation of liabilities measured under the General Model and the change in value of loss components

on Variable Fee Approach business resulting from market movements on underlying items;

• economic volatility arising from the Group’s hedging strategy which is calibrated to protect the Solvency II capital position and cash

generation capability of the operating companies;

• the accounting mismatch resulting from the application of IFRS 17 between the measurement of non-profit business in a with-profits fund (noted

above) and the change in fair value of this business included within the measurement of the with-profits contracts under the Variable

Fee Approach;

• the accounting mismatch resulting from buy-in contracts between the Group’s pension schemes and Phoenix Life Limited, the Group’s main

insurance subsidiary. The mismatch represents the difference between the unwind of the IAS 19 discount rate calculated with reference to a

AA-rated corporate bond and the expected investment returns on the backing assets; and

• the effect of the mismatch between changes in estimates of future cash flows on General Model contracts measured at current discount rates

and the corresponding adjustment to the CSM measured at the discount rate locked-in at inception.

Other

• amortisation and impairment of AVIF and brand intangible assets (net of policyholder tax);

• finance costs attributable to owners;

• gains or losses on the acquisition or disposal of subsidiaries (net of related costs);

• the financial impacts of mandatory regulatory change;

• the profit or loss attributable to non-controlling interests;

• integration, restructuring or other significant one-off projects impacting the income statement; and

• any other items which, in the Director’s view, should be disclosed separately by virtue of their nature or incidence to enable a full

understanding of the Group’s financial performance. This is typically the case where the nature of the item is not reflective of the underlying

performance of the operating companies.

The items excluded from adjusted operating profit are referred to as ‘non-operating items’. Whilst the excluded items are important to an assessment

of the consolidated financial performance of the Group, management considers that the presentation of adjusted operating profit provides a good

indicator of the underlying performance of the Group’s operating segments and the Group uses this, as part of a suite of measures, for decision-

making and monitoring performance. The Group’s adjusted operating profit should be read in conjunction with the IFRS profit before tax.

B1.1 Segmental result

Notes

			2023
		2024	restated 1
		£m	£m
Adjusted operating profit
Retirement Solutions		474	378
Pensions & Savings		316	190
With-Profits		41	10
Europe & Other		96	144
Corporate Centre		(102)	(93)
Total segmental adjusted operating profit		825	629
Economic variances	B2.2	(1,297)	377
Amortisation and impairment of acquired in-force business		(264)	(316)
Amortisation of brand intangibles	G2	(6)	(6)
Other non-operating items		(520)	(439)
Finance costs on borrowing attributable to owners		(204)	(195)
(Loss)/profit before the tax attributable to owners of the parent		(1,466)	50
Profit before tax attributable to non-controlling interests		12	28
(Loss)/profit before the tax attributable to owners		(1,454)	78

1 See note A3 for further details of the prior year restatements.

Financials

Notes to the consolidated financial statements continued

204 Phoenix Group Holdings plc Annual Report and Accounts 2024

Other non-operating items in respect of the year ended 31 December 2024 include:

• £208 million loss reflecting the net loss from the derecognition of the IAS 19 defined benefit obligation and reimbursement rights and the

recognition of an insurance contract and associated reinsurance contracts following the completion of the PGL Pension Scheme buy-out

transaction. A gain of £108 million arose on the remeasurement of the BEL and risk adjustment using the discount rate implicit in the buy-out

transfer amount at initial recognition and the Group’s discount rate applied for the subsequent measurement of annuity insurance and

reinsurance contracts immediately after initial recognition. The resulting net loss of £106 million also includes pension scheme wind up costs of

£6 million incurred in the period to date. Note G1 provides more detail on the derecognition of the IAS 19 balances;

• £134 million of costs associated with the delivery of the Group Target Operating Model for IT and Operations, including the migration of

policyholder administration onto the Tata Consultancy Services (‘TCS’) platform. Under IFRS 17, the expected costs in respect of this activity that

are directly attributable to insurance contracts have been included within insurance contract liabilities;

• costs of £93 million associated with finance transformation activities, including the migration to cloud-based systems and enhancements to

actuarial modelling and reporting capabilities and the related control environment;

• £80 million of costs associated with strategic growth initiatives, including development of the Group’s Internal Model, investment in digital and

direct asset sourcing capabilities, and transformation of the Group’s operating model to support efficient growth;

• £43 million of costs associated with delivery of the Group’s 3-year cost saving programme;

• £22 million of costs associated with ongoing integration programmes;

• Corporate project costs and net other one-off items totalling a cost of £42 million.

Other non-operating items in respect of the year ended 31 December 2023 include:

• a gain on acquisition of £66 million reflecting the excess of the fair value of the net assets acquired over the consideration paid for the acquisition

of Phoenix Life CA Holdings Limited (Formerly known as SLF of Canada UK Limited) (see note H2 for further details);

• £169 million of costs associated with strategic growth initiatives, including investment in digital and direct asset sourcing capabilities,

establishment of the Group’s Bermudan reinsurance operations and transformation of the Group’s operating model to support efficient growth;

• £79 million of costs associated with the delivery of the Group Target Operating Model for IT and Operations, including the migration of

policyholder administration onto the Tata Consultancy Services (‘TCS’) platform. Under IFRS 17, the expected costs in respect of this activity that

are directly attributable to insurance contracts have been included within insurance contract liabilities;

• costs of £65 million associated with the implementation of IFRS 17;

• costs of £52 million associated with finance transformation activities, including the migration to cloud-based systems and enhancements to

actuarial modelling capabilities and the related control environment;

• costs of £49 million associated with the consolidation by Part VII transfer of four of the Group’s Life Companies into a single entity, completed

in the second half of 2023;

• a £36 million adverse impact from the strengthening of actuarial reserves associated with the Part VII transfer of certain European business from

the Group’s UK Life Companies to a newly established European subsidiary;

• £32 million of costs associated with ongoing integration programmes;

• £12 million of past service costs in relation to a Group pension scheme (see note G1 for further details); and

• Corporate project costs and net other one-off items totalling a cost of £11 million.

Further details of the investment return variances and economic assumption changes on long-term business, and the variance on owners’ funds are

included in note B2.

B1.2 Segmental revenue

2024

	Retirement
	Solutions	Pensions & Savings	With-Profits	Europe & Other	Total
	£m	£m	£m	£m	£m
Revenue from external customers:
Insurance revenue	3,918	274	378	569	5,139
Fees and commissions	–	886	51	90	1,027
Total segmental revenue	3,918	1,160	429	659	6,166

	Retirement
	Solutions	Pensions & Savings	With-Profits	Europe & Other	Total
2023	£m	£m	£m	£m	£m
Revenue from external customers:
Insurance revenue	3,751	272	267	571	4,861
Fees and commissions	–	828	52	87	967
Total segmental revenue	3,751	1,100	319	658	5,828

Of the revenue from external customers presented in the table above, £5,895 million (2023: £5,583 million) is attributable to customers in the

United Kingdom (‘UK’) and £271 million (2023: £245 million) to the rest of the world. No revenue transaction with a single customer external to the

Group amounts to greater than 10% of the Group’s revenue.

The Group has total non-current assets (other than financial assets, deferred tax assets, pension schemes and rights arising under insurance

contracts) of £4,325 million (2023: £3,622 million) located in the UK and £274 million (2023: £299 million) located in the rest of the world.

B. Earnings performance continued

B1. Segmental analysis continued

B1.1 Segmental result continued

Financials

205Phoenix Group Holdings plc Annual Report and Accounts 2024

B2. Investment return variances and economic assumption changes

The long-term nature of much of the Group’s operations means that, for internal performance management, the effects of short-term economic

volatility are treated as non-operating items. The Group focuses instead on an adjusted operating profit measure that incorporates an expected

return on investments supporting its long-term business. The accounting policy adopted in the calculation of adjusted operating profit is detailed

in note B1. The methodology for the determination of the expected investment return is explained below together with an analysis of investment

return variances and economic assumption changes recognised outside of adjusted operating profit.

B2.1 Calculation of the long-term investment return

Adjusted operating profit for life assurance business is based on expected investment returns on financial investments backing shareholder,

annuity, other non-profit business, with-profits funds receiving shareholder support and surplus assets, with allowance for the corresponding

movements in liabilities.

The methodology to determine the expected investment returns on financial investments uses the 1-year risk-free rate for deriving the expected

investment return assumption on assets backing the insurance contract liabilities to reduce unintended economic volatility as set out in note B1.

The long-term risk-free rate used as the basis for deriving the long-term investment return is consistent with that set out in note F11.2.1 at the 1-year

duration for assets backing the insurance contract liabilities and surplus cash assets, and at the 15-year duration for surplus non-cash assets.

A risk premium of 400 bps is added to the risk-free yield for equities (2023: 380 bps), 50 bps for properties (2023: 50 bps) and 170 bps for debt

securities (2023: 130 bps).

The principal assumptions underlying the calculation of the long-term investment return for surplus assets are:

	2024	2023
	%	%
Equities	7.4	7.4
Properties	3.9	4.1
Debt securities	5.1	4.9

B2.2 Life assurance business

The economic variances excluded from the long-term business operating profit are as follows:

		2023
	2024	restated 1
	£m	£m
Economic variances	(1,297)	377

1 See note A3 for further details of the prior year restatements.

The net adverse economic variances of £1,297 million (2023: £377 million favourable (restated)) have primarily arisen as a result of higher yields and

a rise in global equity markets. Movements in yields and equity markets are hedged to protect our Solvency II surplus from volatility, but our IFRS

balance sheet is, in effect, ‘over-hedged’ as it does not recognise the additional Solvency II balance sheet items such as future profits on investment

contracts measured under IFRS 9 and the Solvency Capital Requirements.

B3. Earnings per share

The Group calculates its basic earnings per share based on the present shares in issue using the earnings attributable to ordinary equity holders

of the parent, divided by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share are calculated based on the potential future shares in issue assuming the conversion of all potentially dilutive ordinary

shares. The weighted average number of ordinary shares in issue is adjusted to assume conversion of dilutive share awards granted to employees.

The basic and diluted earnings per share calculations are also presented based on the Group’s adjusted operating earnings net of financing

costs. Adjusted operating profit is a non-GAAP performance measure that is considered to provide a comparable measure of the underlying

performance of the business as it excludes the impact of short-term economic volatility, one-off items and certain other items.

The result attributable to ordinary equity holders of the parent for the purposes of determining earnings per share has been calculated

as set out below.

2024

			Adjusted operating	Other
	Adjusted	Financing	earnings net of	non-operating
	operating profit	costs	financing costs	items	Total
	£m	£m	£m	£m	£m
Profit/(loss) before the tax attributable to owners	825	(204)	621	(2,075)	(1,454)
Tax (charge)/credit attributable to owners	(188)	51	(137)	513	376
Profit/(loss) for the year attributable to owners	637	(153)	484	(1,562)	(1,078)
Coupon paid on Tier 1 notes	–	(29)	(29)	–	(29)
Deduct: Share of result attributable to non-controlling interests	–	–	–	(12)	(12)
Profit/(loss) for the year attributable to ordinary equity
holders of the parent	637	(182)	455	(1,574)	(1,119)

Financials

Notes to the consolidated financial statements continued

206 Phoenix Group Holdings plc Annual Report and Accounts 2024

			Adjusted operating	Other
	Adjusted	Financing	earnings net of	non-operating
	operating profit	costs	financing costs	items	Total
2023 (restated) 1	£m	£m	£m	£m	£m
Profit/(loss) before the tax attributable to owners	629	(195)	434	(356)	78
Tax (charge)/credit attributable to owners	(134)	46	(88)	94	6
Profit/(loss) for the year attributable to owners	495	(149)	346	(262)	84
Coupon paid on Tier 1 notes, net of tax relief	–	(22)	(22)	–	(22)
Deduct: Share of result attributable to non-controlling interests	–	–	–	(28)	(28)
Profit/(loss) for the year attributable to ordinary equity
holders of the parent	495	(171)	324	(290)	34

1 See note A3 for further details of the prior year restatements.

The weighted average number of ordinary shares outstanding during the period is calculated as follows:

	2024	2023
	Number	Number
	million	million
Issued ordinary shares at beginning of the year	1,002	1,000
Effect of ordinary shares issued	–	1
Effect of non-contingently issuable shares in respect of Group’s long-term incentive plan	1	2
Own shares held by the employee benefit trust	(2)	(2)
Weighted average number of ordinary shares	1,001	1,001

The diluted weighted average number of ordinary shares outstanding during the period is 1,005 million (2023: 1,003 million). The Group’s Long

Term Incentive Plan, Deferred Bonus Share Scheme and ShareSave schemes increased the weighted average number of shares on a diluted basis

by 4,318,665 shares for the year ended 31 December 2024 (2023: 2,259,377 shares). As losses have an anti-dilutive effect, none of the share-based

awards had a dilutive effect in the calculation of basic earnings per share for the year ended 31 December 2024.

Earnings per share disclosures are as follows:

		2023
	2024	restated
	pence	pence
Basic earnings per share	(111.8)	3.3
Diluted earnings per share	(111.8)	3.3
Basic adjusted operating earnings net of financing costs per share	45.4	32.4
Diluted adjusted operating earnings net of financing costs per share	45.3	32.3

B4. Dividends on ordinary shares

Final dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Group’s owners.

Interim dividends are deducted from equity when they are paid.

Dividends for the year that are approved after the reporting period are dealt with as an event after the reporting period. Declared dividends are

those that are appropriately authorised and are no longer at the discretion of the entity.

	2024	2023
	£m	£m
Dividends declared and paid in the year	533	520

On 21 March 2024, the Board recommended a final dividend of 26.65p per share in respect of the year ended 31 December 2023. The dividend

was approved at the Group’s Annual General Meeting, which was held on 14 May 2024. The dividend amounted to £267 million and was paid on

22 May 2024.

On 11 September 2024, the Board declared an interim dividend of 26.65p per share for the half year ended 30 June 2024. The dividend amounted

to £266 million and was paid on 31 October 2024.

B. Earnings performance continued

B3. Earnings per share continued

Financials

207Phoenix Group Holdings plc Annual Report and Accounts 2024

C. Other Income Statement notes

C1. Insurance revenue

The Group’s insurance revenue reflects the provision of services arising from a group of insurance contracts at an amount that reflects the

consideration to which the Group expects to be entitled in exchange for those services. Insurance revenue from a group of insurance contracts is

therefore the relevant portion for the period of the total consideration for the contracts, (i.e. the amount of premiums paid to the Group adjusted

for financing effect (the time value of money) and excluding any investment components). The total consideration for a group of contracts covers

amounts related to the provision of services and is comprised of:

• the release of the CSM;

• changes in the risk adjustment for non-financial risk relating to current services;

• claims and other insurance service expenses incurred in the period, generally measured at the amounts expected at the beginning of the period;

• insurance acquisition cash flows recovery which is determined by allocating the portion of premiums related to the recovery of those cash

flows on the basis of the passage of time over the expected coverage of a group of contracts; and

• other amounts, including any other pre-recognition cash flow assets derecognised at the date of initial recognition.

The amount of the CSM of a group of insurance contracts that is recognised as insurance revenue in each year is determined by identifying the

coverage units in the group, allocating the CSM remaining at the end of the year equally to each coverage unit provided in the year and

expected to be provided in future years, and recognising in profit or loss the amount of the CSM allocated to coverage units provided in the year.

The number of coverage units in a group is the quantity of service provided by the contracts in the group, determined by considering for each

contract the quantity of benefits provided under a contract and its expected coverage period. The coverage units are reviewed and updated at

each reporting date.

The Group consider the following when determining coverage units:

• the quantity of benefits provided by contracts in the group;

• the expected coverage period of contracts in the group;

• the likelihood of insured events occurring, only to the extent that they affect the expected coverage period of contracts in the group;

• for insurance contracts without direct participation features, the generation of an investment return for the policyholder, if applicable

(investment-return service); and

• for insurance contracts with direct participation features, the management of underlying items on behalf of the policyholder (investment-

related service).

The coverage units for groups of reinsurance contracts held are determined based on the quantity of coverage provided by the reinsurance

contracts held in the group but not the coverage provided by the insurer to its policyholders through the underlying insurance contracts.

However, where the reinsurance held is a 100% quota share arrangement, it is expected that the coverage units would be consistent with the

underlying insurance contracts. Where there is a change to the fulfilment cash flows of the group of underlying policies that does not adjust the

CSM, it also would not adjust the CSM of the group of reinsurance contracts.

2024

Retirement

Solutions

£m

		Pensions &
		Savings	With-Profits	Europe & Other	Total
		£m	£m	£m	£m
Amounts relating to changes in liabilities for remaining coverage:
CSM recognised in period for services provided	278	36	74	56	444
Change in risk adjustment for non-financial risk	71	11	6	15	103
Expected incurred claims and other insurance service expenses	3,568	194	262	487	4,511
Policyholder tax charges	–	33	36	–	69
Amounts relating to recovery of insurance acquisition cash flows	1	–	–	11	12
Insurance revenue	3,918	274	378	569	5,139
Comprising contracts measured using:
Fair value approach at transition	1,846	271	358	427	2,902
Fully retrospective approach at transition and new contracts	2,072	3	20	142	2,237

	Retirement	Pensions &
	Solutions	Savings	With-Profits	Europe & Other	Total
2023	£m	£m	£m	£m	£m
Amounts relating to changes in liabilities for remaining coverage:
CSM recognised in period for services provided	260	25	77	47	409
Change in risk adjustment for non-financial risk	39	8	4	12	63
Expected incurred claims and other insurance service expenses	3,450	233	169	497	4,349
Policyholder tax charges	1	6	17	1	25
Amounts relating to recovery of insurance acquisition cash flows	1	–	–	14	15
Insurance revenue	3,751	272	267	571	4,861
Comprising contracts measured using:
Fair value approach at transition	1,887	262	257	420	2,826
Fully retrospective approach at transition and new contracts	1,864	10	10	151	2,035

Financials

Notes to the consolidated financial statements continued

208 Phoenix Group Holdings plc Annual Report and Accounts 2024

C2. Fees and commissions

Fees related to the provision of investment management services and administration services are recognised as services are provided. Front end

fees, which are charged at the inception of service contracts, are deferred as a liability and recognised over the life of the contract. No significant

judgements are required in determining the timing or amount of fee income or the costs incurred to obtain or fulfil a contract.

Fee income from investment contracts without DPF does not include amounts related to policyholder tax. Policyholder tax is collected through

adjustments to unit prices and is therefore reflected in change in investment contract liabilities.

The table below disaggregates fees and commissions by segment.

	Retirement
	Solutions	Pensions & Savings	With-Profits	Europe & Other	Total
2024	£m	£m	£m	£m	£m
Fee income from investment contracts without DPF	–	877	51	63	991
Initial fees deferred during the year	–	–	–	(8)	(8)
Revenue from investment contracts without DPF	–	877	51	55	983
Other revenue from contracts with customers	–	9	–	35	44
Fees and commissions	–	886	51	90	1,027

	Retirement
	Solutions	Pensions & Savings	With-Profits	Europe & Other	Total
2023	£m	£m	£m	£m	£m
Fee income from investment contracts without DPF	–	814	52	60	926
Initial fees deferred during the year	–	–	–	(9)	(9)
Revenue from investment contracts without DPF	–	814	52	51	917
Other revenue from contracts with customers	–	14	–	36	50
Fees and commissions	–	828	52	87	967

Remaining performance obligations

The practical expedient under IFRS 15 Revenue from Contracts with Customers has been applied and remaining performance obligations are not

disclosed as the Group has the right to consideration from customers in amounts that correspond with the performance completed to date.

Specifically management charges become due over time in proportion to the Group’s provision of investment management services.

In the period, no amortisation or impairment losses from contracts with customers were recognised in the statement of comprehensive income.

C3. Net investment income

Net investment income comprises interest, dividends, rents receivable, net interest income/(expense) on the Group defined benefit pension

scheme asset/(liability), fair value gains and losses on financial assets (except for reinsurers’ share of investment contract liabilities without DPF,

see note E1), financial liabilities and investment property at fair value and impairment losses on loans and receivables.

Interest income is recognised in the consolidated income statement as it accrues using the effective interest method.

Dividend income is recognised in the consolidated income statement on the date the right to receive payment is established, which in the case

of listed securities is the ex-dividend date.

Rental income from investment property is recognised in the consolidated income statement on a straight-line basis over the term of the lease.

Lease incentives granted are recognised as an integral part of the total rental income.

Fair value gains and losses on financial assets and financial liabilities designated at fair value through profit or loss are recognised in the

consolidated income statement. Fair value gains and losses includes both realised and unrealised gains and losses.

		2023
	2024	restated 1
	£m	£m
Investment income
Interest income on financial assets at amortised cost	31	37
Interest income on financial assets at FVTPL	4,363	3,901
Dividend income	6,403	5,923
Rental income	329	324
Net interest expense on Group defined benefit pension scheme liability/asset (restated) 1	(56)	(111)
	11,070	10,074
Fair value gains/(losses)
Financial assets and financial liabilities at FVTPL	7,882	11,126
Investment property	(100)	(362)
	7,782	10,764
Net investment income	18,852	20,838

1 See note A3 for further details of the prior year restatements .

C. Other Income Statement notes continued

Financials

209Phoenix Group Holdings plc Annual Report and Accounts 2024

C4. Net finance expense from insurance contracts

Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects of

the time value of money, financial risk and changes therein, unless any such changes for groups of direct participating contracts are allocated to a

loss component and included in insurance service expenses. They include changes in the measurement of groups of contracts caused by

changes in the value of underlying items. The Group presents insurance finance income or expenses in profit or loss.

	Retirement
	Solutions	Pensions & Savings	With-Profits	Europe & Other	Total
2024	£m	£m	£m	£m	£m
Insurance contracts issued
Changes in fair value of underlying items of direct
participating contracts	–	(773)	(265)	(682)	(1,720)
Group’s share of changes in fair value of underlying items
or fulfilment cash flows that do not adjust the CSM	–	14	–	–	14
Unwind of discount on fulfilment cash flows	(2,359)	(964)	(1,342)	(890)	(5,555)
Interest accreted on the CSM	(102)	–	(10)	(5)	(117)
Effect of changes in interest rates and other financial assumptions	2,997	1	495	229	3,722
Insurance finance income/(expense)	536	(1,722)	(1,122)	(1,348)	(3,656)
Reinsurance contracts held
Unwind of discount on fulfilment cash flows	296	–	50	19	365
Interest accreted on the CSM	45	–	3	1	49
Effect of changes in interest rates and other financial assumptions	(336)	–	(71)	(116)	(523)
Reinsurance finance income/(expense)	5	–	(18)	(96)	(109)
Net insurance finance income/(expense)	541	(1,722)	(1,140)	(1,444)	(3,765)

	Retirement
	Solutions				Total
	restated 1	Pensions & Savings	With-Profits	Europe & Other	restated 1
2023	£m	£m	£m	£m	£m
Insurance contracts issued
Changes in fair value of underlying items of direct
participating contracts	–	(581)	(629)	(376)	(1,586)
Group’s share of changes in fair value of underlying items
or fulfilment cash flows that do not adjust the CSM	–	10	–	–	10
Unwind of discount on fulfilment cash flows	(1,930)	(902)	(1,320)	(1,040)	(5,192)
Interest accreted on the CSM	(62)	–	(10)	(5)	(77)
Effect of changes in interest rates and other financial
assumptions (restated) 1	(45)	(117)	45	(96)	(213)
Insurance finance expense	(2,037)	(1,590)	(1,914)	(1,517)	(7,058)
Reinsurance contracts held
Unwind of discount on fulfilment cash flows	272	–	47	6	325
Interest accreted on the CSM	23	–	3	–	26
Effect of changes in interest rates and other financial
assumptions	(173)	–	(5)	6	(172)
Reinsurance finance income	122	–	45	12	179
Net insurance finance expense	(1,915)	(1,590)	(1,869)	(1,505)	(6,879)

1 See note A3 for further details of the prior year restatements.

There is a close relationship between the net investment income in note C3, as it relates to assets backing contracts within the scope of IFRS 17, and

net insurance finance (expense)/income. Net investment income includes the results for all investment assets including those backing investment

contracts and surplus assets.

For Retirement Solutions the principal product is annuities. The insurance finance (expense)/income primarily reflects the unwind of the discount

rate on the liabilities. This is largely offset by the interest income earned, included within net investment income, on the assets backing the annuity

contracts which primarily consist of debt securities and equity release mortgages. Changes in the discount rates used to discount the annuity cash

flows in the measurement of the insurance contract liabilities are largely offset by changes in the fair value of the backing assets, included in net

investment income, in respect of the best estimate liability (‘BEL’) and risk adjustment.

Financials

Notes to the consolidated financial statements continued

210 Phoenix Group Holdings plc Annual Report and Accounts 2024

Mismatches between net investment income and insurance finance expense arises for the following reasons:

• the annuity business within the Retirement Solutions segment uses the General Model for measurement. As a result, the contractual service

margin (‘CSM’) is measured using discount rates locked in at inception, whereas the assets backing the CSM are based on current

economic assumptions;

• the discount rate for annuity business uses a reference portfolio constructed in line with the Group’s investment strategy as set out in Note F11.2.1,

and therefore insurance finance expenses are impacted by changes to the asset mix within this reference portfolio. Net investment income is

determined with reference to the actual assets held by the Group during the reporting period;

• changes in non-economic assumptions for General Model business impacts BEL and risk adjustment using current discount rates and CSM using

locked in discount rates. This gives rise to a mismatch for which there is no corresponding item within net investment income;

For Pensions & Savings the principal products are unit-linked and hybrid contracts, which contain an element of unit-linked and unitised with-profits

within a single contract. These contracts are measured primarily using the variable fee approach (‘VFA’) as the amounts payable to policyholders

reflect a substantial share of the fair value returns on the backing assets. As a result, the change in fair value of underlying items within insurance

finance (expense)/income will be closely matched by changes in the value of backing assets which are also measured at fair value.

The unwind of discount rate on cash flows within insurance finance (expenses)/income is offset by the investment income recognised in respect

of backing assets. The discount rate used for BEL and risk adjustment is determined on a bottom-up basis, as set out in note F11.2.1, based on the

liquidity characteristics of the liabilities rather than with reference to the backing assets and therefore a mismatch occurs.

For With-Profits business there are differing impacts dependent on the nature of the liabilities within the fund. For with-profits business without

guarantees, the relationship between net investment income and insurance finance (expense)/income will be consistent with that for the business

within Pensions & Savings. In respect of guarantees, the value of these is typically influenced by changes in interest rates. The Group hedges its

interest rate risk in respect of these guarantees with derivatives such that the effect of changes in interest rates on guarantees within insurance

finance (expense)/income are largely offset by changes in the fair value of the derivatives used for hedging in net investment income.

For non-profit business in a with-profits fund where profits from these contracts accrue to the with-profits policyholders or to the with-profits fund

estate, the non-profit contracts and their backing assets are considered to be an underlying item of the with-profits contracts and therefore

changes in their fair value are included within insurance finance (expense)/income.

The non-profit contracts will be measured based on their substance. For non-profit annuities which fall within the scope of IFRS 17 they are

measured using the IFRS 17 General Model and the treatment of the non-profit contract is consistent with the non-profit annuities within the

Retirement Solutions segment. The effect of these non-profit annuities on the income statement, does not match the change in fair value

measurement used to measure their effect on the with-profits policyholders and therefore a mismatch arises. For unit-linked business which falls

within the scope of IFRS 9 the liabilities are measured in line with the Group’s accounting policy for investment contracts with movements being

taken through ‘change in investment contract liabilities’. Movements in the related assets which are reflected in net investment income largely match

the movements in the liabilities. The assets backing the non-profit business in the with-profits fund are typically measured at fair value with

investment income and changes in fair value being included within net investment income.

The Europe & Other segment contains business consistent with that in the segments noted above and will mirror the relationships between net

investment income and insurance finance (expense)/income as noted above for the relevant type of business. In addition, this segment contains

protection business which uses a bottom-up discount rate based on the liability characteristics rather than being based on the backing assets,

which leads to mismatches between net investment income and insurance finance (expenses)/income.

C5. Expenses

Insurance service expenses

Insurance service expenses arising from insurance contracts are recognised in profit or loss generally as they are incurred. They exclude

repayments of investment components and comprise the following items:

• adjustment to liabilities for incurred claims and benefits, excluding investment components reduced by loss component allocations;

• other incurred directly attributable expenses, including amounts of any other pre-recognition cash flows assets (other than insurance

acquisition cash flows) derecognised at the date of initial recognition;

• insurance acquisition cash flows amortisation;

• insurance acquisition cash flows assets impairment; and

• reversal of impairment of assets for insurance acquisition cash flows.

Net income or expense from reinsurance contracts held

Income and expenses from reinsurance contracts are presented separately from income and expenses from insurance contracts. Income and

expenses from reinsurance contracts, other than insurance finance income or expenses, are presented on a net basis as ‘net expenses from

reinsurance contracts’ in the insurance service result.

Net expenses from reinsurance contracts comprise an allocation of reinsurance premiums paid less amounts recovered from reinsurers.

The Group recognises an allocation of reinsurance premiums paid in profit or loss as it receives services under groups of reinsurance contracts.

The allocation of reinsurance premiums paid relating to services received for each period represents the total of the changes in the asset for

remaining coverage that relates to services for which the Group expects to pay consideration.

Administrative expenses

Administrative expenses are recognised in the consolidated income statement as incurred.

C. Other Income Statement notes continued

C4. Net finance expense from insurance contracts continued

Financials

211Phoenix Group Holdings plc Annual Report and Accounts 2024

Total expenses are analysed by expenses type as follows:

		2023
	2024	restated 1
	£m	£m
Claims and benefits net of reinsurance contracts (restated) 1,3	1,458	1,423
Reversal of losses on onerous insurance contracts	(30)	(22)
Cost of retroactive cover on reinsurance contracts held	5	3
Employee costs	750	664
Outsourcer expenses	368	308
Professional fees	285	376
Temporary staff costs	143	167
Audit fees	26	28
Commission expenses	161	155
Office and IT costs	280	260
Investment management expenses and transaction costs	388	413
Direct costs of collective investment schemes	25	20
Depreciation	21	21
Pension past service costs	–	13
Pension administrative expenses	17	7
Advertising and sponsorship	58	66
Loss on completion of buy-out of PGL Pension Scheme liabilities (see note B1.1)	208 –
Regulatory fees	18	17
Other	65	60
	4,246	3,979
Acquisition costs deferred during the year (restated) 1	(29)	(21)
Amortisation of deferred acquisition costs (restated) 1	9	9
Amounts attributed to insurance acquisition cash flows incurred during the year	(179)	(154)
Amortisation of insurance acquisition cash flows	12	15
Total expenses	4,059	3,828
Reported within:
Insurance service expenses (restated) 1	4,493	4,335
Net expenses from reinsurance contracts 2	(2,259)	(2,169)
Administrative expenses	1,825	1,662
Total expenses	4,059	3,828

1 See note A3 for further details of the prior year restatements.

2 Reported as part of the ‘Net expenses from reinsurance contracts’ balance in the consolidated income statement.

3 Claims and benefits is presented net of reinsurance recovery but stated gross in the consolidated income statement.

Employee costs comprise:

	2024	2023
	£m	£m
Wages and salaries	677	603
Social security contributions	73	61
	750	664

	2024	2023
	Number	Number
Average number of persons employed	7,505	7,512

C6. Auditor’s remuneration

During the year the Group obtained the following services from its auditor at costs as detailed in the table below. In 2024, total fees payable are in

relation to those payable to KPMG with the comparative period information relating to fees payable to EY.

	2024	2023
	£m	£m
Audit of the consolidated financial statements	7.5	12.7
Audit of the Company’s subsidiaries	14.9	12.9
	22.4	25.6
Audit-related assurance services	3.0	2.8
Other assurance services	0.2	–
Total fee for assurance services	25.6	28.4
Total auditor’s remuneration	25.6	28.4

EY resigned as auditor and KPMG appointed effective from 14 May 2024.

Financials

Notes to the consolidated financial statements continued

212 Phoenix Group Holdings plc Annual Report and Accounts 2024

No services were provided by the Company’s auditors to the Group’s pension schemes in either 2024 or 2023.

The decrease in the audit fee during 2024 principally reflects the reduction in work undertaken in connection with the transition to IFRS 17 which

was complete in 2023.

Audit-related assurance services includes fees payable for services where the reporting is required by law or regulation to be provided by the

auditor, such as reporting on regulatory returns. It also includes fees payable in respect of reviews of interim financial information and services

where the work is integrated with the audit itself.

Non-audit services during the year of £0.2 million (2023: £nil) were in respect to ESG assurance services over key metrics reported in the

Company’s annual report and sustainability report for the year ended 31 December 2024.

Further information on auditor’s remuneration and the assessment of the independence of the external auditor is set out in the Audit Committee

report on pages 92 to 99.

C7. Finance costs

Interest payable is recognised in the consolidated income statement as it accrues and is calculated using the effective interest method.

	2024	2023
	£m	£m
Interest expense
On financial liabilities at amortised cost	288	256
On leases	2	2
	290	258
Attributable to:
– policyholders	68	8
– owners	222	250
	290	258

C8. Tax charge

Income tax comprises current and deferred tax. Income tax is recognised in the consolidated income statement except to the extent that it relates

to items recognised in the statement of consolidated comprehensive income or the statement of consolidated changes in equity, in which case it

is recognised in these statements.

Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws enacted or substantively enacted at the date

of the statement of consolidated financial position together with adjustments to tax payable in respect of previous years.

The tax charge is analysed between tax that is payable in respect of policyholders’ returns and tax that is payable on owners’ returns.

C8.1 Current year tax charge

		2023
	2024	restated 1
	£m	£m
Current tax:
UK corporation tax	42	28
Overseas tax	92	110
	134	138
Adjustment in respect of prior years	(6)	(16)
Total current tax charge	128	122
Deferred tax:
Origination and reversal of temporary differences	(154)	58
Change in the rate of UK corporation tax	1	(9)
Write (up)/down of deferred tax assets	(4)	7
Total deferred tax (credit)/charge	(157)	56
Total tax (credit)/charge	(29)	178
Attributable to:
– policyholders	347	184
– owners	(376)	(6)
Total tax (credit)/charge	(29)	178

1 See note A3 for further details of the prior year restatements.

The Group, as a proxy for policyholders in the UK, is required to pay taxes on investment income and gains each year. Accordingly, the tax credit or

expense attributable to UK life assurance policyholder earnings is included in income tax expense. The tax charge attributable to policyholder

earnings was £347 million (2023: £184 million charge).

C. Other Income Statement notes continued

C6. Auditor’s remuneration continued

Financials

213Phoenix Group Holdings plc Annual Report and Accounts 2024

C8.2 Tax charged/(credited) to other comprehensive income

		2023
	2024	restated 1
	£m	£m
Current tax charge/(credit)	4	(8)
Deferred tax charge/(credit) on defined benefit schemes	32	(20)
	36	(28)

1 See note A3 for further details of the prior year restatements.

C8.3 Tax credited to equity

		2023
	2024	restated 1
	£m	£m
Current and deferred tax credit on Tier 1 Notes	–	(7)

1 See note A3 for further details of the prior year restatements.

C8.4 Reconciliation of tax (credit)/charge

		2023
	2024	restated 1
	£m	£m
(Loss)/profit for the year before tax	(1,107)	262
Policyholder tax charge	(347)	(184)
(Loss)/profit before the tax attributable to owners	(1,454)	78
Tax (credit)/charge at standard UK rate of 25% (2023:23.5%)	(364)	18
Non-taxable gains 3	–	(16)
Disallowable expenses	4	1
Prior year tax (credit)/charge for shareholders 4	(67)	12
Movement on acquired in-force amortisation at rates other than 25% (2023: 23.5%)	10	12
Profits taxed at rates other than 25% (2023: 23.5%)	51	7
Recognition of previously unrecognised deferred tax assets 6	(14)	(59)
Deferred tax rate change	1	(9)
Current year losses not valued	1	15
Other	2	13
Owners’ tax credit	(376)	(6)
Policyholder tax charge	347	184
Total tax (credit)/charge for the year	(29)	178

1 See note A3 for further details of the prior year restatements.

2 The Phoenix operating segments are predominantly in the UK. The reconciliation of tax charge has therefore, been completed by reference to the standard rate of UK tax.

3 2023 movement relates principally to a profit arising on consolidation due to the purchase of the Phoenix Life CA Holdings Limited (formerly known as SLF of Canada UK Limited), not subject

to deferred tax.

4 The 2024 prior year tax charge relates principally to true-ups between group reporting and statutory reporting and reassessment of tax provisions.

5 Profits taxed at rates other than 25%/23.5% relates to overseas profits, consolidated fund investments and UK life company profits subject to marginal shareholder tax rates.

6 Relates principally to reassessment of deferred tax assets recognition relating to losses and refinement of deferred tax assets between tax jurisdictions .

D. Equity

D1. Share Capital

The Group has issued ordinary shares which are classified as equity. Incremental external costs that are directly attributable to the issue of these

shares are recognised in equity, net of tax.

	2024		2023
	£m		£m
Issued and fully paid:
1,003.1 million ordinary shares of £0.10 each (2023: 1,001.5 million)		100		100

The holders of ordinary shares are entitled to one vote per share on matters to be voted on by owners and to receive such dividends, if any, as may

be declared by the Board of Directors in its discretion out of legally available profits.

Movements in issued share capital during the year:

	2024	2024	2023	2023
	Number	£	Number	£
Shares in issue at 1 January	1,001,538,419	100,153,841	1,000,352,477	100,035,247
Ordinary shares issued in the year	1,573,419	157,342	1,185,942	118,594
Shares in issue at 31 December	1,003,111,838	100,311,183	1,001,538,419	100,153,841

Financials

Notes to the consolidated financial statements continued

214 Phoenix Group Holdings plc Annual Report and Accounts 2024

During the year, 1,573,419 shares (2023: 1,185,942) were issued at a premium of £nil (2023: £6 million) in order to satisfy obligations to employees

under the Group’s shares schemes (see note I1). This included 1,500,000 shares (2023: nil) that were issued to the Group’s Employee Benefit Trust

at nominal value.

The balance in the merger relief reserve arose upon the issuance of equity shares in 2020 as part consideration for the acquisition of the entire

share capital of ReAssure Group plc. The Group applied the relief in section 612 of the Companies Act 2006 to present the difference between the

consideration received and the nominal value of the shares issued of £1,819 million in a merger reserve as opposed to in share premium. During the

period £1,226 million of the reserve was transferred to retained earnings following the impairment of the Company’s investment in the ReAssure

group of companies as a result of the distribution of dividends to the Company.

D2. Shares held by the employee benefit trust

Where the Phoenix Group Employee Benefit Trust (‘EBT’) acquires shares in the Company or obtains rights to purchase its shares, the

consideration paid (including any attributable transaction costs, net of tax) is shown as a deduction from owners’ equity. Gains and losses on sales

of shares held by the EBT are charged or credited to the own shares account in equity.

The EBT holds shares to satisfy awards granted to employees under the Group’s share-based payment schemes.

	2024	2023
	£m	£m
At 1 January	15	13
Shares acquired by the EBT	16	14
Shares awarded to employees by the EBT	(13)	(12)
At 31 December	18	15

During the year 2,267,832 (2023: 1,942,979) shares were awarded to employees by the EBT, 2,994,854 (2023: 2,477,897) shares were purchased on

market and a further 1,500,000 shares were issued to the EBT by the Company (2023: nil). The number of shares held by the EBT at 31 December

2024 was 4,853,962 (2023: 2,626,940).

The Company provided the EBT with an interest-free non-recourse facility arrangement to enable it to purchase the shares.

D3. Other Reserves

The other reserves comprise the owner-occupied property revaluation reserve and the cash flow hedging reserve.

Owner-occupied property revaluation reserve

This reserve comprises the revaluation surplus arising on revaluation of owner-occupied property. When a revaluation loss arises on a previously

revalued asset it should be deducted first against the previous revaluation gain. Any excess impairment will then be recorded as an impairment

expense in the consolidated income statement.

Cash flow hedging reserve

Where a cash flow hedging relationship exists, the effective portion of changes in the fair value of derivatives that are designated and qualify as

cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or

loss relating to the ineffective portion is recognised immediately in the consolidated income statement, and is reported in net investment income.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when

the hedged item affects profit or loss, in the same line as the recognised hedged item.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated,

or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated

in equity at that time is recycled to profit or loss over the period the hedged item impacts profit or loss.

Further details of the Group’s hedge accounting policy are included in note E1.

2024

	Owner-occupied
	property	Cash flow hedging
	revaluation reserve	reserve	Total other reserves
	£m	£m	£m
At 1 January 2024	2	14	16
Other comprehensive (expense)/income for the year	(2)	9	7
At 31 December 2024	–	23	23

2023

	Owner-occupied
	property		Cash flow hedging
	revaluation reserve		reserve	Total other reserves
	£m		£m	£m
At 1 January 2023		–	46	46
Other comprehensive income/(expense) for the year	2		(32)	(30)
At 31 December 2023		2	14	16

D. Equity continued

D1. Share Capital continued

Financials

215Phoenix Group Holdings plc Annual Report and Accounts 2024

At 31 December 2023, the Group had in place four cross currency swaps which were designated as hedging instruments in order to effect cash

flow hedges of the Group’s Euro and US Dollar denominated borrowings. On 12 June 2024, the Company issued US $500 million Contingent

Convertible Tier 1 notes and the cross currency swap that was entered into at this time was designated as a hedging instrument. On 18 June 2024,

$500 million of the $750 million Contingently Convertible T1 notes were repurchased via a tender offer, leading to an unwinding of $500 million of

the related swap arrangement, which was then treated as a partial discontinuance.

Hedge accounting has been adopted effective from the date of designation of the hedging relationships. The objective of the hedging

relationships is to hedge the risk of variability in functional currency equivalent cash flows with the foreign currency denominated borrowings due

to changes in forward rates. The hedge ratio (i.e. the relationship between the quantity of the hedging instrument and the quantity of the hedged

item in terms of their relative weighting) is such that there is an exact match in the relative weightings of the hedged items and hedging instruments

within each of the hedging relationships.

D4. Tier 1 notes

An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. Accordingly,

a financial instrument is treated as equity if:

• there is no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities on terms that may be

unfavourable; and

• the instrument is a non-derivative that contains no contractual obligation to deliver a variable number of shares or is a derivative that will be

settled only by the Group exchanging a fixed amount of cash or other assets for a fixed number of the Group’s own equity instruments.

The Fixed Rate Reset Perpetual Restricted Tier 1 Contingent Convertible Notes (‘Tier 1 Notes’) meet the definition of equity and accordingly are

shown as a separate category within equity at the proceeds of issue. The coupons on the instruments are recognised as distributions on the date

of payment and are charged directly to the statement of consolidated changes in equity.

	2024	2023
	£m	£m
Tier 1 Notes	494	494

On 26 April 2018, Old PGH (the Group’s ultimate parent company up to December 2018) issued £500 million of Tier 1 Notes, the proceeds of which

were used to fund a portion of the cash consideration for the acquisition of the Standard Life Assurance businesses. The Tier 1 Notes bear interest

on their principal amount at a fixed rate of 5.75% per annum up to the ‘First Call Date’ of 26 April 2028. Thereafter the fixed rate of interest will be

reset on the First Call Date and on each fifth anniversary of this date by reference to a 5-year gilt yield plus a margin of 4.169%. Interest is payable

on the Tier 1 Notes semi-annually in arrears on 26 October and 26 April. The coupon paid in the year was £29 million (2023: £29 million).

At the issue date, the Tier 1 Notes were unsecured and subordinated obligations of Old PGH. On 12 December 2018, the Company was substituted

in place of Old PGH as issuer.

The Tier 1 Notes have no fixed maturity date and interest is payable only at the sole and absolute discretion of the Company; accordingly the Tier 1

Notes meet the definition of equity for financial reporting purposes and are disclosed as such in the consolidated financial statements. If an interest

payment is not made, it is cancelled and it shall not accumulate or be payable at any time thereafter.

The Tier 1 Notes may be redeemed at par on the First Call Date or on any interest payment date thereafter at the option of the Company and also in

other limited circumstances. In respect of any redemption or purchase of the Tier 1 Notes, such redemption or purchase is subject to the receipt of

permission to do so from the PRA.

On 27 October 2020, the terms of the Tier 1 Notes were amended and the consequence of a trigger event, linked to the Solvency II capital position,

was changed. Previously, the Tier 1 Notes were subject to a permanent write-down in value to zero. The amended terms require that the Tier 1 Notes

would automatically be subject to conversion to ordinary shares of the Company at the conversion price of £1,000 per share, subject to adjustment

in accordance with the terms and conditions of the notes and all accrued and unpaid interest would be cancelled. Following any such conversion

there would be no reinstatement of any part of the principal amount of, or interest on, the Tier 1 Notes at any time.

D5. Non-controlling interests

Non-controlling interests are stated at the share of net assets attributed to the non-controlling interest holder at the time of acquisition, adjusted

for the relevant share of subsequent changes in equity.

	2024	2023
	£m	£m
At 1 January	549	532
Profit for the year	12	28
Dividends paid	(12)	(11)
Decrease in non-controlling interests	(10)	–
At 31 December	539	549

The non-controlling interests of £539 million (2023: £549 million) reflects third party ownership of Patria Private Equity Trust plc (‘PPET’) (formerly

known as abrdn Private Equity Opportunities Trust plc) determined at the proportionate value of the third party interest in the underlying assets

and liabilities. PPET is a UK Investment Trust listed and traded on the London Stock Exchange. As at 31 December 2024, the Group held 54.3%

(2023: 53.6%) of the issued share capital of PPET. The decrease in non-controlling interests reflects the impact of a share buyback undertaken

during the year.

The Group’s interest in PPET is held in the with-profits and unit-linked funds of the Group’s life companies. Therefore, the shareholder exposure

to the results of PPET is limited to the impact of those results on the shareholder share of distributed profits of the relevant fund.

Financials

Notes to the consolidated financial statements continued

216 Phoenix Group Holdings plc Annual Report and Accounts 2024

Summary financial information showing the interest that non-controlling interests have in the Group’s activities and cash flows is shown below:

PPET

	2024	2023
	£m	£m
Statement of financial position:
Financial assets	529	586
Other assets	56	10
Total assets	585	596
Total liabilities	46	47
Income statement:
Net income	23	37
Profit after tax	12	28
Comprehensive income	12	28
Cash flows:
Net increase in cash and cash equivalents	1	(1)

E. Financial assets & liabilities

E1. Fair values

Financial assets

Financial assets are to be classified into one of the following measurement categories: Fair value through profit or loss (‘FVTPL’), fair value

through other comprehensive income (‘FVOCI’) and amortised cost. Classification is made based on the objectives of the entity’s business model

for managing its financial assets and the contractual cash flow characteristics of the instruments.

Financial assets are measured at amortised cost where they have:

• contractual terms that give rise to cash flows on specified dates, that represent solely payments of principal and interest on the principal

amount outstanding; and

• are held within a business model whose objective is achieved by holding to collect contractual cash flows.

These financial assets are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the financial asset.

All transaction costs directly attributable to the acquisition are also included in the cost of the financial asset. Subsequent to initial recognition,

these financial assets are carried at amortised cost, using the effective interest method.

Equities, debt securities, collective investment schemes, derivatives and certain loans and deposits are measured at FVTPL as they are managed

and evaluated on a fair value basis.

Purchases and sales of financial assets are recognised on the trade date, which is the date that the Group commits to purchase or sell the asset.

Where derivative financial instruments are held to hedge the Group’s Euro and US Dollar borrowings, and are designated as cash flow hedges,

the effective portion of any gain or loss that arises on remeasurement to fair value is initially recognised in other comprehensive income and is

recycled to profit or loss as the hedged item impacts the profit or loss. For such instruments, the timing of the recognition of any gain or loss that

arises on remeasurement to fair value in profit or loss depends on the nature of the hedge relationship.

The Group has treaties in place with third party insurance companies to provide reinsurance in respect of liabilities that are linked to the

performance of funds maintained by those companies. The contracts in question do not transfer significant insurance risk and therefore are

classified as financial instruments and are valued at fair value through profit and loss. These contracts are disclosed under Reinsurers’ share of

investment contract liabilities in the statement of consolidated financial position.

Impairment of financial assets

The Group assesses the expected credit losses associated with its loans and deposits, receivables, cash and cash equivalents and other financial

assets carried at amortised cost. The measurement of credit impairment is based on an Expected Credit Loss (‘ECL’) model and depends upon

whether there has been a significant increase in credit risk.

For those credit exposures for which credit risk has not increased significantly since initial recognition, the Group measures loss allowances at an

amount equal to the total expected credit losses resulting from default events that are possible within 12 months after the reporting date

(‘12-month ECL’). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, the Group

measures and recognises an allowance at an amount equal to the expected credit losses over the remaining life of the exposure, irrespective of

the timing of the default (‘Lifetime ECL’). If the financial asset becomes ‘credit-impaired’ (following significant financial difficulty of issuer/

borrower, or a default/breach of a covenant), the Group will recognise a Lifetime ECL. ECLs are derived from unbiased and probability-weighted

estimates of expected loss.

The loss allowance reduces the carrying value of the financial asset and is reassessed at each reporting date. ECLs and subsequent

remeasurements of the ECL, are recognised in the consolidated income statement.

Fair value estimation

The fair values of financial instruments traded in active markets such as publicly traded securities and derivatives are based on quoted market

prices at the period end. The quoted market price used for financial assets is the applicable bid price on the period end date. The fair value of

investments that are not traded in an active market is determined using valuation techniques such as broker quotes, pricing models or discounted

cash flow techniques. Where pricing models are used, inputs are based on market related data at the period end. Where discounted cash flow

D. Equity continued

D5. Non-controlling interests continued

Financials

217Phoenix Group Holdings plc Annual Report and Accounts 2024

techniques are used, estimated future cash flows are based on contractual cash flows using current market conditions and market calibrated

discount rates and interest rate assumptions for similar instruments.

For units in unit trusts and shares in open-ended investment companies, fair value is determined by reference to published bid values. The fair

value of receivables and floating rate and overnight deposits with credit institutions is their carrying value. The fair value of fixed interest-bearing

deposits is estimated using discounted cash flow techniques.

Associates

Investments in associates that are held for investment purposes are accounted for under IFRS 9

Financial Instruments

as permitted by IAS 28

Investments in Associates and Joint Ventures

. These are measured at fair value through profit or loss.

Derecognition of financial assets

A financial asset (or part of a group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired;

• the Group retains the right to receive cash flows from the assets, but has assumed an obligation to pay them in full without material delay

to a third party under a ‘pass-through’ arrangement; or

• the Group has transferred its rights to receive cash flows from the asset and has either transferred substantially all the risks and rewards of the

asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities

On initial recognition, financial liabilities are recognised when due and measured at the fair value of the consideration received less directly

attributable transaction costs (with the exception of liabilities at FVTPL for which all transaction costs are expensed).

Subsequent to initial recognition, financial liabilities (except for liabilities under investment contracts without DPF and other liabilities designated

at FVTPL) are measured at amortised cost using the effective interest method.

Financial liabilities are designated upon initial recognition at FVTPL where doing so results in more meaningful information because either:

• it eliminates or significantly reduces accounting mismatches that would otherwise arise from measuring assets or liabilities or recognising the

gains and losses on them on different bases; or

• a group of financial assets, financial liabilities or both is managed and its performance is evaluated and managed on a fair value basis, in

accordance with a documented risk management or investment strategy, and information about the investments is provided internally on that

basis to the Group’s key management personnel.

Investment contracts without DPF

Contracts under which the transfer of insurance risk to the Group from the policyholder is not significant are classified as investment contracts

and accounted for as financial liabilities.

Receipts and payments on investment contracts without DPF are accounted for using deposit accounting, under which the amounts collected

and paid out are recognised in the statement of consolidated financial position as an adjustment to the liability to the policyholder.

Investment contracts without DPF are measured at fair value which is determined using a valuation technique to provide a reliable estimate of the

amount for which the liability could be transferred in an orderly transaction between market participants at the measurement date, subject to a

minimum equal to the surrender value. The valuation of liabilities on unit-linked contracts are held at the fair value of the related assets and

liabilities. The liability is the sum of the unit-linked liabilities plus an additional amount to cover the present value of the excess of future policy

costs over future charges.

Movements in the fair value of investment contracts without DPF and reinsurers’ share of investment contract liabilities are included in Change in

investment contract liabilities in the consolidated income statement.

Investment contract policyholders are charged for policy administration services, investment management services, surrenders and other

contract fees. These fees are recognised as revenue over the period in which the related services are performed. If the fees are for services

provided in future periods, they are deferred and recognised over those periods. ‘Front end’ fees are charged on some non-participating

investment contracts. Where the non-participating investment contract is measured at fair value, such fees which relate to the provision of future

investment management services are deferred and recognised as the services are provided.

Net asset value attributable to unitholders

The net asset value attributable to unitholders represents the non-controlling interest in collective investment schemes which are consolidated by

the Group. This interest is classified at FVTPL and measured at fair value, which is equal to the bid value of the number of units of the collective

investment scheme not owned by the Group.

Obligations for repayment of collateral received

It is the Group’s practice to obtain collateral in stock lending and derivative transactions, usually in the form of cash or marketable securities.

Where cash collateral received is available to the Group for investment purposes, it is recognised as a ‘financial asset’ and the collateral repayable

is recognised as ‘obligations for repayment of collateral received’ in the statement of consolidated financial position. The ‘obligations for

repayment of collateral received’ are measured at amortised cost, which in the case of cash is equivalent to the fair value of the consideration

received. Further details of the Group’s collateral arrangements are included in note E4.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

Offsetting financial assets and financial liabilities

Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is a legally

enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability

simultaneously. When financial assets and liabilities are offset any related interest income and expense is offset in the income statement.

Financials

Notes to the consolidated financial statements continued

218 Phoenix Group Holdings plc Annual Report and Accounts 2024

Hedge accounting

The Group designates certain derivatives as hedging instruments in order to effect cash flow hedges. At the inception of the hedge relationship,

the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its

strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents

whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the

hedged risk.

Where a cash flow hedging relationship exists, the effective portion of changes in the fair value of derivatives that are designated and qualify as

cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or

loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in net investment income.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when

the hedged item affects profit or loss, in the same line as the recognised hedged item.

Hedge accounting is discontinued if: the Group’s hedging objective has changed (can result in a partial discontinuance); the hedged item or

hedging instrument no longer exists or is sold; there is no longer an economic relationship between the hedged item and the hedging instrument;

or the effect of credit risk starts to dominate the value changes that result from the economic relationship. Any gain or loss recognised in other

comprehensive income and accumulated in equity at that time is recycled to profit or loss over the period the hedged item impacts profit or loss.

E1.1 Fair value analysis

The table below sets out a comparison of the carrying amounts and fair values of financial instruments:

2024

		Carrying value
		Amounts due for
		settlement after
	Total	12 months	Fair value
	£m	£m	£m
Financial assets
Financial assets mandatorily held at fair value through profit or loss (‘FVTPL’):
Loans and deposits	249	–	249
Derivatives	2,600	2,281	2,600
Equities 1	96,365	–	96,365
Debt securities	89,301	78,854	89,301
Collective investment schemes 1	83,700	–	83,700
Reinsurers’ share of investment contract liabilities 1	9,297	–	9,297
Financial assets measured at amortised cost:
Loans and deposits	12	10	12
Total financial assets	281,524		281,524
Less amounts classified as financial assets held for sale (see note H3) 2	(1,985)		(1,985)
Total financial assets less financial assets classified as held for sale	279,539		279,539

2024

		Carrying value
		Amounts due for
		settlement after
	Total	12 months	Fair value
	£m	£m	£m
Financial liabilities
Financial liabilities mandatorily held at FVTPL:
Derivatives	4,085	3,443	4,085
Financial liabilities designated at FVTPL upon initial recognition:
Borrowings	31	31	31
Net asset value attributable to unitholders 1	2,486	–	2,486
Investment contract liabilities 1	173,922	–	173,922
Financial liabilities measured at amortised cost:
Borrowings	3,591	3,304	3,599
Obligations for repayment of collateral received	849	–	849
Total financial liabilities	184,964		184,972
Less amounts classified as financial liabilities held for sale (see note H3) 3	(3,175)		(3,175)
Total financial liabilities less financial liabilities held for sale	181,789		181,797

1 These assets and liabilities have no specified settlement date.

2 Amounts classified as financial assets held for sale include equities of £14 million, debt securities of £979 million, collective investment schemes of £960 million and reinsurers’ share of investment contract

liabilities of £32 million.

3 Amounts classified as financial liabilities held for sale include investment contract liabilities of £3,175 million.

E. Financial assets & liabilities continued

E1. Fair values continued

Financials

219Phoenix Group Holdings plc Annual Report and Accounts 2024

2023

		Carrying value
		Amounts due for
		settlement after
	Total	12 months	Fair value
	£m	£m	£m
Financial assets
Financial assets mandatorily held at fair value through profit or loss (‘FVTPL’):
Loans and deposits	231	4	231
Derivatives	2,769	2,338	2,769
Equities 1	87,656	–	87,656
Investment in associate (see note H4.1) 1	349	–	349
Debt securities	94,785	79,994	94,785
Collective investment schemes 1	79,937	–	79,937
Reinsurers’ share of investment contract liabilities 1	9,700	–	9,700
Financial assets measured at amortised cost:
Loans and deposits	17	17	17
Total financial assets	275,444		275,444
Less amounts classified as financial assets held for sale (see note H3) 2	(2,498)		(2,498)
Total financial assets less financial assets classified as held for sale	272,946		272,946

		Carrying value
		Amounts due for
	Total	settlement after	Fair value
	restated 3	12 months	restated 3
2023	£m	£m	£m
Financial liabilities
Financial liabilities mandatorily held at FVTPL:
Derivatives	3,344	2,976	3,344
Financial liabilities designated at FVTPL upon initial recognition:
Borrowings	45	45	45
Net asset value attributable to unitholders 1	2,921	–	2,921
Investment contract liabilities 1,3	162,495	–	162,495
Financial liabilities measured at amortised cost:
Borrowings	3,847	3,757	3,739
Obligations for repayment of collateral received	1,005	–	1,005
Total financial liabilities	173,657		173,549
Less amounts classified as financial liabilities held for sale (see note H3) 4	(4,782)		(4,782)
Total financial liabilities less financial liabilities held for sale	168,875		168,767

1 These assets and liabilities have no specified settlement date.

2 Amounts classified as financial assets held for sale include derivatives of £3 million, equities of £28 million, debt securities of £1,411 million, collective investment schemes of £1,028 million and reinsurers’

share of investment contract liabilities of £28 million.

3 See note A3 for further details of the prior year restatements.

4 Amounts classified as financial liabilities held for sale include derivative liabilities of £2 million and investment contract liabilities of £4,780 million.

E1.2 impairment of financial assets held at amortised cost

The Group applies a forward-looking expected credit loss (‘ECL’) approach to the financial assets carried at amortised cost. A significant portion of

the Group’s financial assets are carried at FVTPL and are therefore not subject to ECL assessment. The financial assets classified as amortised cost

and subject to ECL mainly relate to certain loan assets, other receivables and certain cash and cash equivalents balances.

For the in-scope financial assets at the reporting date either the lifetime expected credit loss or a 12-month expected credit loss is provided for,

depending on the Group’s assessment of whether the credit risk associated with the specific asset has increased significantly since initial

recognition. The Group’s current credit risk grading framework comprises the following categories:

Category	Description	Basis for recognising ECL
Performing	The counterparty has a low risk of default and does not have	12 month ECL
	any past-due amounts
Doubtful	There has been a significant increase in credit risk since initial recognition	Lifetime ECL – not credit impaired
In default	There is evidence indicating the asset is credit impaired	Lifetime ECL – credit impaired
Write-off	There is evidence indicating that the counterparty is in severe financial difficulty	Amount is written off
	and the Group has no realistic prospect of recovery

The financial assets held at amortised cost are assessed as at 31 December 2024 as ‘performing’ and this assessment is summarised below.

Loans and deposits – the Group has assessed the estimated credit losses of these loans and deposits as low due to the external credit ratings of the

counterparties resulting in low credit risk and there being no past-due amounts.

Other receivables – these balances relate to investment broker balances and other regular receivables due to the Group in the normal course of

business. Expected credit losses are assessed as being immaterial given the typically short-term nature of these balances.

Financials

Notes to the consolidated financial statements continued

220 Phoenix Group Holdings plc Annual Report and Accounts 2024

Cash and cash equivalents – the Group’s cash and cash equivalents are held with banks and financial institutions, which have investment grade

credit ratings of ‘BBB’ or above. The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings

of the counterparties and, there being no history of default. The impact to the net carrying amount stated in the table above is therefore not

considered to be material.

Based on the above assessment, an immaterial credit loss balance has been determined due to these financial assets being predominantly

short-term and having low credit risk.

E2. Fair value hierarchy

E2.1 Determination of fair value and fair value hierarchy of financial instruments

Level 1 financial instruments

The fair value of financial instruments traded in active markets (such as exchange traded securities and derivatives) is based on quoted market

prices at the period end provided by recognised pricing services. Market depth and bid-ask spreads are used to corroborate whether an active

market exists for an instrument. Greater depth and narrower bid-ask spread indicate higher liquidity in the instrument and are classed as Level 1

inputs. For collective investment schemes and reinsurers’ share of investment contract liabilities, fair value is by reference to published bid prices.

Level 2 financial instruments

Financial instruments traded in active markets with less depth, or wider bid-ask spreads, which do not meet the classification as Level 1 inputs,

are classified as Level 2. The fair values of financial instruments not traded in active markets are determined using broker quotes or valuation

techniques with observable market inputs. Financial instruments valued using broker quotes are classified as Level 2, only where there is a

sufficient range of available quotes. The fair value of over-the-counter derivatives is estimated using pricing models or discounted cash flow

techniques. Collective investment schemes where the underlying assets are not priced using active market prices are determined to be Level 2

instruments and will include collective investment schemes which have a material underlying holdings within real estate/property. Where pricing

models are used, inputs are based on market related data at the period end. Where discounted cash flows are used, estimated future cash flows

are based on management’s best estimates and the discount rate used is a market related rate for a similar instrument. The fair value of investment

contract liabilities reflects the fair value of the underlying assets and liabilities in the funds plus an additional amount to cover the present value of

the excess of future policy costs over future charges. The liabilities are consequently determined to be Level 2 instruments.

Level 3 financial instruments

The Group’s financial instruments determined by valuation techniques using non-observable market inputs are based on a combination

of independent third party evidence and internally developed models. In relation to investments in hedge funds and private equity investments,

non-observable third party evidence in the form of net asset valuation statements is used as the basis for the valuation. Adjustments may be made

to the net asset valuation where other evidence, for example recent sales of the underlying investments in the fund, indicates this is required.

Securities that are valued using broker quotes which could not be corroborated across a sufficient range of quotes are considered as Level 3.

For a small number of investment vehicles and debt securities, standard valuation models are used, as due to their nature and complexity they

have no external market. Inputs into such models are based on observable market data where possible. The fair value of loans, derivatives and

some borrowings with no external market is determined by internally developed discounted cash flow models using appropriate assumptions

corroborated with external market data where possible.

For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between

levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole)

during each reporting period.

Fair value hierarchy information for non-financial assets measured at fair value is included in note G3 for owner-occupied property and in note G4

for investment property.

E2.2 Fair value hierarchy of financial instruments

The tables below separately identify financial instruments carried at fair value from those measured on another basis but for which fair value is disclosed.

2024

	Level 1	Level 2	Level 3	Total fair value
	£m	£m	£m	£m
Financial assets measured at fair value
Financial assets at FVTPL (mandatory)
Loans and deposits	–	249	–	249
Derivatives	114	2,321	165	2,600
Equities	93,708	81	2,576	96,365
Debt securities	49,624	24,531	15,146	89,301
Collective investment schemes	79,921	3,292	487	83,700
Reinsurers’ share of investment contract liabilities	9,297	–	–	9,297
Total financial assets measured at fair value	232,664	30,474	18,374	281,512
Less amounts classified as held for sale 1	(1,283)	(147)	(555)	(1,985)
Total financial assets measured at fair value, excluding amounts classified as held for sale	231,381	30,327	17,819	279,527
Financial assets measured at amortised cost for which fair values are disclosed
Loans and deposits	–	12	–	12
	231,381	30,339	17,819	279,539

1 Amounts classified as held for sale includes £14 million of equities (Level 1), £32 million of reinsurers’ share of investment contract liabilities (Level 1), £960 million of collective investment schemes

(£956 million Level 1 and £4 million Level 2) and £979 million of debt securities (£281 million Level 1; £143 million Level 2; and £555 million Level 3) .

E. Financial assets & liabilities continued

E1. Fair values continued

Financials

221Phoenix Group Holdings plc Annual Report and Accounts 2024

	Level 1	Level 2	Level 3	Total fair value
2024	£m	£m	£m	£m
Financial liabilities measured at fair value
Financial liabilities at FVTPL (mandatory)
Derivatives	70	3,882	133	4,085
Financial liabilities designated at FVTPL upon initial recognition:
Borrowings	–	–	31	31
Net asset value attributable to unitholders	2,486	–	–	2,486
Investment contract liabilities	–	173,922	–	173,922
	2,486	173,922	31	176,439
Total financial liabilities measured at fair value	2,556	177,804	164	180,524
Less amounts classified as held for sale	–	(3,175)	–	(3,175)
Total financial liabilities measured at fair value, excluding amounts classified as held for sale 1	2,556	174,629	164	177,349
Financial liabilities measured at amortised cost for which fair values are disclosed
Borrowings	–	3,599	–	3,599
Obligations for repayment of collateral received	–	849	–	849
Total financial liabilities measured at amortised cost for which fair values are disclosed	–	4,448	–	4,448
	2,556	179,077	164	181,797

1 Amounts classified as held for sale includes £3,175 million of investment contract liabilities.

	Level 1	Level 2
	restated 1	restated 1	Level 3	Total fair value
2023	£m	£m	£m	£m
Financial assets measured at fair value
Financial assets at FVTPL (mandatory)
Loans and deposits	–	231	–	231
Derivatives	139	2,398	232	2,769
Equities	85,029	132	2,495	87,656
Investment in associate	349	–	–	349
Debt securities 1	51,998	28,969	13,818	94,785
Collective investment schemes	76,343	3,193	401	79,937
Reinsurers’ share of investment contract liabilities	9,700	–	–	9,700
Total financial assets measured at fair value	223,558	34,923	16,946	275,427
Less amounts classified as held for sale 2	(1,639)	(181)	(678)	(2,498)
Total financial assets measured at fair value, excluding amounts classified as held for sale	221,919	34,742	16,268	272,929
Financial assets measured at amortised cost for which fair values are disclosed
Loans and deposits	–	17	–	17
	221,919	34,759	16,268	272,946

1 Level 1 and Level 2 debt securities have been restated to correctly reflect £6,469 million of debt securities within Level 1 instead of Level 2 as previously reported.

2 Amounts classified as held for sale includes £28 million of equities (Level 1), £3 million of derivatives (Level 2), £28 million of reinsurers’ share of investment contract liabilities (Level 1), £1,028 million

of collective investment schemes (£996 million Level 1; £28 million Level 2; and £4 million Level 3) and £1,411 million of debt securities (£587 million Level 1; £150 million Level 2; and £674 million Level 3).

		Level 2		Total fair value
	Level 1	restated 1	Level 3	restated 1
2023	£m	£m	£m	£m
Financial liabilities measured at fair value
Financial liabilities FVTPL (mandatory)
Derivatives	152	2,986	206	3,344
Financial liabilities designated at FVTPL upon initial recognition:
Borrowings	–	–	45	45
Net asset value attributable to unitholders	2,921	–	–	2,921
Investment contract liabilities (restated) 1	–	162,495	–	162,495
	2,921	162,495	45	165,461
Total financial liabilities measured at fair value	3,073	165,481	251	168,805
Less amounts classified as held for sale 2	–	(4,782)	–	(4,782)
Total financial liabilities measured at fair value, excluding amounts classified as held for sale	3,073	160,699	251	164,023
Financial liabilities measured at amortised cost for which fair values are disclosed
Borrowings	–	3,739	–	3,739
Obligations for repayment of collateral received	–	1,005	–	1,005
Total financial liabilities measured at amortised cost for which fair values are disclosed	–	4,744	–	4,744
	3,073	165,443	251	168,767

1 See note A3 for further details of the prior year restatements.

2 Amounts classified as held for sale includes £4,780 million of investment contract liabilities and £2 million of derivatives.

Financials

Notes to the consolidated financial statements continued

222 Phoenix Group Holdings plc Annual Report and Accounts 2024

E2.3 Significant inputs and input values for Level 3 financial instruments

			Key unobservable input value
Description	Valuation technique	Significant inputs		2024	2023
Equities	Net asset value	Net asset statement		£2,576m	£2,495m
Debt securities (see E2.3.1 for further details)
Loans guaranteed by export credit	DCF model 1	Credit spread		79bps	78bps
agencies & supranationals				(weighted average)	(weighted average)
Private corporate credit	DCF model 1	Credit spread		134bps	145bps
				(weighted average)	(weighted average)
Infrastructure loans	DCF model 1	Credit spread		146bps	160bps
				(weighted average)	(weighted average)
Loans to housing associations	DCF model 1	Credit spread		140bps	139bps
				(weighted average)	(weighted average)
Local authority loans	DCF model 1	Credit spread		118bps	130bps
				(weighted average)	(weighted average)
Equity Release Mortgage loans (‘ERM’)	DCF model and	Spread		159bps over Sonia plus	256bps over Sonia plus
	Black-Scholes			36bps	36bps
	model 2	House price		+75bps adjustment to	+75bps adjustment to RPI
		inflation		RPI
		House prices		£385,838 (average)	£371,380 (average
					restated)
		Mortality		Average life expectancy	Average life expectancy
				of a male and female	of a male and female
				currently aged 75 is 14.2	currently aged 75 is 14.1
				years and 15.8 years	years and 15.6 years
				respectively	respectively
		Voluntary		190bps to 400bps	190bps to 650bps
		redemption rate
Commercial real estate loans	DCF model 1	Credit spread		230bps	253bps
				(weighted average)	(weighted average)
Income strips 3	Income capitalisation	Credit spread		674bps	613bps
Collective investment schemes	Net asset value	Net asset statement		£487m	£401m
Borrowings
Property reversions loans (see note E5)	Internally developed	Mortality rate	130% IFL92C15	130% IFL92C15
	model		(Female) 4	(Female) 4
			130% IML92C15	130% IML92C15
			(Male) 4	(Male) 4
		House price	3-year RPI rate plus	3-year RPI rate plus
		inflation	75bps	75bps
		Discount rate	3-year swap rate plus	3-year swap rate plus
			170bps	170bps
		Deferred possession	370bps	370bps
		rate
Derivative assets and liabilities
Forward private placements, infrastructure	DCF model 1	Credit spread	111bps	98bps
and local authority loans 5			(weighted average)	(weighted average)
Longevity swaps 6	DCF model 1	Swap curve	swap curve	swap curve
Equity Release Income Plan total return swap 7	DCF model 1	Credit spread	500bps	500bps

1 Discounted cash flow (‘DCF’) model: Except where otherwise stated, the discount rate used is based on a risk-free curve and a credit spread. The risk-free rate is taken from an appropriate gilt of

comparable duration. The spread is derived from a basket of comparable securities.

2 ERM loans: The loans are valued using a DCF model and a Black-Scholes model for valuation of the No-Negative Equity Guarantee (‘NNEG’). The NNEG caps the loan repayment in the event of death or

entry into long-term care to be no greater than the sales proceeds from the property. The future cash flows are estimated based on assumed levels of mortality derived from published mortality tables,

entry into long-term care rates and voluntary redemption rates. Cash flows include an allowance for the expected cost of providing a NNEG assessed under a real world approach using a closed form

model including an assumed level of property value volatility. For the NNEG assessment, property values are indexed from the latest property valuation point and then assumed to grow in line with an RPI

based assumption. Cash flows are discounted using a risk-free curve plus a spread, where the spread is based on recent originations, with margins to allow for the different risk profiles of ERM loans.

3 Income strips are transactions where an owner-occupier of a property has sold a freehold or long leasehold interest to the Group, and has signed a long lease (typically 30-45 years) or a ground lease

(typically 45-175 years) and retains the right to repurchase the property at the end of the lease for a nominal sum (usually £1). The income strips are valued using an income capitalisation approach, where the

annual rental income is capitalised using an appropriate yield. The yield is determined by considering recent transactions involving similar income strips.

4 IFL92C15 and IML92C15 relate to immediate annuitant female and male lives and refer to the 92 series mortality tables produced by the Continuous Mortality Investigation (‘CMI’).

5 Derivative liabilities include forward investments of £33 million (2023: £54 million) which include a commitment to acquire or provide funding for fixed rate debt instruments at specified future dates.

6 Included within derivative assets and liabilities are longevity swap contracts with corporate pension schemes with a fair value of £165 million (2023: £230 million) and £63 million (2023: £100 million)

respectively. (see note E3.2 for further details).

7 Included within derivative liabilities is the Equity Release Income Plan (‘ERIP’) total return swap with a value of £38 million (2023: £50 million), under which a share of the disposal proceeds arising on

a portfolio of property reversions is payable to a third party (see note E.3.3 for further details).

E. Financial assets & liabilities continued

E2. Fair value hierarchy continued

Financials

223Phoenix Group Holdings plc Annual Report and Accounts 2024

E2.3.1 Debt securities

	2024	2023
Analysis of Level 3 debt securities	£m	£m
Unquoted corporate bonds:
Loans guaranteed by export credit agencies & supranationals	461	486
Private corporate credit	3,046	1,829
Infrastructure loans – project finance	1,011	1,097
Infrastructure loans – corporate	1,613	1,493
Loans to housing associations	1,172	1,186
Local authority loans	823	932
ERM	4,795	4,486
Commercial real estate loans	1,170	1,147
Income strips	555	674
Bridging loans to private equity funds	498	470
Other	2	18
Total Level 3 debt securities	15,146	13,818
Less amounts classified as held for sale	(555)	(674)
Total Level 3 debt securities excluding amounts classified as held for sale	14,591	13,144

E2.4 Sensitivities of Level 3 instruments

			2024		2023
			Impact from	Impact from	Impact from	Impact from
	Key unobservable	Reasonable	increase	decrease	increase	decrease
	input	alternative	£m	£m	£m	£m
Equities	Net asset value	+/- 10%	258	(258)	250	(250)
	statements
Debt securities
Loans guaranteed by export credit agencies	Credit spread	+/- 65bps	(11)	11	(13)	14
and supranationals
Private corporate credit	Credit spread	+/- 65bps	(169)	181	(103)	116
Infrastructure loans	Credit spread	+/- 65bps	(121)	129	(129)	134
Loans to housing associations	Credit spread	+/- 65bps	(97)	106	(93)	105
Local authority loans	Credit spread	+/- 65bps	(62)	66	(82)	90
ERM	Credit spread	+/- 100bps	(416)	457	(373)	410
	House price	+/- 1%	57	(80)	52	(74)
	inflation
	House prices	+/- 10%	37	(55)	38	(59)
	Mortality	+/- 5%	18	(20)	16	(18)
	Voluntary	+/- 15%	36	(38)	44	(47)
	redemption rate
Commercial real estate loans	Credit spread	+/- 65bps	(52)	57	(44)	48
Income strips	Credit spread	+/- 65bps	(64)	68	(89)	109
Collective investment schemes	Net asset value	+/- 10%	49	(49)	40	(40)
Derivative assets and liabilities	statements					–
Forward private placements, infrastructure	Credit spread	+/- 65bps	(8)	9	(6)	7
and local authority loans
Longevity swap contracts	Swap curve	+/- 100bps	(14)	17	(20)	25
Equity Release Income Plan total	Credit spread	+/- 100bps	1	(1)	1	(1)
return swap

For the property reversions loans and bridging loans to private equity funds, there are no reasonably possible movements in unobservable input

values which would result in a significant movement in the fair value of the financial instruments.

Financials

Notes to the consolidated financial statements continued

224 Phoenix Group Holdings plc Annual Report and Accounts 2024

E2.5 Transfers of financial instruments between Level 1 and Level 2

	From Level 1 to	From Level 2 to
	Level 2	Level 1
2024	£m	£m
Financial assets measured at fair value
Financial assets mandatorily held at FVTPL
Derivatives	21	–
Equities	21	2
Debt securities	1,319	244
Collective investment schemes	56	5

	From Level 1 to	From Level 2 to
	Level 2	Level 1
2023	£m	£m
Financial assets measured at fair value
Financial assets mandatorily held at FVTPL
Derivatives	–	21
Financial assets designated at FVTPL upon initial recognition:
Equities	10	12
Debt securities	1,023	725
Collective investment schemes 1	1,188	16

1 As a result of the assessment of the liquidity of the underlying investments held within collective investment schemes, in accordance with the Group’s fair value hierarchy classification methodology a net

£1,172 million of collective investment schemes has transferred from Level 1 to Level 2.

Consistent with the prior year, all the Group’s Level 1 and Level 2 assets have been valued using standard market pricing sources.

The application of the Group’s fair value hierarchy classification methodology at an individual security level, in particular observations with regard

to measures of market depth and bid-ask spreads, resulted in an overall net movement of debt securities from Level 1 to Level 2 in both the current

and prior period.

E2.6 Movement in Level 3 financial instruments measured at fair value

								Unrealised
		Net (losses)/			Transfers			(losses)/gains
		gains in			from	Transfers to	At	on assets held
	At 1 January	income			Level 1	Level 1 and	31 December	at end of
	2024	statement	Purchases	Sales	and Level 2 2	Level 2	2024 1	period
2024	£m	£m	£m	£m	£m	£m	£m	£m
Financial assets measured at fair value
Financial assets mandatorily held at FVTPL:
Derivatives	232	(67)	–	–	–	–	165	(67)
Equities	2,495	50	446	(415)	–	–	2,576	82
Debt securities	13,818	(335)	7,424	(6,027)	282	(16)	15,146	(259)
Collective investment schemes	401	6	140	(60)	2	(2)	487	5
Total financial assets measured at fair value	16,946	(346)	8,010	(6,502)	284	(18)	18,374	(239)

1 Total financial assets of £18,374 million includes £555 million of assets classified as held for sale.

2 During the year, £282 million of debt securities were transferred from Level 1 and Level 2 to Level 3 to harmonise the approach for determining the fair value hierarchy across the Group following the

acquisition of Phoenix Life CA Holdings Limited (formerly known as SLF of Canada UK Limited) in the prior period.

								Unrealised
								(gains)/losses
		Net (gains)/						losses on
		losses in			Transfers	Transfers to	At 31	liabilities held
	At 1 January	income		Sales/	from Level 1	Level 1 and	December	at end of
	2024	statement	Purchases	repayments	and Level 2	Level 2	2024	period
2024	£m	£m	£m	£m	£m	£m	£m	£m
Financial liabilities measured at fair value
Financial liabilities mandatorily held at FVTPL:
Derivatives	206	(56)	–	(17)	–	–	133	(67)
Financial liabilities designated at FVTPL upon
initial recognition:
Borrowings	45	2	–	(16)	–	–	31	2
Total financial liabilities measured at fair value	251	(54)	–	(33)	–	–	164	(65)

E. Financial assets & liabilities continued

E2. Fair value hierarchy continued

Financials

225Phoenix Group Holdings plc Annual Report and Accounts 2024

		Net (losses)/						Unrealised
		gains in			Transfers from	Transfers to	At	gains on assets
	At 1 January	income			Level 1 and	Level 1 and	31 December	held at end of
	2023	statement	Purchases	Sales	Level 2	Level 2	2023 1	period
2023	£m	£m	£m	£m	£m	£m	£m	£m
Financial assets measured at fair value
Financial assets mandatorily held at FVTPL:
Loans and deposits	7	(1)	–	(6)	–	–	–	–
Derivatives	152	80	–	–	–	–	232	80
Equities	2,192	163	433	(293)	2	(2)	2,495	14
Debt securities	11,465	416	7,011	(5,224)	150	–	13,818	475
Collective investment schemes	312	46	47	(5)	1	–	401	46
Total financial assets measured at fair value	14,128	704	7,491	(5,528)	153	(2)	16,946	615

1 Total financial assets of £16,946 million includes £678 million of assets classified as held for sale.

								Unrealised
								losses on
		Net losses in			Transfers from	Transfers to	At	liabilities held
	At 1 January	income		Sales/	Level 1 and	Level 1 and	31 December	at end of
	2023	statement	Purchases	Repayments	Level 2	Level	2023	period
2023	£m	£m	£m	£m	£m	2£m	£m	£m
Financial liabilities measured at fair value
Financial liabilities mandatorily held at FVTPL:
Derivatives	243	67	–	(104)	–	–	206	59
Financial liabilities designated at FVTPL upon
initial recognition:
Borrowings	64	2	–	(21)	–	–	45	2
Total financial liabilities measured
at fair value	307	69	–	(125)	–	–	251	61

Gains and losses on Level 3 financial instruments are included in net investment income in the consolidated income statement. There were no gains

or losses recognised in other comprehensive income in either the current or comparative period.

E3. Derivatives

The Group purchases derivative financial instruments principally in connection with the management of its insurance contract and investment

contract liabilities based on the principles of reduction of risk and efficient portfolio management. The Group does not typically hold derivatives

for the purpose of selling and repurchasing in the near term or with the objective of generating a profit from short-term fluctuations in price or

margin. The Group also holds derivatives which are designated as hedging instruments in order to hedge the Group’s Euro and US Dollar

borrowings. These hedging relationships qualify for hedge accounting under IFRS 9 and are designated as cash flow hedges.

Derivative financial instruments are recognised initially at fair value and are subsequently remeasured to fair value. The gain or loss on

remeasurement to fair value is recognised in the consolidated income statement where the derivatives are held for trading. Where derivative

financial instruments are held to hedge the Group’s Euro and US Dollar borrowings, the effective portion of any gain or loss that arises on

remeasurement to fair value is initially recognised in other comprehensive income and is recycled to profit or loss as the hedged item impacts the

profit or loss. See notes E1 and D3 for further details of the Group’s hedging accounting policy.

Financials

Notes to the consolidated financial statements continued

226 Phoenix Group Holdings plc Annual Report and Accounts 2024

E3.1 Summary

The fair values of derivative financial instruments are as follows:

	Assets	Liabilities	Assets	Liabilities
	2024	2024	2023	2023
	£m	£m	£m	£m
Forward currency	130	296	265	97
Credit default swaps	12	–	9	2
Contracts for difference	1	–	2	1
Interest rate swaps	1,526	2,605	1,456	2,290
Total return bond swaps	41	43	–	–
Swaptions	147	44	164	65
Inflation swaps	283	339	187	142
Equity options	36	187	107	106
Stock index futures	74	13	18	87
Fixed income futures	23	71	84	124
Longevity swap contracts	165	63	230	100
Currency futures	5	19	15	5
Cross currency swaps	156	366	232	274
Equity Release Income Plan total return swap	–	38	–	50
Other	1	1	–	1
	2,600	4,085	2,769	3,344
Less amounts classified as held for sale	–	–	(3)	(2)
	2,600	4,085	2,766	3,342

E3.2 Longevity swap contracts

The Group has in place longevity swap arrangements with corporate pension schemes which do not meet the definition of insurance

contracts under the Group’s accounting policies. Under these arrangements the majority of the longevity risk has been passed to third parties.

Derivative assets of £165 million and derivative liabilities of £63 million have been recognised as at 31 December 2024 (2023: £230 million and

£100 million respectively).

E3.3 Equity Release Income Plan (‘ERIP’) total return swap

ERIP contracts are an equity release product under which the Group holds a reversionary interest in the residential property of policyholders who

have been provided with a lifetime annuity in return for the legal title to their property (see note G4). The Group is party to an ERIP total return swap

under which a share of the future generated cash flows arising under the ERIP contracts is payable to a third party. Over time, as the property

reversions are realised, the relevant share of disposal proceeds is transferred to a third party who also holds a beneficial interest in these residential

properties. The carrying amount of the derivative liability is the present value of all future cash flows due to the third party under the total return swap.

E4. Collateral arrangements

The Group receives and pledges collateral in the form of cash or non-cash assets in respect of stock lending transactions, derivative contracts and

reinsurance arrangements in order to reduce the credit risk of these transactions. The amount and type of collateral required where the Group

receives collateral depends on an assessment of the credit risk of the counterparty, but is usually in the form of cash and marketable securities.

Collateral received in the form of cash, where the Group has contractual rights to receive the cash flows generated and is available to the Group

for investment purposes, is recognised as a financial asset in the statement of consolidated financial position with a corresponding financial

liability for its repayment. Non-cash collateral received is not recognised in the statement of consolidated financial position, unless the

counterparty defaults on its obligations under the relevant agreement.

Non-cash collateral pledged where the Group retains the contractual rights to receive the cash flows generated is not derecognised from the

statement of consolidated financial position, unless the Group defaults on its obligations under the relevant agreement. Cash collateral pledged,

where the counterparty has contractual rights to receive the cash flows generated, is derecognised from the statement of consolidated financial

position and a corresponding receivable is recognised for its return.

The Group is also party to reverse repurchase agreements under which securities are purchased from third parties with an obligation to resell the

securities. The securities are not recognised as financial assets on the statement of consolidated financial position, unless the counterparty

defaults on its obligations under the relevant agreement. The right to receive the return of any cash paid as purchase consideration plus interest

is recognised as a financial asset on the statement of financial position.

E4.1 Financial instrument collateral arrangements

The Group has no financial assets and financial liabilities that have been offset in the statement of consolidated financial position as at

31 December 2024 (2023: none).

The table below contains disclosures related to financial assets and financial liabilities recognised in the statement of consolidated financial position

that are subject to enforceable master netting arrangements or similar agreements. Such agreements do not meet the criteria for offsetting in the

statement of consolidated financial position as the Group has no current legally enforceable right to offset recognised financial instruments.

Furthermore, certain related assets received as collateral under the netting arrangements will not be recognised in the statement of consolidated

financial position as the Group does not have permission to sell or re-pledge, except in the case of default. Details of the Group’s collateral

arrangements in respect of these recognised assets and liabilities are provided below.

E. Financial assets & liabilities continued

E3. Derivatives continued

Financials

227Phoenix Group Holdings plc Annual Report and Accounts 2024

			Related amounts not offset
	Gross and net	Financial
	amounts of	instruments and
	recognised	cash collateral		Net
	financial assets	received	Derivative liabilities	amount
2024	£m	£m	£m	£m
Financial assets
OTC derivatives	2,487	759	1,537	191
Exchange traded derivatives	113	68	17	28
Stock lending	1,156	1,156	–	–
Repurchase arrangement	151	151	–	–
Total	3,907	2,134	1,554	219

			Related amounts not offset
	Gross and net	Financial
	amounts of	instruments and
	recognised	cash collateral		Net
	financial liabilities	pledged	Derivative assets	amount
2024	£m	£m	£m	£m
Financial liabilities
OTC derivatives	3,983	2,305	1,537	141
Exchange traded derivatives	102	7	17	78
Total	4,085	2,312	1,554	219

			Related amounts not offset
	Gross and net	Financial
	amounts of	instruments and
	recognised	cash collateral		Net
	financial assets	received	Derivative liabilities	amount
2023	£m	£m	£m	£m
Financial assets
OTC derivatives	2,629	976	1,459	194
Exchange traded derivatives	137	33	28	76
Stock lending	836	836	–	–
Repurchase arrangement	100	100	–	–
Total	3,702	1,945	1,487	270

			Related amounts not offset
	Gross and net	Financial
	amounts of	instruments and
	recognised	cash collateral		Net
	financial liabilities	pledged	Derivative assets	amount
2023	£m	£m	£m	£m
Financial liabilities
OTC derivatives	3,126	1,520	1,459	147
Exchange traded derivatives	216	68	28	120
Total	3,342	1,588	1,487	267

E4.2 Derivative collateral arrangements

Assets accepted

It is the Group’s practice to obtain collateral to mitigate the counterparty risk related to over-the-counter (‘OTC’) derivatives usually in the form

of cash or marketable financial instruments.

The fair value of financial assets accepted as collateral for OTC derivatives but not recognised in the statement of consolidated financial position

amounts to £377 million (2023: £505 million).

The amounts recognised as financial assets and liabilities from cash collateral received at 31 December are set out below.

	OTC derivatives
	2024	2023
	£m	£m
Financial assets	790	971
Financial liabilities	(790)	(971)

The maximum exposure to credit risk in respect of OTC derivative assets is £2,487 million (2023: £2,629 million) of which credit risk of £2,296 million

(2023: £2,434 million) is mitigated by use of collateral arrangements (which are settled net after taking account of any OTC derivative liabilities

owed to the counterparty).

Credit risk on exchange traded derivative assets of £113 million (2023: £137 million) is mitigated through regular margining and the protection

offered by the exchange.

Financials

Notes to the consolidated financial statements continued

228 Phoenix Group Holdings plc Annual Report and Accounts 2024

Assets pledged

The Group pledges collateral in respect of its OTC derivative liabilities. The value of assets pledged at 31 December 2024 in respect of OTC

derivative liabilities of £3,983 million (2023: £3,126 million) amounted to £2,717 million (2023: £1,936 million).

E4.3 Stock lending collateral arrangements

The Group lends listed financial assets held in its investment portfolio to other institutions.

The Group conducts stock lending only with well-established, reputable institutions in accordance with established market conventions. The

financial assets do not qualify for derecognition as the Group retains all the risks and rewards of the transferred assets except for the voting rights.

It is the Group’s practice to obtain collateral in stock lending transactions, usually in the form of cash or marketable financial instruments.

The fair value of financial assets accepted as such collateral but not recognised in the statement of consolidated financial position amounts to

£1,284 million (2023: £897 million).

The maximum exposure to credit risk in respect of stock lending transactions is £1,156 million (2023: £836 million) of which credit risk

of £1,156 million (2023: £833 million) is mitigated through the use of collateral arrangements.

E4.4 Other collateral arrangements

At 31 December 2024, the Group had entered into reverse repurchase transactions under which it purchased securities and had taken on the

obligation to resell the securities. The fair value of the financial assets accepted as collateral in respect of these transactions, but not recognised

in the statement of consolidated financial position, is £151 million (2023: £100 million).

The maximum exposure to credit risk in respect of reverse repurchase transactions is £151 million (2023: £100 million) of which credit risk of

£151 million (2023: £100 million) is mitigated through the use of collateral arrangements.

Details of collateral received to mitigate the counterparty risk arising from the Group’s reinsurance transactions is given in note F10.

Collateral has also been pledged and charges have been granted in respect of certain Group borrowings. The details of these arrangements are set

out in note E5.

E5. Borrowings

The Group classifies the majority of its interest-bearing borrowings as financial liabilities carried at amortised cost and these are recognised

initially at fair value less any directly attributable transaction costs. The difference between initial cost and the redemption value is amortised

through the consolidated income statement over the period of the borrowing using the effective interest method.

Certain borrowings are designated upon initial recognition at fair value through profit or loss and measured at fair value where doing so provides

more meaningful information due to the reasons stated in the financial liabilities accounting policy (see note E1). Transaction costs relating to

borrowings designated upon initial recognition at fair value through profit or loss are expensed as incurred.

Borrowings are classified as either policyholder or shareholder borrowings. Policyholder borrowings are those borrowings where there is either

no or limited shareholder exposure, for example, borrowings attributable to the Group’s with-profits operations.

E5.1 Analysis of borrowings

	Carrying value		Fair value
	2024	2023	2024	2023
	£m	£m	£m	£m
£300 million multi-currency revolving credit facility	90	90	90	90
Property reversions loan	31	45	31	45
Total policyholder borrowings	121	135	121	135
£428 million Tier 2 notes	197	197	199	202
US $500 million Tier 2 notes	399	391	399	377
€500 million Tier 2 notes	411	430	423	419
US $750 million Perpetual Contingent Convertible Tier 1 notes	199	587	200	563
£500 million 5.625% Tier 2 notes	490	489	485	476
US $500 million Fixed Rate Reset Callable Tier 2 notes	279	274	275	262
£500 million 5.867% Tier 2 notes	529	536	500	493
£250 million Fixed Rate Reset Callable Tier 2 notes	–	254	–	239
£250 million Tier 3 notes	252	253	246	250
£350 million Fixed Rate Reset Callable Tier 2 notes	347	346	367	368
US $500 million Perpetual Contingent Convertible Tier 1 notes	398	–	415	–
Total shareholder subordinated borrowings	3,501	3,757	3,509	3,649
Total borrowings	3,622	3,892	3,630	3,784
Amount due for settlement after 12 months	3,335	3,802

E. Financial assets & liabilities continued

E4. Collateral arrangements continued

E4.2 Derivative collateral arrangements continued

Financials

229Phoenix Group Holdings plc Annual Report and Accounts 2024

On 18 November 2024, the Group replaced its £1.75 billion unsecured revolving credit facility with a new £1.5 billion unsecured revolving credit

facility (the ‘revolving facility’), maturing in November 2029. The new facility remains undrawn as at 31 December 2024.

Policyholder borrowings

Patria Private Equity Trust plc (‘PPET’) (formerly known as abrdn Private Equity Opportunities Trust plc) has in place a syndicated multi-currency

revolving credit facility, of which £90 million (2023: £90 million) had been drawn down as at 31 December 2024. The facility term maturity is

December 2025 and interest accrues at a margin over the reference rate of the currency drawn.

The Property Reversions loan from Santander UK plc (‘Santander’) was recognised in the consolidated financial statements at fair value. It relates

to the sale of Extra-Income Plan policies that Santander finances to the value of the associated property reversions. As part of the arrangement

Santander receives an amount calculated by reference to the movement in the Halifax House Price Index and the Group is required to indemnify

Santander against profits or losses arising from mortality or surrender experience which differs from the basis used to calculate the reversion

amount. During 2024, repayments totalling £16 million were made (2023: £21 million). Note G4 contains details of the assets that support this loan.

Shareholder subordinated borrowings

The principal features of the Group’s subordinated borrowings are detailed in the table below.

2024	Nominal amount	Coupon	Maturity
£428 million Tier 2 notes 1	£197m 2	6.625%	18 December 2025
US $500 million Tier 2 notes 1	US $500m	5.375%	6 July 2027
€500 million Tier 2 notes 1	€500m	4.375%	24 January 2029
US $750 million Perpetual Contingent Convertible Tier 1 notes	US $250m	5.625% 4	Perpetual
			28 April 2031 (with optional
			redemption from
£500 million 5.625% Tier 2 notes	£500m	5.625%	28 January 2031)
			4 September 2031 (with optional
		4.750% up to reset date	redemption between 4 June and
US $500 million Fixed Rate Reset Callable Tier 2 notes	US $350m 5	of 4 September 2026	4 September 2026)
£500 million 5.867% Tier 2 note 6	£500m	5.867%	13 June 2029
			13 June 2029 (with option to call
			on 13 June 2024 which the
£250 million Fixed Rate Reset Callable Tier 2 notes 6	– 7	5.766%	Company exercised)
£250 million Tier 3 notes 6	£250m	4.016%	13 June 2026
			6 December 2053 (with optional
		7.750% up to reset date of	redemption between 6 June and
£350 million Fixed Rate Reset Callable Tier 2 notes	£350m	6 December 2033 8	6 December 2033)
			Perpetual (with optional
			redemption between
		8.500% up to first reset date	12 December 2029 and
US $500 million Perpetual Contingent Convertible Tier 1 notes	US $500m	of 12 June 2030 4	12 June 2030)

1 The Company was substituted as issuer on 12 December 2018.

2 On 7 December 2023, the Company repurchased £231 million of the original £428m principal amount of the notes via a tender offer.

3 On 18 June 2024, the Company repurchased US $500 million of the original $750m principal amount of the notes via a tender offer.

4 Interest is cancellable at the absolute discretion of the Company.

5 On 7 December 2023, the Company repurchased US $150 million of the original $500m principal amount of the notes via a tender offer.

6 The Company was substituted as issuer on 22 July 2020 on acquisition of ReAssure Group plc and the notes were recognised at fair value.

7 On 13 June 2024, the Company redeemed the £250 million notes at their principal amount together with accrued and unpaid interest to the redemption date.

8 Interest is deferrable at the discretion of the Company .

Financials

Notes to the consolidated financial statements continued

230 Phoenix Group Holdings plc Annual Report and Accounts 2024

E5.2 Reconciliation of liabilities arising from financing activities

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes (with the

exception of lease liabilities, which have been included in note G9). Liabilities arising from financing activities are those for which cash flows were,

or future cash flows will be, classified in the Group’s consolidated statement of cash flows as cash flows from financing activities.

			Cash movements		Non-cash movements
		New			Movement in
	At 1 January	borrowings, net		Changes in fair	foreign	Other	At 31 December
	2024	of costs	Repayments	value	exchange	movements 1	2024
	£m	£m	£m	£m	£m	£m	£m
£300 million multi-currency revolving
credit facility	90	85	(80)	–	(5)	–	90
Property Reversions loan	45	–	(16)	2	–	–	31
£428 million Tier 2 notes	197	–	–	–	–	–	197
US $500 million Tier 2 notes	391	–	–	–	7	1	399
€500 million Tier 2 notes	430	–	–	–	(20)	1	411
US $750 million Perpetual Contingent
Convertible Tier 1 notes	587	–	(393)	–	4	1	199
£500 million 5.625% Tier 2 notes	489	–	–	–	–	1	490
US $500 million Fixed Rate Reset Callable
Tier 2 notes	274	–	–	–	5	–	279
£500 million 5.867% Tier 2 notes	536	–	–	–	–	(7)	529
£250 million Fixed Rate Reset Callable
Tier 2 notes	254	–	(250)	–	–	(4)	–
£250 million Tier 3 notes	253	–	–	–	–	(1)	252
£350 million Fixed Rate Reset Callable
Tier 2 notes	346	–	–	–	–	1	347
US $500 million Perpetual Contingent
Convertible Tier 1 notes	–	390	–	–	8	–	398
Total borrowings	3,892	475	(739)	2	(1)	(7)	3,622
Interest payable on borrowings 3	63	–	(218)	–	–	215	60
Derivative assets 2	(118)	–	–	12	–	–	(106)
	3,837	475	(957)	14	(1)	208	3,576

1 Principally comprises amortisation under the effective interest method applied to borrowings held at amortised cost. No interest was capitalised in the year.

2 Cross currency swaps to hedge against adverse currency movements in respect of Group’s Euro and US Dollar denominated borrowings. These instruments are reported within the derivative balances

detailed within note E3.1.

3 Other movement represents the non-cash movement in the interest liability on borrowings.

E. Financial assets & liabilities continued

E5. Borrowings continued

Financials

231Phoenix Group Holdings plc Annual Report and Accounts 2024

			Cash movements		Non-cash movements
		New			Movement in
	At 1 January	borrowings, net		Changes in fair	foreign	Other	At 31 December
	2023	of costs	Repayments	value	exchange	movements 1	2023
	£m	£m	£m	£m	£m	£m	£m
£300 million multi-currency revolving credit
facility	62	64	(37)	–	–	1	90
Property Reversions loan	64	–	(21)	2	–	–	45
£428 million Tier 2 notes	427	–	(231)	–	–	1	197
US $500 million Tier 2 notes	413	–	–	–	(22)	–	391
€500 million Tier 2 notes	439	–	–	–	(10)	1	430
US $750 million Perpetual Contingent
Convertible Tier 1 notes	618	–	–	–	(32)	1	587
£500 million 5.625% Tier 2 notes	487	–	–	–	–	2	489
US $500 million Fixed Rate Reset Callable
Tier 2 notes	412	–	(119)	–	(20)	1	274
£500 million 5.867% Tier 2 notes	543	–	–	–	–	(7)	536
£250 million Fixed Rate Reset Callable
Tier 2 notes	259	–	–	–	–	(5)	254
£250 million Tier 3 notes	256	–	–	–	–	(3)	253
£350 million Fixed Rate Reset Callable
Tier 2 notes	–	346	–	–	–	–	346
Total borrowings	3,980	410	(408)	2	(84)	(8)	3,892
Interest payable on borrowings 3	64	–	(203)	–	–	202	63
Derivative assets 2	(225)	–	–	108	–	(1)	(118)
	3,819	410	(611)	110	(84)	193	3,837

1 Principally comprises amortisation under the effective interest method applied to borrowings held at amortised cost. No interest was capitalised in the year.

2 Cross currency swaps to hedge against adverse currency movements in respect of Group’s Euro and US Dollar denominated borrowings. These instruments are reported within the derivative balances

detailed within note E3.1

3 Other movement represents the non-cash movement in the interest liability on borrowings.

E6. Risk management – financial and other risks

This note forms one part of the risk management disclosures in the consolidated financial statements. An overview of the Group’s approach to risk

management is outlined in note I3 and the Group’s management of insurance risk is detailed in note F11.

E6.1 Financial risk and the Asset Liability Management (‘ALM’) framework

The use of financial instruments naturally exposes the Group to the risks associated with them, chiefly market risk, credit risk and financial

soundness risk.

Responsibility for agreeing the financial risk profile rests with the Board of each Life Company, as advised by investment managers, internal

committees and the actuarial function. In setting the risk profile, the Board of each Life Company will receive advice from the Chief Investment

Officer, the relevant With-profits Actuary and the relevant actuarial function holder/Chief Actuary as to the potential implications of that risk profile

with regard to the probability of both realistic insolvency and of failing to meet the regulatory Minimum Capital Requirement. The Chief Actuary will

also advise the extent to which the investment risk taken is consistent with the Group’s commitment to help customers secure a life of possibilities,

including meeting the FCA’s expectations under Consumer Duty.

Derivatives are used in many of the Group’s funds, within policy guidelines agreed by the Board of each Life Company and overseen by investment

committees of the Boards of each Life Company supported by management oversight committees. Derivatives are primarily used for risk hedging

purposes or for efficient portfolio management, including the activities of the Group’s Treasury function.

More detail on the Group’s exposure to financial risk is provided in note E6.2 below.

The Group is also exposed to insurance risk arising from its Life, Pensions and Savings business. Life insurance risk in the Group arises through its

exposure to longevity, persistency, mortality and to other variances between assumed and actual experience. These variances can be in factors

such as administrative expenses and new business pricing. More detail on the Group’s exposure to insurance risk is provided in note F11.

The Group’s overall exposure to market and credit risk is monitored by appropriate committees, which agree policies for managing each type of risk

on an ongoing basis, in line with the investment strategy developed to achieve investment returns in excess of amounts due in respect of insurance

contracts. The effectiveness of the Group’s ALM framework relies on the matching of assets and liabilities arising from insurance and investment

contracts, taking into account the types of benefits payable to policyholders under each type of contract. Separate portfolios of assets are

maintained for with-profits business funds (which include all of the Group’s participating business), non-linked non-profits funds and

unit-linked funds.

Financials

Notes to the consolidated financial statements continued

232 Phoenix Group Holdings plc Annual Report and Accounts 2024

E6.2 Financial risk analysis

Transactions in financial instruments result in the Group assuming financial risks. These include credit risk, market risk and financial soundness risk.

Each of these are described below, together with a summary of how the Group manages the risk, along with sensitivity analysis where appropriate.

The sensitivity analysis does not include second order impacts of market movements, for example, where a market movement may give rise to

potential indicators of impairment for the Group’s intangible balances.

Climate risk

The Group is exposed to financial risks (in particular market and credit risk) related to the transition to a low carbon economy, and the physical

impacts resulting from climate change which could result in long-term market, credit, insurance, reputation, proposition and operational

implications. As such, this risk is treated as a component of the cross-cutting Sustainability risk in the Group’s Risk Universe.

Identification of climate related risks has been embedded into the Group’s Risk Management Framework. Significant progress has been made

in recent years in developing risk metrics and establishing appropriate governance and risk management processes. The Group has adopted a

proactive approach towards combatting climate change, with key net zero targets. Further details on these targets and on managing the related

climate change risks are provided in the Task Force for Climate-related Financial Disclosures (‘TCFD’) within the Strategic Report.

Restatement of prior year comparatives

The prior year comparatives for the market and credit risk sensitivities have been restated. These sensitivities were materially impacted by including

the Group’s pension schemes within the scope of the sensitivity, providing a more holistic view of the impact of these stresses on the Group, and

improvements made to the modelling of sensitivities following the introduction of IFRS 17.

E6.2.1 Credit risk

Credit risk is defined as the risk of reductions in earnings and/or value, through financial or reputational loss, as a result of the default of a

counterparty or an associate of such a counterparty to a financial transaction (i.e. failure to honour their financial obligations, or failing to perform

them in a timely manner), whether on or off balance sheet.

There are two principal sources of credit risk for the Group:

• credit risk which results from direct investment activities, including investments in debt securities, derivatives counterparties, collective

investment schemes, hedge funds and the placing of cash deposits; and

• credit risk which results indirectly from activities undertaken in the normal course of business. Such activities include premium payments,

outsourcing contracts, reinsurance agreements, exposure from material suppliers and the lending of securities.

The amount disclosed in the statement of consolidated financial position in respect of all financial assets, together with rights secured under off

balance sheet collateral arrangements, but excluding the minority interest in consolidated collective investment schemes and those assets that back

policyholder liabilities, represents the Group’s maximum exposure to credit risk. The credit risk borne by the shareholder on with-profits policies is

dependent on the extent to which the underlying insurance fund is relying on shareholder support.

The impact of non-government debt securities and, inter alia, the change in market credit spreads during the year is fully reflected in the values

shown in these consolidated financial statements. Credit spreads are the excess of corporate bond yields over gilt yields to reflect the higher level

of risk. Similarly, the value of derivatives that the Group holds takes into account fully the changes in swap rates.

There is an exposure to spread changes affecting the prices of corporate bonds and derivatives. This exposure applies to supported with-profits

funds (where risks and rewards fall wholly to shareholders), non-profit funds and shareholders’ funds.

The Group holds £17,554 million (2023: £18,479 million) of corporate bonds which are used to back annuity liabilities in non-profit funds.

These annuity liabilities include an aggregate credit default provision of £330 million (2023: £388 million) to fund against the risk of default.

The credit spread sensitivity represents a 100bps widening of credit spreads, with no change in the risk-free interest rate curve. Under this

sensitivity it is also assumed that both expected and unexpected defaults remain unchanged. The illiquidity premium used in the valuation of

primarily annuity liabilities, and associated reinsurance contracts, is adjusted to reflect the impact of the change in credit spreads arising on assets

containing credit risk held within the reference portfolio.

A 100bps widening of credit spreads, with all other variables held constant and no change in assumed expected defaults, would result in an

increase in the profit after tax in respect of a full financial year of £14 million (2023: decrease £108 million (restated)), an increase in equity of

£141 million (2023: £166 million (restated)), and a decrease in CSM of £3 million (2023: £14 million (restated)).

A 100bps narrowing of credit spreads, with all other variables held constant and no change in assumed expected defaults, would result in an

increase in the profit after tax in respect of a full financial year of £42 million (2023: £202 million (restated)), a decrease in equity of £113 million

(2023: £136 million (restated)), and an increase in CSM of £3 million (2023: £9 million (restated)).

Details of the restatement of the prior year comparatives is disclosed in note E6.2.

Credit risk is managed by the monitoring of aggregate Group exposures to individual counterparties and by appropriate credit risk diversification

(including by industry, credit rating, asset class and country). The Group manages the level of credit risk it accepts through an established Group

Credit Risk Policy and Group Credit Limit and Counterparty Framework that includes the use of credit risk tolerances and limits. Additional controls

for illiquid asset concentration risk are set out via specific risk limits within the framework. Credit risk on derivatives and securities lending is

mitigated through the use of collateral with appropriate haircuts.

E. Financial assets & liabilities continued

E6. Risk management – financial and other risks continued

Financials

233Phoenix Group Holdings plc Annual Report and Accounts 2024

Credit quality of assets

An indication of the Group’s exposure to credit risk is the quality of the investments and counterparties with which it transacts. The following table

provides information regarding the aggregate credit exposure split by credit rating.

									Less
									amounts
									classified
					BB and				as held for
	AAA	AA	A	BBB	below	Non-rated	Unit-linked	Total	sale	Total
2024	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Loans and deposits	–	2	–	–	–	259	–	261	–	261
Derivatives	–	1,536	662	43	–	335	24	2,600	–	2,600
Debt securities 1,2	7,329	32,892	17,752	14,967	2,518	7,071	6,772	89,301	(979)	88,322
Reinsurance contract assets	–	3,131	2,056	–	–	–	–	5,187	–	5,187
Reinsurers’ share of investment
contract liabilities	–	–	–	–	–	–	9,297	9,297	(32)	9,265
Cash and cash equivalents	1	1,453	5,820	82	–	–	2,130	9,486	(33)	9,453
	7,330	39,014	26,290	15,092	2,518	7,665	18,223	116,132	(1,044)	115,088

1 For financial assets that do not have credit ratings assigned by external ratings agencies, the Group assigns internal ratings for use in management and monitoring of credit risk. £55 million of AAA,

£865 million of AA, £1,837 million of A, £2,266 million of BBB and £240 million of BB and below debt securities are internally rated. If a financial asset is neither rated by an external agency nor internally

rated, it is classified as ‘non-rated’.

2 Non-rated debt securities includes equity release mortgages with a value of £4,795 million (further details are set out in note E2.3) and non-rated bonds.

									Less
									amounts
					BB and				classified as
	AAA	AA	A	BBB	below	Non-rated	Unit-linked	Total	held for sale	Total
2023	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Loans and deposits	–	3	–	–	–	245	–	248	–	248
Derivatives	–	1,314	736	–	–	662	57	2,769	(3)	2,766
Debt securities 1,2	7,427	34,133	21,170	14,769	2,933	7,332	7,021	94,785	(1,411)	93,374
Reinsurance contract assets	–	2,690	2,163	–	–	23	–	4,876	–	4,876
Reinsurers’ share of investment
contract liabilities	–	–	–	–	–	–	9,700	9,700	(28)	9,672
Cash and cash equivalents	–	1,254	4,383	88	–	–	1,495	7,220	(52)	7,168
	7,427	39,394	28,452	14,857	2,933	8,262	18,273	119,598	(1,494)	118,104

£1,435 million of AA, £2,470 million of A, £1,819 million of BBB and £247 million of BB and below debt securities are internally rated. If a financial asset is neither rated by an external agency nor internally

rated, it is classified as ‘non-rated’.

2 Non-rated debt securities includes equity release mortgages with a value of £4,486 million (further details are set out in note E2.3) and non-rated bonds.

Credit ratings have not been disclosed in the above tables for the assets of the unit-linked funds since the shareholder is not directly exposed

to credit risks from these assets. Included in unit-linked funds are assets which are held as reinsured external fund links. Under certain

circumstances, the shareholder may be exposed to losses relating to the default of the reinsured external fund link.

Credit ratings have not been disclosed in the above tables for holdings in unconsolidated collective investment schemes and investments in

associates. The credit quality of the underlying debt securities within these vehicles is managed by the safeguards built into the investment

mandates for these vehicles.

The Group maintains accurate and consistent risk ratings across its asset portfolio. This enables management to focus on the applicable risks and

to compare credit exposures across all lines of business, geographical regions and products. The rating system is supported by a variety of financial

analytics combined with market information to provide the main inputs for the measurement of counterparty risk. All risk ratings are tailored to the

various categories of assets and are assessed and updated regularly.

The Group operates an Asset Management Risk Committee, a Rating Committee and a Portfolio Credit Committee to monitor and control

oversight of internal credit ratings for externally rated and internally rated assets. A variety of methods are used to validate the appropriateness of

credit assessments from external institutions and fund managers. Internally rated assets are those that do not have a public rating from an external

credit rating agency (‘CRA’) or from external asset managers (where the methodology and framework is assessed as being CRA comparable).

Instead, internal credit ratings are used by the Group which are provided by fund managers or for certain assets (in particular, equity release

mortgages and illiquid assets) are determined by the Life Companies. The Committees review the policies, processes and practices to ensure the

appropriateness of the internal ratings, and to ensure they are in line with regulatory requirements.

Throughout 2024, the Group has continued to undertake actions to increase the overall credit quality of its asset portfolio and mitigate the impact

of future downgrades on risk capital. Additionally, the Group has increased exposure to an array of illiquid credit assets such as equity release

mortgages, commercial real estate loans and infrastructure loans. This is as a result of BPA transactions with the aim of achieving greater

diversification and investment returns, consistent with the Strategic Asset Allocation and Risk Appetite approved by the Board.

A further indicator of the quality of the Group’s financial assets is the extent to which they are neither past due nor impaired. All of the amounts

in the table above for the current and prior year are neither past due nor impaired.

Additional life company asset disclosures are included on page 306 and include information on the Group’s market exposure analysed by credit

rating, sector and country of exposure for the shareholder debt portfolio.

Financials

Notes to the consolidated financial statements continued

234 Phoenix Group Holdings plc Annual Report and Accounts 2024

Impact of credit risk on value of financial liabilities designated at FVTPL

The fair value of investment contracts and net asset value attributable to unitholders liabilities are determined based upon the performance of the

assets backing those liabilities. This has the effect that the fair value of the liability primarily reflects asset-specific performance risk rather than

credit risk. As a result, the impact of credit risk on the fair value of financial liabilities designated at FVTPL is not considered to be significant.

Concentration of credit risk

Concentration of credit risk might exist where the Group or its insurance subsidiaries has significant exposure to an individual counterparty or

a group of counterparties with similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected

by changes in economic and other conditions. The Group has most of its counterparty risk within its life business and is monitored by the Group

Credit Limit and Counterparty Framework contained within the Group Credit Risk Policy. It is further provided for in investment management

agreements, overlaid by regulatory requirements and the monitoring of aggregate counterparty exposures across the Group against additional

Group counterparty limits. Counterparty risk in respect of over-the-counter derivative counterparties is monitored using a Potential Future

Exposure (‘PFE’) value metric.

The Group is also exposed to concentration risk with outsource partners. The Group operates a policy to manage outsourcer service counterparty

exposures and the impact from default is reviewed regularly by executive committees and measured through stress and scenario testing.

Reinsurance

The Group is exposed to credit risk as a result of insurance risk transfer contracts with reinsurers. The Group’s policy is to place reinsurance only

with highly rated counterparties. The Group restricts concentration with individual external reinsurers by specifying limits on ceding and minimum

conditions for acceptance and retention of reinsurers. The Group has made progress in increasing the number of reinsurers it transacts with,

however, an element of concentration remains due to the nature of the reinsurance market and the restricted range of reinsurers available. The

Group manages its exposure to reinsurance credit risk through the operation of a credit policy, collateralisation, and regular monitoring of

exposures at the Reinsurance Management Committee and other credit focused committees.

Collateral

The credit risk of the Group is mitigated, in certain circumstances, by entering into collateral agreements. The amount and type of collateral

required depends on an assessment of the credit risk of the counterparty. Guidelines are implemented regarding the acceptability of types of

collateral and the valuation parameters. Collateral is mainly obtained in respect of stock lending, certain reinsurance arrangements and to provide

security against the daily mark to model value of derivative financial instruments. Management monitors the market value of the collateral received,

requests additional collateral when needed, and performs an impairment valuation when impairment indicators exist. See note E4 for further

information on collateral arrangements.

E6.2.2 Market risk

Market risk is the risk of loss or of adverse change in the financial situation resulting, directly or indirectly, from fluctuations in the level and in the

volatility of market prices of assets, liabilities and financial instruments. The risk typically arises from exposure to equity, property and fixed income

asset classes and the impact of changes in interest rates, inflation rates and currency exchange rates.

The Group is mainly exposed to market risk as a result of:

• the mismatch between liability profiles and the related asset investment portfolios;

• the investment of assets held to meet regulatory capital and solvency requirements;

• the investment of surplus assets including shareholder reserves yet to be distributed, surplus assets within the with-profits funds and assets held

to meet regulatory capital and solvency requirements; and

• the income flow of management charges derived from the value of invested assets of the business.

The Group manages the levels of market risk that it accepts through the operation of a market risk policy using a number of controls and

techniques including:

• defined lists of permitted securities and/or application of investment constraints and portfolio limits;

• clearly defined investment benchmarks for policyholder and shareholder funds;

• stochastic and deterministic asset/liability modelling;

• active use of derivatives to improve the matching characteristics of assets and liabilities and to reduce the risk exposure of a portfolio; and

• setting risk limits for main market risks and managing exposures against these appetites.

All operations comply with regulatory requirements relating to the taking of market risk.

Assets in the shareholder funds are managed against benchmarks that ensure they are diversified across a range of asset classes, instruments and

geographies that are appropriate to the liabilities of the funds or are held to match the cash flows anticipated to arise in the business. A combination

of limits by name of issuer, sector, geographical region and credit rating are used where relevant to reduce concentration risk among the assets held.

The assets of the participating business are principally managed to support the liabilities of the participating business and are appropriately

diversified by both asset class and geography, considering:

• the economic liability and how this varies with market conditions;

• the need to invest assets supporting participating business in a manner consistent with the participating policyholders’ reasonable expectations

and Principles and Practices of Financial Management (‘PPFM’); and

• the need to ensure that regulatory and capital requirements are met.

In practice, an element of market risk arises as a consequence of the need to balance these considerations, for example, in certain instances

participating policyholders may expect that equity market risk will be taken on their behalf, and derivative instruments may be used to

manage these risks.

E. Financial assets & liabilities continued

E6. Risk management – financial and other risks continued

E6.2.1 Credit risk continued

Financials

235Phoenix Group Holdings plc Annual Report and Accounts 2024

Markets retain the potential to be volatile particularly given geopolitical instability, with escalation of regional conflicts and increasing protectionist

policies able to result in increased inflationary pressures due to global policy changes and supply change disruption. More detail is covered within

the Principal Risks section within the Group’s Annual Report and Accounts.

Interest rate and inflation risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate relative to the respective liability due to the

impact of changes in market interest rates on the value of interest-bearing assets and on the value of future guarantees provided under certain

contracts of insurance. The paragraphs in this section also apply to inflation risk, but references to fixed rate assets and liabilities would be replaced

with index-linked assets and liabilities.

The Group is required to manage its interest rate exposures in line with qualitative risk appetite statements, quantitative risk metrics and any additional

hedging benchmarks. Interest rate risk is managed by matching assets and liabilities where practicable and by entering into derivative arrangements

for hedging purposes where appropriate. This is particularly the case for the non-participating funds and supported participating funds. The market

risks arising from participating business are born primarily by the with-profits policyholders. Market risk exposures, including the exposure to interest

rate risk, are set with the aims of (i) ensuring that the with-profits funds are strong enough to honour guarantees and to smooth investment returns, and

(ii) to optimise the risks and returns for with-profits policyholders, taking into account previous undertakings made to policyholders as well as legal and

regulatory requirements.. In practice, the life companies of the Group maintain an appropriate mix of fixed and variable rate instruments according to

the underlying insurance or investment contracts and will review this at regular intervals to ensure that overall exposure is kept within the risk profile

agreed for each particular fund. This also requires the maturity profile of these assets to be managed in line with the liabilities to policyholders.

The sensitivity analysis for interest rate and inflation risk indicates how changes in the fair value or future cash flows of a financial instrument arising from

changes in market interest and inflation rates at the reporting date result in a change in profit after tax, equity and CSM. It takes into account the effect

of such changes in market interest and inflation rates on all assets and liabilities that contribute to the Group’s reported profit after tax and in equity.

With-profits business and non-participating business within the with-profits funds are exposed to interest rate risk as guaranteed liabilities are

valued relative to market interest rates and investments include fixed interest securities and derivatives. For unsupported with-profits business the

profit or loss arising from mismatches between such assets and liabilities is largely offset by increased or reduced discretionary policyholder

benefits dependent on the existence of policyholder guarantees. The contribution of unsupported participating business to the Group result is

largely limited to the shareholders’ share of bonuses. The contribution of the supported participating business to the Group result is determined

in line with IFRS 17, which exposes the shareholder to changes in the value of the liabilities backed by shareholder assets and the value of capital

advanced to the with-profits funds.

In the non-participating funds, policy liabilities’ sensitivity to interest rates are matched primarily with debt securities and hedging if necessary to

match duration on a regulatory basis for the Group’s Solvency II position, with the result that sensitivity to changes in interest rates is very low. The

Group’s exposure to interest rates on an IFRS basis principally arises from the Group’s hedging strategy to protect the regulatory capital position,

which results in an adverse impact on profit on an increase in interest rates.

The Group is exposed to inflation risk through certain contracts, such as annuities, which may provide for future benefits to be paid taking account

of changes in the level of experienced and implied inflation, and also through the Group’s cost base. The Group seeks to manage inflation risk within

the ALM framework through the holding of derivatives, such as inflation swaps, or physical positions in relevant assets, such as index-linked gilts,

where appropriate.

The interest rate sensitivity reflects a 100bps change in risk-free yields at each time step on the risk-free curve applied to assets and liabilities as at

the balance sheet date. The illiquidity premium used in the measurement of insurance contracts, and associated reinsurance contracts, as an

addition to the risk-free curve does not change as a result of this sensitivity.

			2024			2023 restated 1
		Impact on			Impact on
		profit	Impact on	Impact on	profit	Impact on	Impact on
	Change in	after tax	equity	CSM	after tax	equity	CSM
	interest rate	£m	£m	£m	£m	£m	£m
Insurance contract and reinsurance contract balances	+1%	3,717	3,717	3	3,946	3,946	12
Investment contract without DPF balances	+1%	2,097	2,097	–	1,935	1,935	–
Financial assets subject to interest rate risk backing
insurance and reinsurance contract balances	+1%	(3,991)	(3,991)	–	(4,334)	(4,334)	–
Financial assets subject to interest rate risk backing
investment contract without DPF balances	+1%	(2,095)	(2,095)	–	(1,934)	(1,934)	–
Other financial assets subject to interest rate risk	+1%	(168)	(168)	–	(222)	(222)	–
Pension scheme liability	+1%	–	127	–	–	274	–
		(440)	(313)	3	(609)	(335)	12
Insurance contract and reinsurance contract balances	-1%	(4,493)	(4,493)	(12)	(4,821)	(4,821)	(11)
Investment contract without DPF balances	-1%	(2,431)	(2,431)	–	(2,216)	(2,216)	–
Financial assets subject to interest rate risk backing
insurance and reinsurance contract balances	-1%	4,885	4,885	–	5,390	5,390	–
Financial assets subject to interest rate risk backing
investment contract without DPF balances	-1%	2,428	2,428	–	2,215	2,215	–
Other financial assets subject to interest rate risk	-1%	169	169	–	222	222	–
Pension scheme liability	-1%	–	(155)	–	–	(338)	–
		558	403	(12)	790	452	(11)

1 See note E6.2 for further details of the prior year restatements .

Financials

Notes to the consolidated financial statements continued

236 Phoenix Group Holdings plc Annual Report and Accounts 2024

The inflation sensitivity reflects a 100bps change in future inflation rates at each time step on the inflation curve, with no change in the risk-free

interest rate curve. The illiquidity premium used in the measurement of insurance contracts, and associated reinsurance contracts, as an addition to

the risk-free interest rate curve is adjusted to reflect the impact on values of inflation-linked instruments included within the reference portfolio used

to determine the illiquidity premium.

			2024			2023 restated 1
		Impact on			Impact on
		profit	Impact on	Impact on	profit	Impact on	Impact on
	Change in	after tax	equity	CSM	after tax	equity	CSM
	inflation	£m	£m	£m	£m	£m	£m
Insurance contract and reinsurance contract balances	+1%	(1,184)	(1,184)	(30)	(1,179)	(1,179)	(36)
Investment contract without DPF balances	+1%	(16)	(16)	–	(33)	(33)	–
Financial assets subject to inflation risk backing insurance
and reinsurance contract balances	+1%	1,673	1,673	–	1,599	1,599	–
Financial assets subject to inflation risk backing investment
contract without DPF balances	+1%	16	16	–	33	33	–
Pension scheme liability	+1%	–	(114)	–	–	(246)	–
		489	375	(30)	420	174	(36)
Insurance contract and reinsurance contract balances	-1%	1,137	1,137	22	1,096	1,096	42
Investment contract without DPF balances	-1%	14	14	–	28	28	–
Financial assets subject inflation risk backing insurance
and reinsurance contract balances	-1%	(1,393)	(1,393)	–	(1,309)	(1,309)	–
Financial assets subject to inflation risk backing investment
contract without DPF balances	-1%	(14)	(14)	–	(28)	(28)	–
Pension scheme liability	-1%	–	109	–	–	222	–
		(256)	(147)	22	(213)	9	42

1 See note E6.2 for further details of the prior year restatements.

Equity and property risk

The Group is exposed to the risk of reductions in the valuation of equities (or changes in the volatility) or property investments which could result in

reductions in asset values and losses for policyholders or shareholders. In this context, equity assets should be taken to include shares, equity

derivatives, equity collectives and unlisted equities. Property assets include direct property investment, shares in property companies, property

collectives and structured property assets.

The portfolio of marketable equity securities and property investments which is carried in the statement of consolidated financial position at fair

value has exposure to price risk. The Group’s objective in holding these assets is to earn higher long-term returns by investing in a diverse portfolio

of equities and properties. Portfolio characteristics are analysed regularly and price risks are actively managed in line with investment mandates.

The Group’s holdings are diversified across industries and concentrations in any one company or industry are limited.

Equity and property price risk is primarily borne in respect of assets held in with-profits funds, unit-linked funds or equity release mortgages in the

non-profit funds. For unit-linked funds this risk is borne by policyholders and asset movements directly impact unit prices and hence policy values.

For with-profits funds policyholders’ future bonuses will be impacted by the investment returns achieved and hence the price risk, whilst the Group

also has exposure to the value of guarantees provided to with-profits policyholders. In addition, some equity investments are held in respect of

shareholders’ funds. For the non-profit fund property price risk from equity release mortgages is borne by the Group with the aim of achieving

greater diversification and investment returns, consistent with the Strategic Asset Allocation approved by the Board. The Group as a whole is

exposed to price risk fluctuations impacting the income flow of management charges from the invested assets of all funds; this is primarily managed

through the use of derivatives.

Equity and property price risk is managed through the agreement and monitoring of financial risk profiles that are appropriate for each of the

Group’s life funds in respect of maintaining adequate regulatory capital and Consumer Duty. This is largely achieved through asset class

diversification and within the Group’s ALM framework through the holding of derivatives or physical positions in relevant assets where appropriate.

The shareholders’ exposure to equity risk principally arises from the Group’s hedging strategy to protect the regulatory capital position, which

results in an adverse impact on profit on an increase in equity prices.

The sensitivity analysis for equity and property price risk illustrates how a change in the fair value of equities and properties affects the Group result.

It takes into account the effect of such changes in equity and property prices on all assets and liabilities that contribute to the Group’s reported

profit after tax and in equity.

The equity sensitivity represents a 10% change in equity prices at the balance sheet date. This is applied to investment assets/liabilities and to

policyholder liabilities directly measured with reference to the value of backing equities, such as investment contract liabilities, unit-linked insurance

contracts and with-profits contracts, and associated reinsurance contracts. The illiquidity premiums used in the measurement of insurance

contracts do not change as a result of this sensitivity.

E. Financial assets & liabilities continued

E6. Risk management – financial and other risks continued

E6.2.2 Market risk continued

Financials

237Phoenix Group Holdings plc Annual Report and Accounts 2024

			2024			2023 restated 1
		Impact on			Impact on
		profit		Impact on	profit	Impact on	Impact on
	Change in	after tax	Impact on	CSM	after tax	equity	CSM
	equity prices	£m	equity	£m	£m	£m	£m
Insurance contract and reinsurance contract balances	+10%	(2,239)	(2,239)	44	(2,192)	(2,192)	49
Investment contract without DPF balances	+10%	(8,197)	(8,197)	–	(7,962)	( 7,962)	–
Financial assets subject to equity price risk backing
insurance and reinsurance contract balances	+10%	2,293	2,293	–	2,241	2,241	–
Financial assets subject to equity price risk backing
Investment contract without DPF balances	+10%	8,107	8,107	–	7,876	7,876	–
Other financial assets subject to equity price risk	+10%	(209)	(209)	–	(223)	(223)	–
		(245)	(245)	44	(260)	(260)	49
Insurance contract and reinsurance contract balances	-10%	2,274	2,274	(50)	2,227	2,227	(48)
Investment contract without DPF balances	-10%	8,301	8,301	–	8,074	8,074	–
Financial assets subject to equity price risk backing
insurance and reinsurance contract balances	-10%	(2,328)	(2,328)	–	(2,279)	(2,279)	–
Financial assets subject to equity price risk backing
Investment contract without DPF balances	-10%	(8,208)	(8,208)	–	(7,988)	(7,988)	–
Other financial assets subject to equity price risk	-10%	211	211	–	229	229	–
		250	250	(50)	263	263	(48)

1 See note E6.2 for further details of the prior year restatements.

The property sensitivity represents a 10% change in property prices at the balance sheet date. This is applied to investment assets/liabilities and to

policyholder liabilities directly measured with reference to the value of backing property assets, such as investment contract liabilities, unit-linked

insurance contracts and with-profit contracts, and associated reinsurance contracts. The illiquidity premium used in the valuation of primarily

annuity liabilities, and associated reinsurance contracts, is adjusted to reflect the impact of property values on the change in spreads arising on

equity release mortgage assets held within the reference portfolio.

			2024			2023 restated 1
		Impact on			Impact on
	Change in	profit after	Impact on	Impact on	profit	Impact on	Impact on
	property	tax	equity	CSM	after tax	equity	CSM
	prices	£m	£m	£m	£m	£m	£m
Insurance contract and reinsurance contract balances	+10%	(121)	(121)	3	(141)	(141)	4
Investment contract without DPF balances	+10%	(291)	(291)	–	(278)	(278)	–
Financial assets subject to property price risk backing
insurance and reinsurance contract balances	+10%	181	181	–	193	193	–
Financial assets subject to property price risk backing
Investment contract without DPF balances	+10%	291	291	–	278	278	–
		60	60	3	52	52	4
Insurance contract and reinsurance contract balances	-10%	114	114	(4)	135	135	(4)
Investment contract without DPF balances	-10%	296	296	–	283	283	–
Financial assets subject to property price risk backing
insurance and reinsurance contract balances	-10%	(190)	(190)	–	(204)	(204)	–
Financial assets subject to property price risk backing
Investment contract without DPF balances	-10%	(296)	(296)	–	(283)	(283)	–
		(76)	(76)	(4)	(69)	(69)	(4)

1 See note E6.2 for further details of the prior year restatements.

The sensitivity to changes in equity prices is primarily driven by the Group’s equity hedging arrangements over the value of future management

charges that are linked to asset values.

Currency risk

Currency risk is the risk that changes in the value of currencies could lead to reductions in asset values which may result in losses for policyholders

and shareholders. With the exception of Standard Life International business sold in Germany and the Republic of Ireland and some historic

business written in the Republic of Ireland, the Group’s principal transactions are carried out in sterling. The assets for these books of business are

generally held in the same currency denomination as their liabilities, therefore, any foreign currency mismatch is largely mitigated. Consequently,

the foreign currency risk relating to this business mainly arises when the assets and liabilities are translated into sterling.

The Group’s financial assets are primarily denominated in the same currencies as its insurance and investment liabilities. Thus, the main foreign

exchange risk arises from recognised assets and liabilities denominated in currencies other than those in which insurance and investment liabilities

are expected to be settled and, indirectly, from the non-UK earnings of UK companies.

Both the with-profits and non-profit funds have some exposure to overseas assets which is not driven by liability considerations. The purpose of this

exposure is to reduce overall risk whilst maximising returns by diversification. This exposure is limited and managed through investment mandates

Financials

Notes to the consolidated financial statements continued

238 Phoenix Group Holdings plc Annual Report and Accounts 2024

which are subject to the oversight of the investment committees of the Boards of each insurance subsidiary, and in the case of the with-profits funds

consistent with policyholders’ reasonable expectations and PPFM. Fluctuations in exchange rates from certain holdings in overseas assets are

hedged against currency risks.

At 31 December 2023, the Group had in place four cross currency swaps which were designated as hedging instruments in order to effect cash

flow hedges of the Group’s Euro and US Dollar denominated borrowings. On 12 June 2024, the Company issued US $500 million Contingent

Convertible Tier 1 notes and the cross currency swap that was entered into at this time was designated as a hedging instrument. On 18 June 2024,

$500 million of the $750 million Contingently Convertible T1 notes were repurchased via a tender offer, leading to an unwinding of $500 million

of the related swap arrangement.

E6.2.3 Financial soundness risk

Financial soundness risk is a broad risk category encompassing capital management risk, tax risk and liquidity and funding risk.

Capital management risk is defined as the risk of reductions in earnings and/or value, through financial or reputational loss, due to a failure to

maintain sufficient capital to provide appropriate security for policyholders and meet all regulatory capital requirements whilst not retaining

unnecessary capital. The Group has exposure to capital management risk through the regulatory capital requirements mandated by the PRA.

The Group’s approach to managing capital management risk is described in detail in note I3.

Tax risk

Tax risk is defined as the risk of reductions in earnings and/or value, through financial or reputational loss, due to an unforeseen tax cost, or by the

inappropriate reporting and disclosure of information in relation to taxation. Tax risk can be caused by:

• the Group, or one of its subsidiaries, making a material error in its tax reporting;

• incorrect calculation of tax provisions;

• failure to implement the optimum financial arrangements to underpin a commercial transaction; and

• incorrect operation of policyholder tax requirements.

Tax risk is managed by maintaining an appropriately-staffed tax team who have the qualifications and experience to make judgements on tax issues,

augmented by advice from external specialists where required. In addition, the Group has a formal tax risk policy, which sets out its risk appetite in

relation to specific aspects of tax risk, and which details the controls the Group has in place to manage those risks.

Liquidity risk

Liquidity risk is defined as failure to maintain adequate levels of financial resources to meet obligations as they fall due. Funding risk relates to the

potential inability to raise additional capital or liquidity when required in order to maintain the resilience of the balance sheet. The Group has

exposure to liquidity risk as a result of servicing its external debt and equity investors, and from the operating requirements of its subsidiaries.

The Group’s subsidiaries have exposure to liquidity risk as a result of normal business activities, specifically the risk arising from an inability to meet

short-term cash flow requirements and to meet obligations to policy liabilities. The Board of Phoenix Group Holdings plc has defined a number of

governance objectives and principles and the liquidity risk frameworks of each subsidiary are designed to ensure that:

• liquidity risk is managed in a manner consistent with the subsidiary company Boards’ strategic objectives, risk appetite and PPFM;

• cash flows are appropriately managed and the reputation of the Group is safeguarded; and

• appropriate information on liquidity risk is available to those making decisions.

The Group’s liquidity risk management strategy is based on a risk appetite of less than a 1 in 200 chance of having insufficient liquid or tangible

assets to meet financial obligations as they fall due and is supported by:

• holding appropriate assets to meet liquidity buffers;

• holding high quality liquid assets to support day to day operations;

• an effective stress testing framework to ensure survival horizons are met under different severe, but plausible scenarios;

• effective liquidity portfolio management including Early Warning Indicators; and

• liquidity risk contingency planning.

The Group’s funding strategy aims to maintain the appropriate level of debt and equity in order to support the Group’s organic and inorganic

growth ambitions, while maintaining sufficient headroom for hybrid capital under regulatory rules.

Liquidity forecasts showing headroom against liquidity buffers are prepared regularly to predict required liquidity levels over both the short and

medium-term allowing management to respond appropriately to changes in circumstances. In the event of a liquidity shortfall, either current or

projected, this would be managed in line with the Group’s Contingency Liquidity Plan where the latest available contingency management actions

would be considered.

In extreme circumstances, the Group could be exposed to liquidity risk in its unit-linked funds. This could occur where a high volume of surrenders

coincides with a tightening of liquidity in a unit-linked fund to the point where assets of that fund have to be sold to meet those withdrawals. Where

the fund affected consists of less liquid assets such as property, it can take several months to complete a sale and this would impede the proper

operation of the fund. In these situations, the Group considers its risk to be low since there are steps that can be taken first within the funds

themselves both to ensure the fair treatment of all investors in those funds and to protect the Group’s own risk exposure.

The vast majority of the Group’s derivative contracts are traded OTC and have a two-day collateral settlement period. The Group’s derivative

contracts are monitored daily, via an end-of-day valuation process, to assess the need for additional funds to cover margin or collateral calls.

Some of the Group’s commercial property investments, cash and cash equivalents are held through collective investment schemes. The collective

investment schemes have the power to restrict and/or suspend withdrawals, which would, in turn, affect liquidity.

The following table provides a maturity analysis showing the remaining contractual maturities of the Group’s undiscounted financial liabilities

and associated interest.

E. Financial assets & liabilities continued

E6. Risk management – financial and other risks continued

E6.2.2 Market risk continued

Financials

239Phoenix Group Holdings plc Annual Report and Accounts 2024

							Less amounts
							classified as
	1 year or less			Greater than	No fixed		held for sale
	or on demand	1-5 years	6-10 years	10 years	term	Total	(see note H3)	Total
2024	£m	£m	£m	£m	£m	£m	£m	£m
Investment contracts	173,922	–	–	–	–	173,922	(3,175)	170,747
Borrowings 1	483	2,767	1,303	–	31	4,584	–	4,584
Derivatives 1	641	245	745	8,372	–	10,003	–	10,003
Net asset value attributable to unitholders	2,486	–	–	–	–	2,486	–	2,486
Obligations for repayment of collateral received	849	–	–	–	–	849	–	849
Lease liabilities 1	13	30	17	17	–	77	–	77
Accruals and deferred income	545	25	13	–	–	583	–	583
Other payables	2,280	–	–	–	–	2,280	–	2,280

							Less amounts
							classified as
	1 year or less or			Greater than	No fixed		held for sale
	on demand	1-5 years	6-10 years	10 years	term	Total	(see note H3)	Total
2023	£m	£m	£m	£m	£m	£m	£m	£m
Investment contracts (restated) 2	162,495	–	–	–	–	162,495	(4,780)	157,715
Borrowings 1	298	2,065	2,563	–	45	4,971	–	4,971
Derivatives 1	366	403	634	5,084	–	6,487	(2)	6,485
Net asset value attributable to unitholders	2,921	–	–	–	–	2,921	–	2,921
Obligations for repayment of collateral received	1,005	–	–	–	–	1,005	–	1,005
Lease liabilities 1	9	35	26	37	–	107	–	107
Accruals and deferred income	536	29	14	–	–	579	–	579
Other payables	2,272	–	–	–	–	2,272	–	2,272

1 These financial liabilities are disclosed at their undiscounted value and therefore differ from amounts included in the statement of consolidated financial position which discloses the discounted value.

2 See note A3 for further details of the prior year restatements.

Investment contract policyholders have the option to terminate or transfer their contracts at any time and to receive the surrender or transfer value

of their policies. Although these liabilities are payable on demand, and are therefore included in the contractual maturity analysis as due within one

year, the Group does not expect all these amounts to be paid out within one year of the reporting date.

The following tables present the estimated amount and timing of the remaining contractual discounted cash flows arising from insurance

contract liabilities.

	Up to 1 year	1-2 years	2-3 years	3-4 years	4-5 years	>5 years	Total
2024	£m	£m	£m	£m	£m	£m	£m
Insurance contract liabilities	8,054	5,183	4,585	4,916	5,282	81,334	109,354

	Up to 1 year	1-2 years	2-3 years	3-4 years	4-5 years	>5 years	Total
2023 restated 1	£m	£m	£m	£m	£m	£m	£m
Insurance contract liabilities	8,467	4,986	4,958	5,292	5,632	80,437	109,772

1 See note A3 for further details of the prior year restatements.

The following table sets out the amounts that are payable on demand and the carrying value of the related portfolios of contracts.

	2024				2023 restated 1
	Amounts payable	Carrying value of	Amounts payable		Carrying value of
	on demand	portfolio	on demand		portfolio
	£m	£m	£m		£m
With-profits	(42,695)	(49,233)	(44,076)		(51,646)
Annuities	(6,564)	(36,513)	(5,163)		(34,293)
Unit-linked	(17,773)	(17,016)	(15,793)		(16,404)
Protection	(384)	(975)	(612)		(1,722)
Short-term payables and receivables (including deposits from reinsurers)	(3,248)	(3,248)	(3,541)		(3,541)
	(70,664)	(106,985)	(69,185)	(107,	60 6)

1 See note A3 for further details of the prior year restatements.

A significant proportion of the Group’s financial assets are held in gilts, cash, supranationals and investment grade securities which the Group

considers sufficient to meet the liabilities as they fall due. The vast majority of these investments are readily realisable immediately since most

of them are quoted in an active market.

The Group has a set of established policies and processes to manage its exposure to liquidity risk, including impacts arising from the economic

environment, business developments and funding changes. Where liquidity risk is heightened, such as during periods of significant market volatility,

triggers are in place to enhance the frequency of liquidity monitoring and to implement available contingency actions to ensure sufficient liquidity

is maintained.

Financials

Notes to the consolidated financial statements continued

240 Phoenix Group Holdings plc Annual Report and Accounts 2024

E6.2.4 Strategic risk

Strategic risks threaten the achievement of the Group strategy through poor strategic decision-making, implementation or response to changing

circumstances. The Group recognises that core strategic activity brings with it exposure to strategic risk. However, the Group seeks to proactively

review, manage and control these exposures.

The Group’s strategy and business plan are exposed to external events that could prevent or impact the achievement of the strategy; events relating

to how the strategy and business plan are executed; and events that arise as a consequence of following the specific strategy chosen. The

identification and assessment of strategic risks is an integrated part of the Risk Management Framework. Strategic risk should be considered in

parallel with the Risk Universe as each of the risks within the Risk Universe can impact the Group’s strategy.

A Strategic Risk Policy is maintained and reported against regularly, with a particular focus on risk management, stakeholder management,

corporate activity and overall reporting against the Group’s strategic ambitions.

E6.2.5 Operational risk

Operational risk is the risk of reductions in earnings and/or value, through financial or reputational loss, from inadequate or failed internal processes

and systems, or from people-related or external events. Operational risk arises due to failures in one or more of the following aspects of our business:

• indirect exposures through outsourcing service providers and suppliers;

• direct exposures through internal practices, actions or omissions;

• external threats from individuals or groups focused on malicious or criminal activities, or on external events occurring which are not within the

Group’s control; and

• negligence, mal-practice or failure of employees, or suppliers to follow good practice in delivering operational processes and practices.

It is accepted that it is neither possible, appropriate nor cost effective to eliminate all operational risks from the business as operational risk is

inherent in any operating environment particularly given the regulatory framework under which the Group operates. As such the Group will tolerate

a degree of operational risk subject to appropriate and proportionate levels of control around the identification, management and reporting of

such risks. A set of operational risk policies are maintained that set out the nature of the operational risk exposure and key controls in place to

control the risk.

E6.2.6 Customer risk

Customer risk is the risk of financial failure, reputational loss, loss of earnings and/or value through inappropriate or poor customer treatment

(including poor advice). It can arise as a result of:

• Customer Outcomes: The risk that our decisions, actions or behaviors individually or collectively result in a failure to act to deliver good outcomes

for our customers.

• Customer Transformation: The risk that the design, governance and oversight of Strategic Customer Transformation Activity in retained functions

and service providers, fails to deliver on reasonable customer expectations, taking account of the Phoenix Group customer treatment risk

appetites and regulatory requirements.

The Group has both a Conduct Risk appetite to focus on behaviours within the business, and a Customer Risk appetite to focus on achieving good

customer outcomes. The behaviours and standards all colleagues are expected to achieve are detailed in our Group Code of Conduct. For our

customers, what represents a good outcome is articulated in our Customer Standards and supporting Business Unit processes. In addition, the

Group Conduct Strategy, which overarches our Risk Universe and all risk policies is designed to help the Group meet its aim of helping people

secure a lifetime of possibilities. It seeks to do this by putting customers at the heart of our strategy and decision making, achieving good customer

outcomes and preventing foreseeable harm.

The Group also has a suite of customer polices which set out the key customer risks and control objectives in place to mitigate them. The customer

risks for the Group are regularly reported to management oversight committees.

F. Insurance contracts, investment contracts with DPF and reinsurance

F1. Liabilities under insurance contracts

Classification

Contracts under which the Group accepts significant insurance risk are classified as insurance contracts. Contracts held by the Group under

which it transfers significant insurance risk related to underlying insurance contracts are classified as reinsurance contracts. Some contracts

entered into by the Group have the legal form of insurance contracts but do not transfer significant insurance risk and expose the Group to

financial risk. These contracts are classified as financial liabilities and are referred to as investment contracts.

All references in these accounting policies to insurance contracts and reinsurance contracts include contracts issued, initiated or acquired by the

Group, unless otherwise stated.

Insurance contracts are classified as direct participating contracts or contracts without direct participation features. Direct participating

contracts are contracts for which, at inception:

• the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

• the Group expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items; and

• the Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of

the underlying items.

All other insurance contracts and all reinsurance contracts are classified as contracts without direct participation features.

E. Financial assets & liabilities continued

E6. Risk management – financial and other risks continued

Financials

241Phoenix Group Holdings plc Annual Report and Accounts 2024

Some investment contracts issued by the Group contain discretionary participation features (‘DPF’), whereby the investor has the right and is

expected to receive, as a supplement to the amount not subject to the Group’s discretion, potentially significant additional benefits based on the

return of specified pools of investment assets. The Group accounts for these contracts under IFRS 17 consistent with insurance contracts.

The classification assessment is made at the date of inception or for business combinations or portfolio transfers, as at the date of acquisition.

Once a contract is assessed as insurance, investment with DPF or reinsurance, the classification continues until the contract is

derecognised or modified.

When considering classification, and applying the provisions of IFRS 17, the Group identifies a contract as the smallest unit of account. The Group

also makes an evaluation of whether a series of contracts can be treated together in applying IFRS 17 based on reasonable and supportable

information, or whether a single contract contains components that need to be separated and treated as if they were stand-alone contracts.

Accounting treatment

Separating components from insurance and reinsurance contracts

The Group assesses its insurance products to determine whether they contain components, which must be accounted for under accounting

standards other than IFRS 17 (distinct non-insurance components).

Where an insurance contract has a distinct investment component and meets the separation criteria established under IFRS 17, the investment

component is separated from the host contract and accounted for under IFRS 9. The assessment of whether a contract has a distinct investment

component is carried out at inception of the contract, or the date of acquisition in the case of a business combination.

When assessing whether the investment component is distinct, the Group considers the following, which may indicate that the insurance and

investment component are highly interrelated:

• the value of one component varies with the other component;

• existence of an option to switch between the different components;

• discounts that span both elements e.g. a reduced asset management charge based on total size of contract; and

• other interacting features e.g. insurance risk from premium waivers and return of premium covering both elements of the policy.

After separating any distinct components, the Group applies the requirements of IFRS 17 to all remaining components of the insurance contract

or where distinct criteria are not met, the whole contract is accounted for within IFRS 17.

Level of aggregation

The Group is required to divide its business into groups for the purposes of recognition and measurement. The Group’s business is firstly split into

portfolios. Portfolios contain groups of contracts with similar risks, which are managed together. Portfolios are further divided based on expected

profitability at inception into three categories: onerous contracts, contracts that are profitable at initial recognition and have no significant risk of

becoming onerous, and the remaining profitable contracts. For reinsurance contracts the same three groups would be identified with ‘onerous’

being replaced with ‘net gain’ and ‘profitable’ being replaced with ‘net cost’. Contracts which are issued more than one year apart are not

permitted to be included within the same group. However as permitted by IFRS 17, the groups of contracts for which the FVA has been adopted

on transition include contracts issued more than one year apart.

The Group has defined portfolios of insurance and reinsurance contracts issued broadly based on the predominant risks inherent in the

products/contracts, for example, longevity, persistency, mortality, and by considering whether groups of products are managed together. These

portfolios are further split by legal entity, with-profits fund and contracts subject to different IFRS 17 measurement models are grouped

separately. The portfolios are allocated to cohorts based on whether they are onerous at inception or based on their expected level of

profitability using information available at inception.

For reinsurance contracts held, portfolios are based upon similar risks to those of the underlying contracts. The reinsurance contracts held are

assessed for aggregation requirements on an individual contract basis.

The grouping of the insurance contracts is determined at initial recognition and is not subsequently reassessed. Therefore, a contract will remain

within the assigned aggregation group until it is derecognised, either by expiry or modification.

Recognition

The Group recognises groups of insurance contracts that it issues from the earliest of the following:

• the beginning of the coverage period of the group of contracts;

• the date when the first payment from the policyholder in the group is due or actually received if there is no due date; or

• for a group of onerous contracts, as soon as facts and circumstances indicate that the group is onerous.

Investment contracts with DPF are initially recognised at the date when the Group becomes a party to the contract.

Insurance contracts acquired in a business combination within the scope of IFRS 3 Business Combinations or a portfolio transfer are accounted

for as if they were entered into at the date of acquisition or transfer.

Reinsurance contracts held are recognised from the earliest of the following:

• the beginning of the coverage period of the group of reinsurance contracts held. However, the Group delays the recognition of a group of

reinsurance contracts held that provide proportionate coverage (for example, through a quota share arrangement) until the date when any

underlying insurance contract is initially recognised, if that date is later than the beginning of the coverage period of the group of reinsurance

contracts held; and

• the date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance contract

held in the group of reinsurance contracts held at or before that date.

The Group adds new contracts to the group in the reporting period in which that contract meets one of the criteria set out above.

Financials

Notes to the consolidated financial statements continued

242 Phoenix Group Holdings plc Annual Report and Accounts 2024

Contract boundaries

The Group includes in the measurement of a group of insurance contracts all the future cash flows within the boundary of each contract in the

group. Cash flows are within the boundary of an insurance contract if they arise from the rights and obligations that exist during the period in

which the policyholder is obligated to pay premiums or the Group has a substantive obligation to provide the policyholder with insurance

contract services. A substantive obligation to provide insurance contract services ends when:

• the Group has the practical ability to reprice the risks of the particular policyholder or change the level of benefits so that the price fully

reflects those risks; or

• both of the following criteria are satisfied:

– the Group has the practical ability to reprice the contract or a portfolio of contracts so that the price fully reflects the reassessed risk of that

portfolio; and

– the pricing of premiums up to the date when risks are reassessed does not reflect the risks related to periods beyond the reassessment date.

Where an expected premium or expected claim is not within the contract boundary, it is not recognised as a cash flow of the contract and

is instead considered to relate to a future insurance contract and recognised when those contracts meet the recognition criteria.

The contract boundary is reassessed at each reporting date to include the effect of changes in circumstances on the Group’s substantive rights

and obligations and, therefore, may change over time.

The contract boundary for a reinsurance contract is dependent on the terms and conditions of the reinsurance contract and therefore may not

necessarily be the same as for the underlying contracts. Where the reinsurance contract is open to new business on agreed terms for a period of

time, the contract boundary may include estimates of reinsurance on insurance contracts that have not yet been issued or reported.

Measurement

The Group’s insurance contracts issued without direct participation features are grouped together under annuity, protection and other

non-linked insurance business. These groups of insurance contract are measured under the General Model (‘GM’).

Direct participating contracts issued by the Group are contracts with DPF where the Group holds the pool of underlying assets. Direct

participating insurance contracts are grouped together and reported primarily as either unit-linked or with-profits business although some

protection contracts are considered to have direct participation features. These groups of contracts are measured using the variable fee

approach (‘VFA’), unless they fail the eligibility test to be treated under this approach, in such circumstances they are measured under the GM.

Reinsurance contracts held are measured under the GM irrespective of the measurement model used for the underlying contracts. Certain

with-profits funds within the Group hold non-profit insurance business such as annuities. This business will also be measured under the GM.

Initial measurement – Insurance contracts

On initial recognition, the Group measures a group of insurance contracts as the total of (a) the fulfilment cash flows and a risk adjustment for

non-financial risk; and (b) the contractual service margin (‘CSM’). The fulfilment cash flows of a group of insurance contracts do not reflect the

Group’s non-performance risk.

The fulfilment cash flows comprise:

• unbiased and probability-weighted estimates of future cash flows that are within the contract boundary plus an adjustment to reflect the time

value of money and the financial risks related to future cash flows, to the extent that the financial risks are not included in the estimates of future

cash flows (‘BEL’); and

• a risk adjustment for non-financial risk.

The measurement of fulfilment cash flows includes insurance acquisition cash flows which are allocated as a portion of premium to profit or loss

(through insurance revenue) over the period of the contract in a systematic and rational way based on the passage of time.

The risk adjustment for non-financial risk for a group of insurance contracts, determined separately from the other estimates, is the compensation

required for bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk. The Group applies a

confidence level technique. The risk adjustment is allocated to groups of contracts based on an analysis of the risk profiles of the groups,

reflecting the effects of the diversification benefits between Group entities to the extent that the Group includes it when determining the

compensation required to bear that risk. The Group includes diversification between Group entities which use the Group Internal Model for

management decision-making. Where a Standard Formula approach is used, no diversification with other entities within the Group is allowed for.

The Group determines the risk adjustment using a one-year time horizon, consistent with the time horizon used for Solvency II, a key metric

underlying how the Group is managed.

The CSM of a group of insurance contracts represents the unearned profit that the Group will recognise over the life of the contract as insurance

and investment-related services are provided. For profitable groups of insurance contracts the CSM is established to ensure that no profit or loss

is recognised at inception and consequently it offsets the net present value of the expected cash flows (including initial premium and insurance

acquisition cash flows) and the risk adjustment. For a group of insurance contracts that are onerous, the CSM is set to nil and a loss is immediately

recognised in profit or loss. A loss component of the liability for remaining coverage (‘LRC’) is established for the amount of loss recognised.

The initial recognition of the CSM is consistent for insurance contracts applying the GM and VFA measurement approaches, however there are

key differences for subsequent measurement of the CSM under these measurement models.

For groups of contracts acquired in a transfer of contracts or a business combination, the consideration received for the contracts is included in

the fulfilment cash flows as a proxy for the premiums received at the date of acquisition. In a business combination, the consideration received is

the fair value of the contracts at that date.

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F1. Liabilities under insurance contracts continued

Financials

243Phoenix Group Holdings plc Annual Report and Accounts 2024

With-profits estate

The Group has a number of with-profits funds where surpluses are shared between policyholders and shareholders. All such funds are closed to

new business. These funds typically have an estate, being a surplus of assets over those needed to meet the liabilities of current policyholders. As

these funds are closed to new business, the surplus is expected to be distributed to existing policyholders over time and the Group has

determined it appropriate to allocate the expected future policyholder payments from the estate to specific groups of contracts within the

measurement of the best estimate cash flows.

Subsequent measurement – Insurance contracts

The carrying amount of a group of insurance contracts at each reporting date is the sum of the LRC and the liability for incurred claims (‘LIC’).

The LRC comprises the BEL, risk adjustment and any remaining CSM at that date. The LIC includes the BEL and risk adjustment (the fulfilment

cash flows for incurred claims and expenses that have not yet been paid, including claims that have been incurred but not yet reported). There is

no CSM associated with the LIC, and as a result, any changes in the LIC are taken directly to profit or loss.

The fulfilment cash flows of groups of insurance contracts are measured at the reporting date using current estimates of future cash flows, current

discount rates and current estimates of the risk adjustment for non-financial risk. Changes in fulfilment cash flows are recognised as follows.

Changes relating to future insurance services Adjusted against the CSM (or recognised in the insurance service result

in profit or loss if the group is onerous)

Changes relating to current or past services Recognised in the insurance service result in profit or loss

Effects of the time value of money, financial risk and changes Recognised in insurance finance income or expenses therein on

estimated future cash flows

Where, during the coverage period, a group of insurance contracts becomes onerous, the Group recognises a loss in profit or loss for the net

outflow, resulting in the carrying amount of the liability for the group being equal to the fulfilment cash flows. A loss component is established by

the Group for the liability for remaining coverage for such groups of onerous contracts representing the losses recognised.

The balance on the CSM at the end of the period is available for release to profit or loss. The amount of CSM recognised in insurance revenue

each period (the CSM amortisation) is determined by considering, for each group of contracts, coverage units that reflect the quantity of the

benefits provided in each period and the expected coverage period.

Benefits provided included those arising from both insurance and investment related services. Investment related services are only included if

the Group is deemed to be providing a significant investment service when providing an investment component, or policyholder’s right to

withdraw, that is expected to include an investment return generated by investment activity performed by the Group. This includes contracts

where the value of the investment return that the policyholder benefits from is not directly related to the value of the underlying investments.

Coverage units are discounted and are updated at each reporting date to reflect the current best estimate of service expected to be provided in

future periods. Coverage units for reinsurance contracts held are typically consistent with the underlying gross contracts, adjusted for

differences in the services provided.

The CSM of each group of contracts is calculated at each reporting date as follows:

Insurance contracts measured under GM

For insurance contracts measured under the GM approach, the CSM is adjusted by applying locked-in discount rates, while the BEL and risk

adjustment are adjusted using current discount rates.

The carrying amount of the CSM at each reporting date is the carrying amount at the start of the year, adjusted for:

• the CSM of any new contracts that are added to the group in the year;

• interest accreted on the carrying amount of the CSM during the year;

• changes in fulfilment cash flows that relate to future services, except to the extent that:

– any increases in the fulfilment cash flows exceed the carrying amount of the CSM, in which case the excess is recognised as a loss in profit or

loss and creates a loss component; or

– any decreases in the fulfilment cash flows are allocated to the loss component, reversing losses previously recognised in profit or loss;

• the effect of any currency exchange differences on the CSM; and

• the amount recognised as insurance revenue because of the services provided in the year (see the ‘Insurance revenue’ accounting policy in

note C1 for further details).

Changes in fulfilment cash flows relating to future service that adjust the CSM comprise:

• experience adjustments arising from the difference between premiums received and the expected amounts estimated at the beginning of the

period, that relate to future service, along with any associated acquisition costs;

• changes in estimates of the present value of future cash flows in the BEL and risk adjustment;

• differences between any investment component expected to become payable in the period and the actual investment component that

becomes payable; and

• changes in the risk adjustment for non-financial risk that relate to future service.

The impact of discounting the risk adjustment for business measured under GM is disaggregated and recognised within Net finance income or

expenses from insurance contracts within the consolidated income statement.

Financials

Notes to the consolidated financial statements continued

244 Phoenix Group Holdings plc Annual Report and Accounts 2024

Insurance contracts measured under VFA model

Life business is considered to have direct participating features, and is required to be measured under the VFA model where:

• contractual terms evidence that policyholders participate in a pool of clearly identified underlying items, for example unit-linked or with-

profits funds;

• the policyholders expect to receive a substantial share of the returns on underlying items (defined by the Group as greater than 50% and

further qualitative factors are considered where share of returns is less than 50%); and

• a substantial proportion of changes in amounts payable to policyholders varies with returns on the underlying items (where substantial is

defined consistently with the point above).

The Group’s unit-linked and with-profits business that meets the VFA eligibility criteria are direct participating contracts under which the Group’s

obligation to the policyholder is the net of:

• the obligation to pay the policyholder an amount equal to the fair value of the underlying items; and

• a variable fee in exchange for future services provided by the contracts, being the amount of the Group’s share of the fair value of the

underlying items less fulfilment cash flows that do not vary based on the returns on underlying items. The Group provides investment services

under these contracts by giving a return based on underlying items, in addition to insurance coverage.

For unit-linked and with-profits contracts that are measured under the VFA, interest is not accreted on the CSM using a locked-in discount rate,

instead it is determined with reference to the underlying items, reflecting that on these types of insurance contracts the Group fees for providing

investment-related services are determined with reference to the value of the investments associated with the policyholder’s policy. For example,

annual management charges (‘AMC’) are determined by reference to the value of the policyholder’s fund value and the shareholder’s share of

bonuses on a with-profits policy in a 90:10 fund is determined based on the performance of the with-profits fund.

The variable fee earned by the Group is consequently the Group’s share of the fair value of underlying items less fulfilment cash flows that do not

vary based on returns of the underlying items.

For unit-linked contracts, the underlying items are funds that the unit price of the investment chosen by the policyholder varies with.

For with-profits contracts, the underlying items are typically the net assets of the relevant with-profits fund, including the estate and the fair

value of non-profit contracts within the fund. With-profit funds can vary in their nature and operation, therefore will be dependent on facts

and circumstances.

When measuring a group of unit-linked and with-profits contracts using the VFA, the Group adjusts the fulfilment cash flows for the whole of the

changes in the obligation to pay policyholders an amount equal to the fair value of the underlying items. These changes do not relate to future

services and are recognised in profit or loss. The Group then adjusts any CSM for changes in the amount of the Group’s share of the fair value of

the underlying items, which relate to future services, as explained below.

The carrying amount of the CSM at each reporting date is the carrying amount at the start of the year, adjusted for:

• the CSM of any new contracts that are added to the group in the year;

• the change in the amount of the Group’s share of the fair value of the underlying items and changes in fulfilment cash flows that relate to future

services, except to the extent that:

– the Group has applied the risk mitigation option to exclude from the CSM changes in the effect of financial risk on the amount of its share of

the underlying items or fulfilment cash flows;

– a decrease in the amount of the Group’s share of the fair value of the underlying items, or an increase in the fulfilment cash flows that relate to

future services, exceeds the carrying amount of the CSM, giving rise to a loss in profit or loss (included in insurance service expenses) and

creating a loss component; or

– an increase in the amount of the Group’s share of the fair value of the underlying items, or a decrease in the fulfilment cash flows that relate to

future services, is allocated to the loss component, reversing losses previously recognised in profit or loss (included in insurance

service expenses);

• the effect of any currency exchange differences on the CSM; and

• the amount recognised as insurance revenue because of the services provided in the year (see the ‘Insurance revenue’ accounting policy in

note C1 for further details).

Changes in fulfilment cash flows that relate to future service include the changes relating to future services specified above for contracts without

direct participation features (measured at current discount rates) and changes in the effect of the time value of money and financial risks that do

not arise from underlying items.

The Group does not currently apply the risk mitigation option to any material extent.

Loss components

A loss component represents a notional record of the losses attributable to each group of onerous insurance contracts. The loss component is

released based on a systematic allocation of the subsequent changes relating to future service in the fulfilment cash flows to (i) the loss

component; and (ii) the liability for remaining coverage excluding the loss component. The loss component is also updated for subsequent

changes in estimates of the fulfilment cash flows and the risk adjustment relating to future service. The systematic allocation of subsequent

changes to the loss component results in the total amounts allocated to the loss component being equal to zero by the end of the coverage

period of a group of insurance contracts. The Group uses coverage units as the method of systematic allocation.

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F1. Liabilities under insurance contracts continued

Financials

245Phoenix Group Holdings plc Annual Report and Accounts 2024

Reinsurance contracts held – measurement

The carrying amount of a group of reinsurance contracts at each reporting date is the sum of the asset/liability for remaining coverage and the

asset/liability for incurred claims. The asset/liability for remaining coverage comprises (a) the fulfilment cash flows that relate to services that will

be received under the contracts in future periods and (b) any remaining CSM at that date.

The measurement of reinsurance contracts held at initial recognition follows the same principles as those for insurance contracts issued, with the

exception of the following:

• measurement of the cash flows includes an allowance on a probability-weighted basis for the effect of any non-performance by the reinsurers,

including the effects of collateral.

• the risk adjustment for non-financial risk is determined so that it represents the amount of risk being transferred to the reinsurer and

• the Group recognises both gains and losses at initial recognition in the statement of consolidated financial position as CSM and releases this to

profit or loss as the reinsurer renders services, except for any portion of a loss that relates to events before initial recognition. Where the Group

recognises a loss on initial recognition of an onerous group of underlying contracts, it establishes a loss-recovery component of the asset for

remaining coverage depicting the recovery of losses recognised.

• reinsurance contracts held are not eligible to apply the VFA.

To determine the risk adjustment for reinsurance contracts held, the Group will apply the approach set out above for insurance contracts both

gross and net of reinsurance and determine the amount of risk being transferred to the reinsurer as the difference between the two results.

The loss-recovery component determines the amounts that are subsequently presented in profit or loss as reversals of recoveries of losses from

reinsurance contracts and are excluded from the allocation of reinsurance premiums paid. It is adjusted to reflect changes in the loss component

of the onerous group of underlying contracts, but it cannot exceed the portion of the loss component of the onerous group of underlying

contracts that the Group expects to recover from the reinsurance contracts.

The Group adjusts the CSM of the group to which a reinsurance contract belongs and as a result recognises income when it recognises a loss on

initial recognition of onerous underlying contracts, if the reinsurance contract is entered into before or at the same time as the onerous

underlying contracts are recognised. The adjustment to the CSM is determined by multiplying:

• the amount of the loss that relates to the underlying contracts; and

• the percentage of claims on the underlying contracts that the Group expects to recover from the reinsurance contracts.

The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued, with the

exception of the following:

• changes in the fulfilment cash flows are recognised in profit or loss if the related changes arising from the underlying ceded contracts have

been recognised in profit or loss. Alternatively, changes in the fulfilment cash flows adjust the CSM; and

• changes in the fulfilment cash flows that result from changes in the risk of non-performance by the issuer of a reinsurance contract held do not

adjust the CSM as they do not relate to future service. The effect of the non-performance risk of the reinsurer is assessed at each reporting

date and the effect of changes in the non-performance risk is recognised in profit or loss.

Modification and derecognition

The Group derecognises insurance and reinsurance contracts when:

• the rights and obligations relating to the contract are extinguished (i.e. discharged, cancelled or expired); or

• the contract is modified such that the modification results in a change in the measurement model, or the applicable standard for measuring a

component of the contract. In such cases, the Group derecognises the initial contract and recognises the modified contract as a new contract.

Disclosure groups

The Group disaggregates information for the purposes of making the disclosures required by IFRS 17 into the following disclosure groups:

• Retirement Solutions;

• Pensions & Savings;

• With-Profits; and

• Europe & Other

The disclosure groups are aligned to the segments used for segmental reporting in note B1.

Financials

Notes to the consolidated financial statements continued

246 Phoenix Group Holdings plc Annual Report and Accounts 2024

The table below shows a summary of the carrying amount of insurance contracts and the related reinsurance contracts in the statement

of consolidated financial position.

	Retirement
	Solutions	Pensions & Savings	With-Profits	Europe & Other	Total
2024	£m	£m	£m	£m	£m
Insurance contracts issued
Estimates of present value of future cash flows	(37,934)	(22,160)	(26,152)	(23,108)	(109,354)
Risk adjustment	(826)	(78)	(89)	(213)	(1,206)
CSM	(4,000)	(269)	(633)	(329)	(5,231)
Net insurance contract liabilities issued	(42,760)	(22,507)	(26,874)	(23,650)	(115,791)
Insurance contract liabilities	(42,760)	(22,507)	(26,874)	(23,650)	(115,791)
Insurance contract assets	–	–	–	–	–
Net insurance contract liabilities issued	(42,760)	(22,507)	(26,874)	(23,650)	(115,791)
Reinsurance contracts held
Estimates of present value of future cash flows	1,307	4	736	322	2,369
Risk adjustment	575	1	34	76	686
CSM	1,694	6	141	133	1,974
Net reinsurance contract assets held	3,576	11	911	531	5,029
Reinsurance contract assets	3,734	11	911	531	5,187
Reinsurance contract liabilities	(158)	–	–	–	(158)
Net reinsurance contract assets held	3,576	11	911	531	5,029

	Retirement
	Solutions	Pensions & Savings	With-Profits	Europe & Other	Total
2023 (restated 1 )	£m	£m	£m	£m	£m
Insurance contracts issued
Estimates of present value of future cash flows (restated 1 )	(35,713)	(23,164)	(27,700)	(23,195)	(109,772)
Risk adjustment	(767)	(84)	(104)	(217)	(1,172)
CSM (restated 1 )	(3,749)	(201)	(589)	(244)	(4,783)
Net insurance contract liabilities issued (restated 1 )	(40,229)	(23,449)	(28,393)	(23,656)	(115,727)
Insurance contract liabilities	(40,229)	(23,449)	(28,393)	(23,656)	(115,727)
Insurance contract assets	–	–	–	–	–
Net insurance contract liabilities issued	(40,229)	(23,449)	(28,393)	(23,656)	(115,727)
Reinsurance contracts held
Estimates of present value of future cash flows	935	20	820	391	2,166
Risk adjustment	537	2	46	48	633
CSM	1,604	–	147	179	1,930
Net reinsurance contract assets held	3,076	22	1,013	618	4,729
Reinsurance contract assets	3,223	22	1,013	618	4,876
Reinsurance contract liabilities	(147)	–	–	–	(147)
Net reinsurance contract assets held	3,076	22	1,013	618	4,729

1 The segmental presentation of the ‘Estimates of present value of future cash flows’ for the year ended 31 December 2023 was restated to increase the values by £(628) million for Retirement Solutions, by

£(1,123) million for Pensions & Savings, and by £(366) million for Europe & Other, and there was a corresponding decrease of £2,117 million for the With-Profits segment. In addition, ‘Estimates of present

value of future cash flows’ was restated following the recent IFRS 17 valuation updates and was reduced by £14 million (see note A3 for further details). These changes also impacted the CSM and as a result

the Retirement Solutions CSM increased by £(8) million and the With-Profits CSM reduced by £8 million.

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F1. Liabilities under insurance contracts continued

Financials

247Phoenix Group Holdings plc Annual Report and Accounts 2024

F2. Movements in present value of future cash flows, risk adjustment and CSM of insurance contracts

The reconciliations below provide a roll-forward of the net asset or liability for insurance contracts issued by measurement component, showing

estimates of the present value of future cash flows, the risk adjustment for non-financial risk and the CSM.

Insurance contracts

			2024				2023
					Estimates of
	Estimates of				the present
	the present				value of
	value of		Contractual		future cash		Contractual
	future cash	Risk	service		flows	Risk	service margin	Total
	flows	adjustment	margin	Total	restated 1	adjustment	restated 1	restated 1
Retirement Solutions	£m	£m	£m	£m	£m	£m	£m	£m
Insurance contract liabilities as at 1 January
as reported	35,036	767	3,741	39,544	30,779	681	2,821	34,281
Restatements 1	677	–	8	685
Insurance contract liabilities as at 1 January
(restated)	35,713	767	3,749	40,229	30,779	681	2,821	34,281
Insurance contract assets as at 1 January	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 1 January	35,713	767	3,749	40,229	30,779	681	2,821	34,281
Changes in profit or loss:
CSM recognised for services provided	–	–	(278)	(278)	–	–	(260)	(260)
Risk adjustment for the risk expired	–	(71)	–	(71)	–	(39)	–	(39)
Experience adjustments 1	(3)	–	–	(3)	(27)	–	–	(27)
Policyholder tax charges	–	–	–	–	(1)	–	–	(1)
Total change relating to current service	(3)	(71)	(278)	(352)	(28)	(39)	(260)	(327)
Contracts initially recognised in the period	(488)	128	360	–	(602)	167	435	–
Changes in estimates that adjust the CSM 1	(93)	27	66	–	(574)	(92)	666	–
Changes in estimates that do not adjust
the CSM	(12)	–	–	(12)	1	–	–	1
Total change relating to future service	(593)	155	426	(12)	(1,175)	75	1,101	1
Adjustments to liabilities for incurred claims
(past service)	–	–	–	–	106	–	–	106
Impairment of assets for insurance acquisition
cash flows	–	–	–	–	(1)	–	–	(1)
Insurance service result	(596)	84	148	(364)	(1,098)	36	841	(221)
Insurance finance (income)/expense 1	(614)	(25)	103	(536)	1,971	4	62	2,037
Total changes in consolidated
income statement	(1,210)	59	251	(900)	873	40	903	1,816
Cash flows:
Premiums received	5,853	–	–	5,853	6,421	–	–	6,421
Claims and other expenses paid 1	(3,657)	–	–	(3,657)	(3,752)	–	–	(3,752)
Insurance acquisition cash flows	(73)	–	–	(73)	(38)	–	–	(38)
Total cash flows	2,123	–	–	2,123	2,631	–	–	2,631
Other movements 1.2	1,308	–	–	1,308	1,430	46	25	1,501
Net insurance contract liabilities as at 31 December	37,934	826	4,000	42,760	35,713	767	3,749	40,229
Insurance contract liabilities as at 31 December 1	37,934	826	4,000	42,760	35,713	767	3,749	40,229
Insurance contract assets as at 31 December	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 31 December 1	37,934	826	4,000	42,760	35,713	767	3,749	40,229

1 See notes F1 and A3 for details of the prior year restatements.

2 £1,514 million included in ‘Estimates of the present value of future cash flows’ in 2023 relates to the fair value of insurance contracts acquired as part of the acquisition of Phoenix Life CA Holdings Limited

(formerly known as SLF of Canda UK Limited (see note H2). Estimates of the present value of future cash flows in 2024 includes £1,305 million of premium in respect of the PGL Pension Scheme buy-out.

Financials

Notes to the consolidated financial statements continued

248 Phoenix Group Holdings plc Annual Report and Accounts 2024

			2024				2023
					Estimates of
	Estimates of				the present
	the present				value of
	value of		Contractual		future cash		Contractual
	future cash	Risk	service		flows	Risk	service	Total
	flows	adjustment	margin	Total	restated 1	adjustment	margin	restated 1
Pensions & Savings	£m	£m	£m	£m	£m	£m	£m	£m
Insurance contract liabilities as at 1 January
as reported	22,041	84	201	22,326	21,350	89	94	21,533
Restatements 1	1,123	–	–	1,123	–	–	–	–
Insurance contract liabilities as at 1 January
(restated)	23,164	84	201	23,449	21,350	89	94	21,533
Insurance contract assets as at 1 January	–	–	–	–	(48)	–	–	(48)
Net insurance contract liabilities as at 1 January	23,164	84	201	23,449	21,302	89	94	21,485
Changes in profit or loss:
CSM recognised for services provided	–	–	(36)	(36)	–	–	(25)	(25)
Risk adjustment for the risk expired	–	(11)	–	(11)	–	(8)	–	(8)
Experience adjustments	63	–	–	63	10	–	–	10
Policyholder tax charges	(33)	–	–	(33)	(6)	–	–	(6)
Total change relating to current service	30	(11)	(36)	(17)	4	(8)	(25)	(29)
Contracts initially recognised in the period	–	–	–	–	(67)	33	34	–
Changes in estimates that adjust the CSM	(106)	(4)	110	–	(103)	(1)	104	–
Changes in estimates that do not adjust
the CSM	(14)	8	–	(6)	(10)	2	–	(8)
Total change relating to future service	(120)	4	110	(6)	(180)	34	138	(8)
Adjustments to liabilities for incurred claims
(past service)	(22)	–	–	(22)	14	–	–	14
Insurance service result	(112)	(7)	74	(45)	(162)	26	113	(23)
Insurance finance expense/(income)	1,724	1	(3)	1,722	1,593	1	(4)	1,590
Total changes in consolidated
income statement	1,612	(6)	71	1,677	1,431	27	109	1,567
Cash flows:
Premiums received	377	–	–	377	389	–	–	389
Claims and other expenses paid 1	(2,999)	–	–	(2,999)	(2,365)	–	–	(2,365)
Total cash flows	(2,622)	–	–	(2,622)	(1,976)	–	–	(1,976)
Other movements 2	6	–	(3)	3	2,407	(32)	(2)	2,373
Net insurance contract liabilities as at 31 December 1	22,160	78	269	22,507	23,164	84	201	23,449
Insurance contract liabilities as at 31 December	22,160	78	269	22,507	23,164	84	201	23,449
Insurance contract assets as at 31 December	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 31 December	22,160	78	269	22,507	23,164	84	201	23,449

1 See notes F1 and A3 for details of the prior year restatements.

2 £2,411 million included in ‘Estimates of the present value of future cash flows’ in 2023 relates to the fair value of insurance contracts acquired as part of the acquisition of Phoenix Life CA Holdings Limited

(formerly known as SLF of Canda UK Limited) (see note H2).

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F2. Movements in present value of future cash flows, risk adjustment and CSM of insurance contracts continued

Financials

249Phoenix Group Holdings plc Annual Report and Accounts 2024

				2024						2023
							Estimates of
	Estimates of						the present
	the present						value of			Contractual
	value of			Contractual			future cash			service
	future cash		Risk	service			flows		Risk	margin	Total
	flows		adjustment	margin	Total		restated 1		adjustment	restated 1	restated 1
With-Profits	£m		£m	£m	£m		£m		£m	£m	£m
Insurance contract liabilities as at 1 January
as reported	29,880		104	597	30,581		28,282		158	565	29,005
Restatements 1	(2,180)		–	(8)	(2,188)		(64)		–	(7)	(71)
Insurance contract liabilities as at 1 January
(restated)	27,70	0	104	589	28,393		28,218		158	558	28,934
Insurance contract assets as at 1 January		–	–	–	–		–		–	–	–
Net insurance contract liabilities as at 1 January	27,70	0	104	589	28,393		28,218		158	558	28,934
Changes in profit or loss:
CSM recognised for services provided	–		–	(74)	(74)		–		–	(77)	(77)
Risk adjustment for the risk expired	–		(6)	–	(6)		–		(4)	–	(4)
Experience adjustments	11		–	–	11		23		–	–	23
Policyholder tax charges	(36)		–	–	(36)		(17)		–	–	(17)
Total change relating to current service	(25)		(6)	(74)	(105)		6		(4)	(77)	(75)
Changes in estimates that adjust the CSM	(98)		(12)	110	–		(99)		(20)	119	–
Changes in estimates that do not adjust
the CSM	(36)		3	–	(33)		(52)		(12)	–	(64)
Total change relating to future service	(134)		(9)	110	(33)		(151)		(32)	119	(64)
Adjustments to liabilities for incurred claims
(past service)	(38)		–	–	(38)		(33)		–	–	(33)
Insurance service result	(197)		(15)	36	(176)		(178)		(36)	42	(172)
Insurance finance expense/(income)	1,113		–	9	1,122		1,891		13	10	1,914
Total changes in consolidated
income statement	916		(15)	45	946		1,713		(23)	52	1,742
Cash flows:
Premiums received	101		–	–	101		121		–	–	121
Claims and other expenses paid 1	(2,567)		–	–	(2,567)		(2,811)		–	–	(2,811)
Total cash flows	(2,466)		–	–	(2,466)		(2,690)		–	–	(2,690)
Other movements 1,2	2		–	(1)	1		459		(31)	(21)	407
Net insurance contract liabilities as at 31 December 1	26,152		89	633	26,874	27,70	0		104	589	28,393
Insurance contract liabilities as at 31 December	26,152		89	633	26,874		27,70	0	104	589	28,393
Insurance contract assets as at 31 December	–		–	–	–			–	–	–	–
Net insurance contract liabilities as at 31 December 1	26,152		89	633	26,874		27,70	0	104	589	28,393

1 See notes F1 and A3 for details of the prior year restatements.

2 £349 million included in ‘Estimates of the present value of future cash flows’ in 2023 relates to the fair value of insurance contracts acquired as part of the acquisition of Phoenix Life CA Holdings Limited

(formerly known as SLF of Canda UK Limited) (see note H2).

Financials

Notes to the consolidated financial statements continued

250 Phoenix Group Holdings plc Annual Report and Accounts 2024

			2024				2023
					Estimates of
	Estimates of				the present
	the present				value of
	value of		Contractual		future cash		Contractual
	future cash	Risk	service		flows	Risk	service	Total
	flows	adjustment	margin	Total	restated 1	adjustment	margin	restated 1
Europe & Other Insurance contract liabilities as at 1 January	£m	£m	£m	£m	£m	£m	£m	£m
as reported	22,829	217	244	23,290	22,201	169	419	22,789
Restatements 1	366	–	–	366	–	–	–	–
Insurance contract liabilities as at 1 January	23,195	217	244	23,656	22,201	169	419	22,789
Insurance contract assets as at 1 January	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 1 January	23,195	217	244	23,656	22,201	169	419	22,789
Changes in profit or loss:
CSM recognised for services provided	–	–	(56)	(56)	–	–	(47)	(47)
Risk adjustment for the risk expired	–	(15)	–	(15)	–	(12)	–	(12)
Experience adjustments	–	–	–	–	18	–	–	18
Policyholder tax charges	–	–	–	–	(1)	–	–	(1)
Total change relating to current service	–	(15)	(56)	(71)	17	(12)	(47)	(42)
Contracts initially recognised in the period	(51)	6	45	–	(57)	8	53	4
Changes in estimates that adjust the CSM	(82)	2	80	–	116	27	(143)	–
Changes in estimates that do not adjust the CSM	3	15	–	18	10	25	–	35
Total change relating to future service	(130)	23	125	18	69	60	(90)	39
Adjustments to liabilities for incurred claims
(past service)	(8)	–	–	(8)	(104)	–	–	(104)
Impairment of assets for insurance acquisition
cash flows	–	–	–	–	(3)	–	–	(3)
Insurance service result	(138)	8	69	(61)	(21)	48	(137)	(110)
Insurance finance expense/(income)	1,336	(8)	20	1,348	1,550	(13)	(20)	1,517
Total changes in consolidated
income statement	1,198	–	89	1,287	1,529	35	(157)	1,407
Cash flows:
Premiums received	1,720	–	–	1,720	1,673	–	–	1,673
Claims and other expenses paid 1	(2,249)	–	–	(2,249)	(1,893)	–	–	(1,893)
Insurance acquisition cash flows	(106)	–	–	(106)	(116)	–	–	(116)
Total cash flows	(635)	–	–	(635)	(336)	–	–	(336)
Other movements 2	(650)	(4)	(4)	(658)	(199)	13	(18)	(204)
Net insurance contract liabilities as at 31 December 1	23,108	213	329	23,650	23,195	217	244	23,656
Insurance contract liabilities as at 31 December	23,108	213	329	23,650	23,195	217	244	23,656
Insurance contract assets as at 31 December	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 31 December	23,108	213	329	23,650	23,195	217	244	23,656

1 See notes F1 and A3 for details of the prior year restatements.

2 £112 million included in ‘Estimates of the present value of future cash flows’ in 2023 relates to the fair value of insurance contracts acquired as part of the acquisition of Phoenix Life CA Holdings Limited

(formerly known as SLF of Canda UK Limited) (see note H2).

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F2. Movements in present value of future cash flows, risk adjustment and CSM of insurance contracts continued

Financials

251Phoenix Group Holdings plc Annual Report and Accounts 2024

F3. Movements in liabilities for remaining coverage and liabilities for incurred claims for insurance contracts

The following reconciliations show how the net carrying amounts of insurance contracts issued changed over the year as a result of cash flows,

amounts recognised in the consolidated income statement and other movements, analysed by remaining coverage and incurred claims.

			2024				2023
		Liabilities for remaining				Liabilities for remaining
		coverage				coverage
							Liabilities for
			Liabilities for		Excluding loss		incurred
	Excluding loss	Loss	incurred		component	Loss	claims
	component	component	claims	Total	restated 1	component	restated 1	Total
Retirement Solutions	£m	£m	£m	£m	£m	£m	£m	£m
Insurance contract liabilities as at 1 January
as reported	40,050	54	(560)	39,544	34,189	56	36	34,281
Restatements 1	76	–	609	685	–	–	–	–
Insurance contract liabilities as at 1 January
(restated)	40,126	54	49	40,229	34,189	56	36	34,281
Insurance contract assets as at 1 January	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 1 January	40,126	54	49	40,229	34,189	56	36	34,281
Insurance revenue (note C1)	(3,918)	–	–	(3,918)	(3,751)	–	–	(3,751)
Insurance service expenses:
Incurred claims and other expenses 1	–	(4)	3,569	3,565	–	(4)	3,427	3,423
Amortisation of insurance acquisition cash
flows	1	–	–	1	1	–	–	1
Losses on onerous contracts and reversals
of those losses	–	(12)	–	(12)	–	1	–	1
Changes to liabilities for incurred claims
(past service)	–	–	–	–	–	–	106	106
Impairment of assets for insurance acquisition
cash flows	–	–	–	–	(1)	–	–	(1)
Insurance service result	(3,917)	(16)	3,569	(364)	(3,751)	(3)	3,533	(221)
Insurance finance (income)/expense 1	(552)	1	15	(536)	2,036	1	–	2,037
Total changes in the consolidated
income statement	(4,469)	(15)	3,584	(900)	(1,715)	(2)	3,533	1,816
Investment components	(301)	–	301	–	(160)	–	160	–
Cash flows:
Premiums received	5,853	–	–	5,853	6,421	–	–	6,421
Claims and other expenses paid 1	–	–	(3,657)	(3,657)	–	–	(3,752)	(3,752)
Insurance acquisition cash flows	(73)	–	–	(73)	(38)	–	–	(38)
Total cash flows	5,780	–	(3,657)	2,123	6,383	–	(3,752)	2,631
Other movements 1,2	1,287	–	21	1,308	1,429	–	72	1,501
Net insurance contract liabilities as at 31 December 1	42,423	39	298	42,760	40,126	54	49	40,229
Insurance contract liabilities as at 31 December	42,423	39	298	42,760	40,126	54	49	40,229
Insurance contract assets as at 31 December	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 31 December	42,423	39	298	42,760	40,126	54	49	40,229

1 See notes F1 and A3 for details of the prior year restatements.

(formerly known as SLF of Canda UK Limited) (see note H2). Estimates of the present value of future cash flows in 2024 includes £1,305 million of premium in respect of the PGL Pension Scheme buy-out.

Financials

Notes to the consolidated financial statements continued

252 Phoenix Group Holdings plc Annual Report and Accounts 2024

			2024				2023
		Liabilities for remaining				Liabilities for remaining
		coverage				coverage
							Liabilities for
			Liabilities for				incurred
	Excluding loss	Loss	incurred		Excluding loss	Loss	claims	Total
	component	component	claims	Total	component	component	restated 1	restated 1
Pensions & Savings	£m	£m	£m	£m	£m	£m	£m	£m
Insurance contract liabilities as at 1 January
as reported	22,892	115	(681)	22,326	21,359	131	43	21,533
Restatements 1	–	–	1,123	1,123	–	–	–	–
Insurance contract liabilities as at 1 January
(restated)	22,892	115	442	23,449	21,359	131	43	21,533
Insurance contract assets as at 1 January	–	–	–	–	(50)	2	–	(48)
Net insurance contract liabilities as at 1 January	22,892	115	442	23,449	21,309	133	43	21,485
Insurance revenue (note C1)	(274)	–	–	(274)	(272)	–	–	(272)
Insurance service expenses:
Incurred claims and other expenses	–	(14)	271	257	–	(14)	257	243
Amortisation of insurance acquisition
cash flows	–	–	–	–	–	–	–	–
Losses on onerous contracts and reversals
of those losses	–	(6)	–	(6)	–	(8)	–	(8)
Changes to liabilities for incurred claims
(past service)	–	–	(22)	(22)	–	–	14	14
Insurance service result	(274)	(20)	249	(45)	(272)	(22)	271	(23)
Insurance finance expense	1,708	–	14	1,722	1,576	5	9	1,590
Total changes in the consolidated
income statement	1,434	(20)	263	1,677	1,304	(17)	280	1,567
Investment components	(2,679)	–	2,679	–	(2,207)	–	2,207	–
Cash flows:
Premiums received	377	–	–	377	389	–	–	389
Claims and other expenses paid 1	–	–	(2,999)	(2,999)	–	–	(2,365)	(2,365)
Total cash flows	377	–	(2,999)	(2,622)	389	–	(2,365)	(1,976)
Other movements 2	5	(1)	(1)	3	2,097	(1)	277	2,373
Net insurance contract liabilities as at 31 December 1	22,029	94	384	22,507	22,892	115	442	23,449
Insurance contract liabilities as at 31 December	22,029	94	384	22,507	22,892	115	442	23,449
Insurance contract assets as at 31 December	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 31 December 1	22,029	94	384	22,507	22,892	115	442	23,449

1 See notes F1 and A3 for details of the prior year restatements.

(formerly known as SLF of Canda UK Limited).

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F3. Movements in liabilities for remaining coverage and liabilities for incurred claims for insurance contracts continued

Financials

253Phoenix Group Holdings plc Annual Report and Accounts 2024

			2024				2023
		Liabilities for remaining				Liabilities for remaining
		coverage				coverage
							Liabilities for
			Liabilities for		Excluding loss		incurred
	Excluding loss	Loss	incurred		component	Loss	claims	Total
	component	component	claims	Total	restated 1	component	restated 1	restated 1
With-Profits	£m	£m	£m	£m	£m	£m	£m	£m
Insurance contract liabilities as at 1 January as reported	27,591	312	2,678	30,581	27,812	397	796	29,005
Restatements 1	(71)	–	(2,117)	(2,188)	(71)	–	–	(71)
Insurance contract liabilities as at 1 January
(restated)	27,520	312	561	28,393	27,741	397	796	28,934
Insurance contract assets as at 1 January	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 1 January	27,520	312	561	28,393	27,741	397	796	28,934
Insurance revenue (note C1)	(378)	–	–	(378)	(267)	–	–	(267)
Insurance service expenses:
Incurred claims and other expenses	–	(43)	316	273	–	(61)	253	192
Losses on onerous contracts and reversals
of those losses	–	(33)	–	(33)	–	(64)	–	(64)
Changes to liabilities for incurred claims
(past service)	–	–	(38)	(38)	–	–	(33)	(33)
Insurance service result	(378)	(76)	278	(176)	(267)	(125)	220	(172)
Insurance finance expense	1,098	1	23	1,122	1,883	14	17	1,914
Total changes in the consolidated
income statement	720	(75)	301	946	1,616	(111)	237	1,742
Investment components	(2,369)	–	2,369	–	(2,360)	–	2,360	–
Cash flows:
Premiums received	101	–	–	101	121	–	–	121
Claims and other expenses paid 1	–	–	(2,567)	(2,567)	–	–	(2,811)	(2,811)
Total cash flows	101	–	(2,567)	(2,466)	121	–	(2,811)	(2,690)
Other movements 2	–	1	–	1	402	26	(21)	407
Net insurance contract liabilities as at 31 December 1	25,972	238	664	26,874	27,520	312	561	28,393
Insurance contract liabilities as at 31 December	25,972	238	664	26,874	27,520	312	561	28,393
Insurance contract assets as at 31 December	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 31 December 1	25,972	238	664	26,874	27,520	312	561	28,393

1 See notes F1 and A3 for details of the prior year restatements.

(formerly known as SLF of Canda UK Limited).

Financials

Notes to the consolidated financial statements continued

254 Phoenix Group Holdings plc Annual Report and Accounts 2024

			2024				2023
		Liabilities for remaining				Liabilities for remaining
		coverage				coverage
							Liabilities for
			Liabilities for				incurred
	Excluding loss	Loss	incurred		Excluding loss	Loss	claims	Total
	component	component	claims	Total	component	component	restated 1	restated 1
Europe & Other Insurance contract liabilities as at 1 January	£m	£m	£m	£m	£m	£m	£m	£m
as reported	23,055	142	93	23,290	22,271	72	446	22,789
Restatements 1	–	–	366	366	–	–	–	–
Insurance contract liabilities as at 1 January
(restated)	23,055	142	459	23,656	22,271	72	446	22,789
Insurance contract assets as at 1 January	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 1 January	23,055	142	459	23,656	22,271	72	446	22,789
Insurance revenue (note C1)	(569)	–	–	(569)	(571)	–	–	(571)
Insurance service expenses:
Incurred claims and other expenses	–	(34)	521	487	–	(11)	526	515
Amortisation of insurance acquisition cash flows	11	–	–	11	14	–	–	14
Losses on onerous contracts and reversals
of those losses	–	18	–	18	–	39	–	39
Changes to liabilities for incurred claims
(past service)	–	–	(8)	(8)	–	–	(104)	(104)
Impairment of assets for insurance acquisition
cash flows	–	–	–	–	(3)	–	–	(3)
Insurance service result	(558)	(16)	513	(61)	(560)	28	422	(110)
Insurance finance expense	1,326	18	4	1,348	1,488	14	15	1,517
Total changes in the consolidated
income statement	768	2	517	1,287	928	42	437	1,407
Investment components	(1,485)	–	1,485	–	(1,483)	–	1,483	–
Cash flows:
Premiums received	1,720	–	–	1,720	1,673	–	–	1,673
Claims and other expenses paid 1	–	–	(2,249)	(2,249)	–	–	(1,893)	(1,893)
Insurance acquisition cash flows	(106)	–	–	(106)	(116)	–	–	(116)
Total cash flows	1,614	–	(2,249)	(635)	1,557	–	(1,893)	(336)
Other movements 2	(646)	(4)	(8)	(658)	(218)	28	(14)	(204)
Net insurance contract liabilities as at 31 December 1	23,306	140	204	23,650	23,055	142	459	23,656
Insurance contract liabilities as at 31 December	23,306	140	204	23,650	23,055	142	459	23,656
Insurance contract assets as at 31 December	–	–	–	–	–	–	–	–
Net insurance contract liabilities as at 31 December 1	23,306	140	204	23,650	23,055	142	459	23,656

1 See notes F1 and A3 for details of the prior year restatements.

(formerly known as SLF of Canda UK Limited).

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F3. Movements in liabilities for remaining coverage and liabilities for incurred claims for insurance contracts continued

Financials

255Phoenix Group Holdings plc Annual Report and Accounts 2024

F4 Movements in present value of future cash flows, risk adjustment and CSM or reinsurance contracts held.

The reconciliations below provide a roll-forward of the net asset or liability for reinsurance contracts held by measurement component, showing

estimates of the present value of future cash flows, the risk adjustment for non-financial risk and the CSM.

			2024				2023
	Estimates of				Estimates of
	the present				the present
	value of		Contractual		value of
	future cash	Risk	service		future	Risk	Contractual
	flows	adjustment	margin	Total	cash flows	adjustment	service margin	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Reinsurance contract liabilities as at 1 January	(244)	37	60	(147)	(8)	–	1	(7)
Reinsurance contract assets as at 1 January	2,410	596	1,870	4,876	2,285	478	1,308	4,071
Net reinsurance contract assets as at 1 January	2,166	633	1,930	4,729	2,277	478	1,309	4,064
								–
Changes in profit or loss:								–
CSM recognised for services received	–	–	(163)	(163)	–	–	(168)	(168)
Risk adjustment for the risk expired	–	(58)	–	(58)	–	(30)	–	(30)
Experience adjustments	(21)	–	–	(21)	27	–	–	27
Total change relating to current service	(21)	(58)	(163)	(242)	27	(30)	(168)	(171)
Contracts initially recognised in the period	(190)	116	74	–	(351)	229	122	–
Changes in estimates that adjust the CSM	(93)	17	76	–	(610)	(49)	659	–
Changes in estimates that do not adjust
the CSM	(12)	9	–	(3)	(17)	7	–	(10)
Reversal of impairment of assets for reinsurance
acquisition cash flows	–	–	–	–	2	–	–	2
Total change relating to future service	(295)	142	150	(3)	(976)	187	781	(8)
Changes in amounts recoverable arising
from changes in liabilities for incurred claims
(past service)	–	–	–	–	(1)	–	–	(1)
Net (expenses)/income from reinsurance
contracts	(316)	84	(13)	(245)	(950)	157	613	(180)
Reinsurance finance (expense)/income	(130)	(28)	49	(109)	156	(3)	26	179
Total changes in consolidated income
statement	(446)	56	36	(354)	(794)	154	639	(1)
Cash flows:
Premiums paid	2,658	–	–	2,658	3,085	–	–	3,085
Claims recovered and other expenses paid	(2,000)	–	–	(2,000)	(2,280)	–	–	(2,280)
Total cash flows	658	–	–	658	805	–	–	805
Other movements 1	(9)	(3)	8	(4)	(122)	1	(18)	(139)
Net reinsurance contract assets as at 31 December	2,369	686	1,974	5,029	2,166	633	1,930	4,729
Reinsurance contract liabilities as at								–
31 December	(252)	34	60	(158)	(244)	37	60	(147)
Reinsurance contract assets as at 31 December	2,621	652	1,914	5,187	2,410	596	1,870	4,876
Net reinsurance contract assets as at 31 December	2,369	686	1,974	5,029	2,166	633	1,930	4,729
Analysed by segment as follows:								–
Retirement Solutions	1,307	575	1,694	3,576	935	537	1,604	3,076
Pensions & Savings	4	1	6	11	20	2	–	22
With-profits	736	34	141	911	820	46	147	1,013
Europe & Other Net reinsurance contract assets as at	322	76	133	531	391	48	179	618
31 December	2,369	686	1,974	5,029	2,166	633	1,930	4,729

1 In 2023 £(153) million relates to the fair value of insurance contracts acquired as part of the acquisition of Phoenix Life CA Holdings Limited (formerly known as SLF of Canda UK Limited) (see note H2).

Financials

Notes to the consolidated financial statements continued

256 Phoenix Group Holdings plc Annual Report and Accounts 2024

F5. Movements in liabilities for remaining coverage and liabilities for incurred claims for reinsurance contracts held

The following reconciliations show how the net carrying amounts of reinsurance contracts held changed over the year as a result of cash flows,

amounts recognised in the consolidated income statement and other movements, analysed by remaining coverage and incurred claims.

		2024				2023
		Assets for remaining coverage				Assets for remaining coverage
	Excluding loss		Assets for		Excluding loss		Assets for
	recovery	Loss recovery	incurred		recovery	Loss recovery	incurred
	component	component	claims	Total	component	component	claims	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Reinsurance contract liabilities as at 1 January	(152)	–	5	(147)	(7)	–	–	(7)
Reinsurance contract assets as at 1 January	7,147	37	(2,308)	4,876	6,705	47	(2,681)	4,071
Net reinsurance contract assets as at 1 January	6,995	37	(2,303)	4,729	6,698	47	(2,681)	4,064
Reinsurance expenses	(2,504)	–	–	(2,504)	(2,349)	–	–	(2,349)
Claims recoverable and other expenses incurred	–	–	2,267	2,267	–	–	2,181	2,181
Changes in the CSM due to recognition and reversal of a loss-recovery component from onerous underlying contracts	–	(3)	–	(3)	–	(10)	–	(10)
Changes to assets for incurred claims
(past service)	–	–	–	–	–	–	(1)	(1)
Cost of retroactive cover on reinsurance
contracts held	–	(5)	–	(5)	–	(3)	–	(3)
Reversal of impairment of assets for insurance
acquisition cash flows	–	–	–	–	2	–	–	2
Net (expense)/income from reinsurance
contracts held	(2,504)	(8)	2,267	(245)	(2,347)	(13)	2,180	(180)
Reinsurance finance (expense)/income	(94)	1	(16)	(109)	179	–	–	179
Total changes in the consolidated
income statement	(2,598)	(7)	2,251	(354)	(2,168)	(13)	2,180	(1)
Investment components	(126)	–	126	–	(35)	–	35	–
Cash flows:
Premiums paid	2,658	–	–	2,658	3,085	–	–	3,085
Claims recovered and other expenses paid	–	–	(2,000)	(2,000)	–	–	(2,280)	(2,280)
Total cash flows	2,658	–	(2,000)	658	3,085	–	(2,280)	805
Other movements 1	(16)	10	2	(4)	(585)	3	443	(139)
Net reinsurance contract assets as at 31 December	6,913	40	(1,924)	5,029	6,995	37	(2,303)	4,729
Reinsurance contract liabilities as at								–
31 December	(163)	–	5	(158)	(152)	–	5	(147)
Reinsurance contract assets as at 31 December	7,076	40	(1,929)	5,187	7,147	37	(2,308)	4,876
Net reinsurance contract assets as at 31 December	6,913	40	(1,924)	5,029	6,995	37	(2,303)	4,729
Analysed by segment as follows:								–
Retirement Solutions	5,543	25	(1,992)	3,576	5,421	36	(2,381)	3,076
Pensions & Savings	7	–	4	11	6	–	16	22
With-Profits	879	–	32	911	984	–	29	1,013
Europe & Other Net reinsurance contract assets as at	484	15	32	531	584	1	33	618
31 December	6,913	40	(1,924)	5,029	6,995	37	(2,303)	4,729

F. Insurance contracts, investment contracts with DPF and reinsurance continued

Financials

257Phoenix Group Holdings plc Annual Report and Accounts 2024

F6. The impact on the current period of transition approaches adopted in establishing CSMs

The impact on the current period of the transition approaches adopted in establishing CSMs for insurance contracts issued and reinsurance

contracts held is shown in the tables below. For further details of the transition approaches applied see note A2.1.1.

F6.1. Insurance contracts

		2024			2023 (restated 1 )
		Fully retrospective			Fully retrospective
		approach at			approach at
	Fair value approach	transition and new		Fair value approach	transition and new
	at transition	contracts	Total	at transition	contracts	Total
Retirement Solutions	£m	£m	£m	£m	£m	£m
CSM as at 1 January as reported	1,162	2,579	3,741	784	2,037	2,821
Restatements 1	–	8	8	–	–	–
CSM as at 1 January (restated)	1,162	2,587	3,749	784	2,037	2,821
Changes that relate to current service:
CSM recognised for services provided	(107)	(171)	(278)	(103)	(157)	(260)
Changes that relate to future service:
Contracts initially recognised in the period	–	360	360	–	435	435
Changes in estimates that adjust the CSM 1	115	(49)	66	438	228	666
Insurance service result	8	140	148	335	506	841
Insurance finance expenses	26	77	103	18	44	62
Total changes in consolidated
income statement	34	217	251	353	550	903
Other movements	3	(3)	–	25	–	25
CSM as at 31 Decembe 1	1,199	2,801	4,000	1,162	2,587	3,749

1 See note A3 for details of the prior year restatements.

		2024			2023
		Fully retrospective			Fully retrospective
		approach at			approach at
	Fair value approach	transition and new		Fair value approach	transition and new
	at transition	contracts	Total	at transition	contracts	Total
Pensions & Savings	£m	£m	£m	£m	£m	£m
CSM as at 1 January	129	72	201	94	–	94
Changes that relate to current service:
CSM recognised for services provided	(25)	(11)	(36)	(17)	(8)	(25)
Changes that relate to future service:
Contracts initially recognised in the period	–	–	–	–	34	34
Changes in estimates that adjust the CSM	80	30	110	54	50	104
Insurance service result	55	19	74	37	76	113
Insurance finance income	–	(3)	(3)	–	(4)	(4)
Total changes in consolidated
income statement	55	16	71	37	72	109
Other movements	(3)	–	(3)	(2)	–	(2)
CSM as at 31 December	181	88	269	129	72	201

Financials

Notes to the consolidated financial statements continued

258 Phoenix Group Holdings plc Annual Report and Accounts 2024

		2024			2023 (restated 1 )
		Fully			Fully
		retrospective			retrospective
	Fair value	approach at		Fair value	approach at
	approach at	transition and		approach at	transition and
	transition	new contracts	Total	transition	new contracts	Total
With-Profits	£m	£m	£m	£m	£m	£m
CSM as at 1 January as reported	525	72	597	514	51	565
Restatements 1	(8)	–	(8)	(7)		(7)
CSM as at 1 January (restated)	517	72	589	507	51	558
Changes that relate to current service:
CSM recognised for services provided	(64)	(10)	(74)	(69)	(8)	(77)
Changes that relate to future service:
Changes in estimates that adjust the CSM	84	26	110	90	29	119
Insurance service result	20	16	36	21	21	42
Insurance finance expenses	8	1	9	9	1	10
Total changes in consolidated income statement	28	17	45	30	22	52
Other movements 1	2	(3)	(1)	(20)	(1)	(21)
CSM as at 31 Decembe 1	547	86	633	517	72	589

1 See note A3 for details of the prior year restatements.

2024 2023

		Fully			Fully
		retrospective			retrospective
	Fair value	approach at		Fair value	approach at
	approach at	transition and		approach at	transition and
	transition	new contracts	Total	transition	new contracts	Total
Europe & Other	£m	£m	£m	£m	£m	£m
CSM as at 1 January	169	75	244	306	113	419
Changes that relate to current service:
CSM recognised for services provided	(26)	(30)	(56)	(27)	(20)	(47)
Changes that relate to future service:
Contracts initially recognised in the period	–	45	45	–	53	53
Changes in estimates that adjust the CSM	68	12	80	(85)	(58)	(143)
Insurance service result	42	27	69	(112)	(25)	(137)
Insurance finance (income)/expenses	17	3	20	(22)	2	(20)
Total changes in consolidated income statement	59	30	89	(134)	(23)	(157)
Other movements	(3)	(1)	(4)	(3)	(15)	(18)
CSM as at 31 December	225	104	329	169	75	244

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F6. The impact on the current period of transition approaches adopted in establishing CSMs continued

F6.1. Insurance contracts continued

Financials

259Phoenix Group Holdings plc Annual Report and Accounts 2024

F6.2. Reinsurance contracts held

		2024			2023
		Fully			Fully
		retrospective			retrospective
	Fair value	approach at		Fair value	approach at
	approach at	transition and		approach at	transition and
	transition	new contracts	Total	transition	new contracts	Total
	£m	£m	£m	£m	£m	£m
CSM as at 1 January	823	1,107	1,930	697	612	1,309
Changes that relate to current service:
CSM recognised for services received	(87)	(76)	(163)	(99)	(69)	(168)
Changes that relate to future service:
Contracts initially recognised in the period	–	74	74	–	122	122
Changes in estimates that adjust the CSM	5	71	76	254	405	659
Net expenses from reinsurance contracts	(82)	69	(13)	155	458	613
Reinsurance finance income	15	34	49	10	16	26
Total changes in consolidated income statement	(67)	103	36	165	474	639
Other movements	7	1	8	(39)	21	(18)
CSM as at 31 December	763	1,211	1,974	823	1,107	1,930
Analysed by segment as follows:
Retirement Solutions	489	1,205	1,694	497	1,107	1,604
Pensions & Savings	–	6	6	–	–	–
With-Profits	141	–	141	147	–	147
Europe & Other	133	–	133	179	–	179
CSM as at 31 December	763	1,211	1,974	823	1,107	1,930

Financials

Notes to the consolidated financial statements continued

260 Phoenix Group Holdings plc Annual Report and Accounts 2024

F7. Recognition of CSM in profit or loss

The following tables set out when the Group expects to recognise the carrying value of the CSM in the consolidated income statement for

insurance contracts issued and reinsurance contracts held. For General Model business this is shown after allowing for future accretion of interest

on the CSM at the locked in rate. The amounts presented represent the net impact in each period of expected release of the CSM recognised in

revenue less the accretion of interest on the CSM on General Model business recognised in insurance finance expenses.

							More than 10
	Less than 1 year	1-2 years	2-3 years	3-4 years	4-5 years	5-10 years	years	Total
2024	£m	£m	£m	£m	£m	£m	£m	£m
Insurance contracts issued
Retirement Solutions	263	250	239	228	218	933	1,869	4,000
Pensions & Savings	30	26	24	21	19	68	81	269
With-Profits	65	56	49	43	37	139	244	633
Europe & Other	35	30	28	24	23	75	114	329
Total CSM	393	362	340	316	297	1,215	2,308	5,231
Reinsurance contracts held
Retirement Solutions	(120)	(113)	(107)	(101)	(96)	(401)	(756)	(1,694)
Pensions & Savings	(2)	(2)	–	–	–	(1)	(1)	(6)
With-Profits	(13)	(13)	(11)	(10)	(8)	(32)	(54)	(141)
Europe & Other	(10)	(10)	(10)	(10)	(10)	(43)	(40)	(133)
Total CSM	(145)	(138)	(128)	(121)	(114)	(477)	(851)	(1,974)

							More than 10
	Less than 1 year	1-2 years	2-3 years	3-4 years	4-5 years	5-10 years	years	Total
2023 (restated 1 )	£m	£m	£m	£m	£m	£m	£m	£m
Insurance contracts issued
Retirement Solutions 1	244	237	225	214	205	879	1,745	3,749
Pensions & Savings	26	21	18	16	14	49	57	201
With-Profits 1	65	55	49	43	37	125	215	589
Europe & Other	33	25	23	20	18	64	61	244
Total CSM	368	338	315	293	274	1,117	2,078	4,783
Reinsurance contracts held
Retirement Solutions	(116)	(111)	(105)	(99)	(93)	(383)	(697)	(1,604)
With-Profits	(14)	(13)	(12)	(11)	(9)	(32)	(56)	(147)
Europe & Other	(16)	(15)	(14)	(13)	(13)	(51)	(57)	(179)
Total CSM	(146)	(139)	(131)	(123)	(115)	(466)	(810)	(1,930)

1 See note A3 for details of the prior year restatements.

F8. Effect of contracts initially recognised in the year

The effect on the measurement components arising from the initial recognition of insurance and reinsurance contracts in the year is disclosed in the

tables below. Contracts issued mainly comprise of bulk purchase annuity transactions completed in the year and protection business. Contracts

acquired in the prior year relate to the acquisition of Phoenix Life CA Holdings Limited (formerly known as SLF of Canada UK Limited) (see note H2).

F8.1. Insurance contracts

				2024					2023
		Contracts issued		Contracts acquired			Contracts issued		Contracts acquired
	Profitable	Onerous	Profitable	Onerous	Total	Profitable	Onerous	Profitable	Onerous	Total
Retirement Solutions	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Estimate of present value of future cash outflows:
Insurance acquisition cash flows	73	–	–	–	73	39	–	–	–	39
Claims and other directly
attributable expenses	6,320	–	–	–	6,320	5,710	–	1,443	–	7,153
Estimates of present value
of future cash outflows	6,393	–	–	–	6,393	5,749	–	1,443	–	7,192
Estimates of present value
of future cash inflows	(6,881)	–	–	–	(6,881)	(6,280)	–	(1,514)	–	(7,794)
Risk adjustment incurred	128	–	–	–	128	132	–	35	–	167
CSM	360	–	–	–	360	399	–	36	–	435
Losses on onerous contracts
at initial recognition	–	–	–	–	–	–	–	–	–	–

F. Insurance contracts, investment contracts with DPF and reinsurance continued

Financials

261Phoenix Group Holdings plc Annual Report and Accounts 2024

				2024					2023
		Contracts issued		Contracts acquired			Contracts issued		Contracts acquired
	Profitable	Onerous	Profitable	Onerous	Total	Profitable	Onerous	Profitable	Onerous	Total
Pension & Savings	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Estimate of present value of future cash outflows:
Insurance acquisition cash flows	–	–	–	–	–	–	–	–	–	–
Claims and other directly
attributable expenses	–	–	–	–	–	–	–	2,344	–	2,344
Estimates of present value
of future cash outflows	–	–	–	–	–	–	–	2,344	–	2,344
Estimates of present value
of future cash inflows	–	–	–	–	–	–	–	(2,411)	–	(2,411)
Risk adjustment incurred	–	–	–	–	–	–	–	33	–	33
CSM	–	–	–	–	–	–	–	34	–	34
Losses on onerous contracts
at initial recognition	–	–	–	–	–	–	–	–	–	–

				2024					2023
		Contracts issued		Contracts acquired			Contracts issued		Contracts acquired
	Profitable	Onerous	Profitable	Onerous	Total	Profitable	Onerous	Profitable	Onerous	Total
With-Profits	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Estimate of present value of future cash outflows:
Insurance acquisition cash flows	–	–	–	–	–	–	–	–	–	–
Claims and other directly
attributable expenses	–	–	–	–	–	–	–	349	–	349
Estimates of present value
of future cash outflows	–	–	–	–	–	–	–	349	–	349
Estimates of present value
of future cash inflows	–	–	–	–	–	–	–	(349)	–	(349)
Risk adjustment incurred	–	–	–	–	–	–	–	–	–	–
CSM	–	–	–	–	–	–	–	–	–	–
Losses on onerous contracts
at initial recognition	–	–	–	–	–	–	–	–	–	–

				2024					2023
		Contracts issued		Contracts acquired			Contracts issued		Contracts acquired
	Profitable	Onerou	Profitable	Onerous	Total	Profitable	Onerous	Profitable	Onerous	Total
Europe & Other Estimate of present value of future cash outflows:	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Insurance acquisition cash flows	79	–	–	–	79	80	–	–	–	80
Claims and other directly
attributable expenses	156	22	–	–	178	172	270	109	–	551
Estimates of present value
of future cash outflows	235	22	–	–	257	252	270	109	–	631
Estimates of present value
of future cash inflows	(285)	(23)	–	–	(308)	(308)	(268)	(112)	–	(688)
Risk adjustment incurred	5	1	–	–	6	5	2	1	–	8
CSM	45	–	–	–	45	51	–	2	–	53
Losses on onerous contracts
at initial recognition	–	–	–	–	–	–	4	–	–	4

Financials

Notes to the consolidated financial statements continued

262 Phoenix Group Holdings plc Annual Report and Accounts 2024

F8.2. Reinsurance contracts

			2024					2023
	Contracts originated		Contracts acquired			Contracts originated		Contracts acquired
	Without	With	Without	With		Without	With	Without	With
	a loss	a loss	a loss	a loss		a loss	a loss	a loss	a loss
	recovery	recovery	recovery	recovery		recovery	recovery	recovery	recovery
	component	component	component	component	Total	component	component	component	component	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Estimate of present value of future
cash inflows	5,597	–	–	–	5,597	8,287	–	153	–	8,440
Estimates of present value of future
cash outflows	(5,787)	–	–	–	(5,787)	(8,584)	–	(207)	–	(8,791)
Risk adjustment incurred	116	–	–	–	116	195	–	34	–	229
CSM	74	–	–	–	74	102	–	20	–	122
Income recognised on initial recognition	–	–	–	–	–	–	–	–	–	–

All contracts originated, and the majority of contracts acquired, relate to the Retirement Solutions segment.

F9. Underlying items

The following table sets out the composition and the fair value of underlying items of the Group’s participating contracts which are measured using

the variable fee approach.

		2024				2023
					Pensions &		Europe &
	Pensions &		Europe &		Savings	With-profits	Other	Total
	Savings	With-profits	Other	Total	restated 1	restated 1	restated 1	restated 1
	£m	£m	£m	£m	£m	£m	£m	£m
Collective investment schemes	17,753	21,736	14,598	54,087	17,477	17,603	15,532	50,612
Debt securities	2,554	6,569	4,881	14,004	2,861	7,923	3,894	14,678
Equities	1,753	3,987	1,135	6,875	2,392	6,106	967	9,465
Investment property	266	788	14	1,068	219	790	18	1,027
Derivative assets	1	159	893	1,053	98	256	1,007	1,361
Cash and cash equivalents	85	79	363	527	46	77	329	452
Loans and deposits	–	2	142	144	–	3	196	199
Other assets	75	806	621	1,502	83	652	167	902
Derivative liabilities	(3)	(494)	(152)	(649)	(1)	(468)	(434)	(903)
Obligation for repayment of collateral received	–	(90)	(181)	(271)	(2)	(109)	(228)	(339)
Insurance contract liabilities	–	(2,132)	(4)	(2,136)	–	(2,059)	(4)	(2,063)
Investment contract liabilities	–	(8,550)	–	(8,550)	–	( 7,128)	–	(7,128)
Other liabilities	(37)	(1,172)	(855)	(2,064)	(28)	(708)	(522)	(1,258)
	22,447	21,688	21,455	65,590	23,145	22,938	20,922	67,0 05

1 During the year improvements were made to the basis for producing fund level analysis which has resulted in an update to the fair value of underlying items disclosure.

F10. Collateral arrangements

It is the Group’s practice to obtain collateral to mitigate the counterparty risk related to reinsurance transactions usually in the form of cash

or marketable financial instruments.

Where the Group receives collateral in the form of marketable financial instruments and cash held by external custodians, it is not recognised in the

statement of consolidated financial position. The cash collateral received is legally segregated from the Group and consequently the Group does

not have the contractual right to receive the cash flows, and the balances are not available for investment purposes.

The fair value of financial assets accepted as collateral for reinsurance transactions but not recognised in the statement of consolidated financial

position amounts to £5,558 million (2023: £4,880 million).

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F8. Effect of contracts initially recognised in the year continued

Financials

263Phoenix Group Holdings plc Annual Report and Accounts 2024

F11. Risk management – insurance risk

This note forms one part of the risk management disclosures in the consolidated financial statements. An overview of the Group’s approach to risk

management is outlined in note I3 and the Group’s management of financial and other risks is detailed in note E6.

Insurance risk refers to the risk of reductions in earnings and/or value, through financial or reputational loss, due to experience variations in the

timing, frequency and severity of insured/underwritten events and to fluctuations in the timing and amount of claim settlements. The Life businesses

are exposed to the following elements of insurance risk:

Mortality	The risk of reductions in earnings, capital and/or value through a financial or reputational loss arising as a result of higher
	than expected number of death claims on assurance products, lower than expected improvements in mortality or
	adverse movement in mortality rates on Equity Release Mortgages.
Longevity	The risk of reductions in earnings, capital and/or value through a financial or reputational loss arising as a result of lower
	than expected number of deaths experienced on annuity products or greater than expected improvements in
	annuitant mortality.
Morbidity/Disability	The risk of reductions in earnings, capital and/or value through a financial or reputational loss arising as a result of higher
	than expected number of inceptions on critical illness or income protection policies and lower than expected recovery
	rates on income protection policies or adverse movements in morbidity rates on Equity Release Mortgages.
Expenses	The risk of reductions in earnings, capital and/or value through a financial or reputational loss arising as a result of
	unexpected timing or value of expenses incurred.
Persistency	The risk of reductions in earnings, capital and/or value through a financial loss arising as a result of adverse movements in
	surrender rates, guaranteed annuity option (‘GAO’) surrender rates, GAO take-up rates, policyholder retirement dates,
	the occurrence of a mass lapse event or adverse change in mortgage prepayment rates leading to losses.
New business pricing	The risk of reductions in earnings, capital and/or value through a financial loss arising as a result of inappropriate pricing
	of new business that is not in line with the underlying risk factors for that business.
Concentration of risk	The concentration of risk arising from insurance contracts might exist where the Group has significant exposure to specific
	demographic factors such as age, smoker status, geographical location. The Group’s exposure to insurance risk is spread
	across a diversified portfolio of products and approximately 12 million policyholders. Concentration risk might also arise
	from insurance contracts that expose the Group to financial risk as a result of options and guarantees contained within the
	product. Details of the Group’s approach to managing these features are contained in F11.3 Managing Product Risk.
	The Group sets individual risk limits as a key control within its Risk Appetite Framework. Risk limits are reviewed as part of
	approving the Group’s Business Plan and permit concentrations of certain risks only where the strategy can be
	demonstrated as affordable within risk appetite.

Objectives and policies for mitigating insurance risk

Insurance risks are managed by monitoring risk exposure against pre-defined appetite limits. If a risk is moving out of appetite, the Group can

choose to mitigate it via reinsurance in the case of longevity, mortality and morbidity risks, or by taking other risk reducing actions.

This is supported by additional methods to assess and monitor insurance risk exposures for both individual types of risks insured and overall risks.

These methods include internal risk measurement models, experience analyses, external data comparisons, sensitivity analyses, scenario analyses

and stress testing. Assumptions that are deemed to be financially significant are reviewed at least annually for pricing and reporting purposes.

The profitability of the run-off of the Company’s legacy business depends, to a significant extent, on the values of claims paid in the future relative

to the assets accumulated to the date of claim. Typically, over the lifetime of a contract, premiums and investment returns exceed claim costs in the

early years and it is necessary to set aside these amounts to meet future obligations. The amount of such future obligations is assessed on actuarial

principles by reference to assumptions about the development of financial and insurance risks.

It is therefore necessary for the Directors of each life company to make decisions, based on actuarial advice, which ensure an appropriate

accumulation of assets relative to liabilities. These decisions include investment policy, bonus policy and, where discretion exists, the level of

payments on early termination.

In the Retirement Solutions operating segment, longevity risk exposures continue to increase as a result of the Bulk Purchase Annuity deals it has

successfully acquired, however the vast majority of these exposures are reinsured to third parties.

F11.1 Sensitivities

Insurance liabilities are sensitive to changes in risk variables, such as prevailing market interest rates, currency rates and equity prices, since these

variations alter the value of the financial assets held to meet obligations arising from insurance contracts and changes in investment conditions also

have an impact on the value of insurance liabilities themselves. Additionally, insurance liabilities are sensitive to the assumptions which have been

applied in their calculation, such as mortality and lapse rates. Sometimes allowance must also be made for the effect on future assumptions of

management or policyholder actions in certain economic scenarios. This could lead to changes in assumed asset mix or future bonus rates. The

most significant non-economic sensitivities arise from mortality, longevity and lapse risk. The table below analyses how the CSM, profit after tax and

equity would have increased or (decreased) if changes in underwriting risk variables that were reasonably possible at the reporting date had

occurred. This analysis presents the sensitivities both before and after risk mitigation by reinsurance and assumes that all other variables

remain constant .

Financials

Notes to the consolidated financial statements continued

264 Phoenix Group Holdings plc Annual Report and Accounts 2024

		Impact on profit after tax		Impact on equity		Impact on CSM
		Gross of	Net of	Gross of	Net of	Gross of	Net of
	Change in risk	reinsurance	reinsurance	reinsurance	reinsurance	reinsurance	reinsurance
2024	variable	£m	£m	£m	£m	£m	£m
	+5%	(53)	(25)	(53)	(25)	(55)	(54)
Assurance mortality	-5%	28	6	28	6	92	82
	+5%	330	146	308	144	(1,236)	(452)
Annuitant longevity	-5%	(323)	(145)	(303)	(143)	1,183	433
	+10%	(39)	(47)	(39)	(47)	(8)	17
Lapse rates	-10%	33	48	33	48	26	(18)
	+10%	(63)	(63)	(63)	(63)	(251)	(251)
Expenses	-10%	43	43	43	43	277	277

		Impact on profit after tax		Impact on equity		Impact on CSM
		Gross of	Net of	Gross of	Net of	Gross of	Net of
	Change in risk	reinsurance	reinsurance	reinsurance	reinsurance	reinsurance	reinsurance
2023 restated	variable	£m	£m	£m	£m	£m	£m
	+5%	(35)	(36)	(35)	(36)	(84)	(42)
Assurance mortality	-5%	12	13	12	13	119	74
	+5%	285	138	242	124	(1,186)	(455)
Annuitant longevity	-5%	(268)	(129)	(228)	(116)	1,121	424
	+10%	(45)	(46)	(45)	(46)	3	22
Lapse rates	-10%	44	50	44	50	15	(19)
	+10%	(68)	(67)	(68)	(67)	(262)	(262)
Expenses	-10%	32	32	32	32	309	309

The prior year comparatives for the insurance risk sensitivities have been restated. These sensitivities were materially impacted by including the

Group’s pension schemes within the scope of the sensitivities, providing a more holistic view of the impact of these stresses on the Group, and

improvements made to the modelling of sensitivities following the introduction of IFRS 17.

F11.2 Assumptions

The assumptions used to determine the liabilities are updated at each reporting date to reflect recent experience, unless IFRS17 requires otherwise.

Material judgement is required in calculating these liabilities and, in particular, in the choice of assumptions about which there is uncertainty over

future experience. The principal assumptions are as follows:

F11.2.1 Discount rates

All cash flows are discounted using risk-free yield curves adjusted to reflect the timing and liquidity characteristics of those cash flows. For the

risk-free yield curve the Group uses those published by the PRA and EIOPA for regulatory reporting. Where necessary, yield curves are

interpolated between the last available market data point and the ultimate forward rate.

The Group uses a top-down approach primarily for annuities and a bottom-up discount rate for all other business. Under the top-down approach,

the discount rate is determined from the yield implicit in the fair value of an appropriate reference portfolio of assets that reflects the characteristics

of the liabilities.

For annuity business, the Group determines a reference portfolio which is constructed in line with the Group’s investment strategy. The reference

portfolio construction is based on the actual assets held by the Group backing annuity business at the valuation date. Adjustment is made, where

appropriate, to allow for the asset portfolio included in the pricing of policies where that has not been fully deployed at the reporting date and

there are no identified barriers to achieving the pricing asset mix, to reflect any strategic management actions actively underway to re-shape the

annuity asset portfolio. In addition, excess assets are removed from the portfolio where the level of assets exceeds those necessary to meet the

future cash flows. The yield derived from the reference portfolio is determined based on the fair value of assets in that class held by the Group at

the valuation date.

Adjustments are also made for differences between the reference portfolio and the insurance contract liability cash flows, including an allowance

for credit defaults. The credit default deduction comprises an allowance for both expected and unexpected defaults and takes into consideration

long-term historical data on actual defaults and an allowance for variability around these defaults. The credit default deduction is determined based

on the assets held at the valuation date.

The Group has developed a credit model for use in the Phoenix Solvency II Internal Model (subject to PRA approval) which also provides a best

estimate view of credit defaults. This model applies a stress to long-term historical actual default data to determine the variability of defaults and has

been used as an input in determining the assumption for unexpected credit defaults.

The top-down approach was refined as at 31 December 2023. This refinement related to the determination of the yield used in relation to the Equity

Release Mortgages asset class. The previous approach calculated the yield by reference to the internal securitisation structure established for this asset

class for Solvency II purposes. This was amended as at the reporting date to determine the yield based on the underlying Equity Release Mortgage

loans themselves. This refinement had the impact of increasing the liquidity premium applied at 31 December 2023 for GBP Annuities by circa 19bps.

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F11. Risk management – insurance risk continued

F11.1 Sensitivities continued

Financials

265Phoenix Group Holdings plc Annual Report and Accounts 2024

Under the bottom-up approach, the discount rate is determined as the risk-free yield curve, adjusted for differences in liquidity characteristics by

adding an illiquidity premium. For with-profits business a single illiquidity premium is determined for each fund based on the cash flow

characteristics of the contracts within the fund and applied to all contracts within the fund.

The tables below set out the yield curves used to discount the cash flows of insurance contracts for major currencies.

			Risk-free rate (bps)
2024	1 year	5 years	10 years	20 years	30 years
GBP	446	404	407	430	423
Euro	224	214	227	226	200

			Risk-free rate (bps)
2023	1 year	5 years	10 years	20 years	30 years
GBP	474	336	328	343	336
Euro	336	232	239	240	218

		Liquidity premium over risk-free rate
		2023
	2024	(restated 1 )
	bps	bps
Annuities GBP	169	170
Annuities Euro	67	49
With-profits GBP – liquid liabilities	20	20
With-profits Euro – liquid liabilities	20	20
With-profits GBP – illiquid liabilities	104-169	105-170

1 The Liquidity premium for annuities and with-profits were updated following a revision to certain inputs into the IFRS 17 valuation process. See note A3 for details of the prior year restatements.

F11.2.2 Risk adjustment

The Group has used the confidence level technique to derive the risk adjustment for non-financial risk. The risk adjustment percentile is determined

based on the Group’s view of the compensation required in respect of non-financial risk. The diversification benefit included in the risk adjustment

reflects diversification between contracts within the perimeter of the Group’s Internal Model. There is no diversification allowed for between

contracts measured under standard formula and the internal model. The confidence level percentile is calculated on a one-year basis. The risk

adjustment calibration is set at least annually, off-cycle, based on the Group’s current view of risk. The risk adjustment calculation is reassessed at

each reporting date, i.e. the risk adjustment is not locked-in at initial recognition.

For with-profits business, the shareholder’s portion of non-financial risks (including an allowance for burn-through costs to the shareholder) is

allowed for in the derivation of the risk adjustment. For non-profit business held within a with-profits fund, the risk adjustment takes into account the

compensation required by both the shareholder and the participating policyholders.

Confidence level techniques are used to derive the overall risk adjustment for non-financial risk and this is allocated down to each group of

contracts in accordance with their risk profiles. The confidence level percentile input used to determine the risk adjustment is as follows:

	2024	2023
Insurance contracts (gross of reinsurance)	80th	80th

The one year confidence level used to determine the risk adjustment has been converted to an approximate lifetime confidence level using an

approach which involves dividing by the square root of the lifetime duration of the insurance business.

Lifetime confidence level	2024	2023
Insurance contracts (gross of reinsurance)	61st	61st

F11.2.3 Other assumptions

Other assumptions such as policyholder behaviours (lapses and surrender rates), expense inflation and demographic assumptions (i.e. longevity,

mortality) are a key component of determining the cash flows related to the insurance contract liabilities. The underwriting risk variables and

assumptions are set based on past experience and/or relevant industry data, market practice, regulations and expectations about future trends.

Economic assumptions used in the measurement of fulfilment cash flows are market consistent.

Expenses and expense inflation

Insurance contract liabilities include an allowance for the best estimate of future expenses associated with the administration of in-force policies.

This requires the allocation of the Group’s future expenses between those that relate to the administration of in-force policies, those attributable to

the acquisition of new business and other costs, such as corporate costs. There is a level of judgement applied in the analysis that supports this

allocation. Additionally, judgement is applied in the determination of the projected costs of the Group, in particular where those projections include

the impact of transition and integration activity.

Expenses are assumed to increase at either the rate of increase in the Retail Price Index (‘RPI’), or a rate derived from the UK inflation swaps curve,

plus fixed margins in accordance with the various management service agreements (‘MSAs’) the Group has in place with outsource partners. For

with-profits business the rate of RPI inflation is determined within each stochastic scenario. For other business it is based on the Bank of England

inflation spot curve. For MSAs with contractual increases set by reference to national average earnings inflation, this is approximated as RPI inflation

or RPI inflation plus 1%. In instances in which inflation risk is not mitigated, appropriate margins are applied to reflect central expectations of

earnings inflation in excess of RPI.

Financials

Notes to the consolidated financial statements continued

266 Phoenix Group Holdings plc Annual Report and Accounts 2024

Mortality and longevity rates

Mortality rates are based on company experience and published tables, adjusted appropriately to take account of changes in the underlying

population mortality since the table was published, company experience and forecast changes in future mortality. Where appropriate, a margin

is added to assurance mortality rates to allow for adverse future deviations. Annuitant mortality rates are adjusted to make allowance for future

improvements in pensioner longevity.

Lapse and surrender rates (persistency)

The assumed rates for surrender and voluntary premium discontinuance depend on the length of time a policy has been in force and the relevant

company experience. Surrender or voluntary premium discontinuances are only assumed for realistic basis funds. Withdrawal rates used in the

valuation of with-profits policies are based on observed experience and adjusted when it is considered that future policyholder behaviour will be

influenced by different considerations than in the past. In particular, it is assumed that withdrawal rates for unitised with-profits contracts will be

higher on policy anniversaries on which Market Value Adjustments do not apply.

Discretionary participating bonus rate

The regular bonus rates assumed in each scenario are determined in accordance with each company’s Principles and Practices of Financial

Management (‘PPFM’). Final bonuses are assumed at a level such that maturity payments will equal asset shares subject to smoothing rules set out

in the PPFM and the value of guaranteed benefits.

Policyholder options and guarantees

Some of the Group’s products give potentially valuable guarantees, or give options to change policy benefits which can be exercised at the

policyholders’ discretion. These products are described below.

Most with-profits contracts give a guaranteed minimum payment on a specified date or range of dates or on death if before that date or dates. For

pensions contracts, the specified date is the policyholder’s chosen retirement date or a range of dates around that date. For endowment contracts,

it is the maturity date of the contract. For with-profits bonds it is often a specified anniversary of commencement, in some cases with further dates

thereafter. Annual bonuses when added to with-profits contracts usually increase the guaranteed amount.

There are guaranteed surrender values on a small number of older contracts.

The fair value of the guaranteed annuity options, which is a component of the total insurance contract liability, are £529 million (2023: £799 million

(restated)) in the with-profits funds and £73 million (2023: £122 million (restated)) in the non-profit funds. The prior period values were restated

following identification of an error in the calculation.

In common with other life companies in the UK which have written pension transfer and opt-out business, the Group has set up provisions for the

review and possible redress relating to personal pension policies. These provisions, which have been calculated from data derived from detailed file

reviews of specific cases and using a certainty equivalent approach, which give a result very similar to a market consistent valuation, are included in

liabilities arising under insurance contracts. The total amount provided in the with-profits funds and non-profit funds in respect of the review and

possible redress relating to pension policies, including associated costs, are £155 million (2023: £191 million) and £2 million (2023: £2 million)

respectively.

With-profits deferred annuities participate in profits only up to the date of retirement. At retirement, a guaranteed cash option allows the

policyholder to commute the annuity benefit into cash on guaranteed terms.

Assumption changes

During the year a number of changes were made to assumptions to reflect changes in expected experience. The impact of material changes during

the year was as follows:

		(Decrease)/		(Decrease)/
	Increase/	increase in loss	Increase/	increase in loss
	(decrease) in CSM	component	(decrease) in CSM	component
	2024	2024	2023	2023
	£m	£m	£m	£m
For insurance contracts:
Change in longevity assumptions	100	(11)	918	(1)
Change in persistency assumptions	10	(5)	(6)	17
Change in mortality assumptions	–	3	(102)	12
Change in expenses assumptions	(74)	72	(170)	(35)
For reinsurance contracts:
Change in longevity assumptions	(31)	–	(598)	–
Change in persistency assumptions	–	–	–	–
Change in mortality assumptions	–	–	15	–
Change in expenses assumptions	(45)	–	(13)	–

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F11.2.3 Other assumptions continued

Financials

267Phoenix Group Holdings plc Annual Report and Accounts 2024

2024

The £69 million net of reinsurance increase in CSM and £(11) million decrease in loss component are due to changes in longevity assumptions

reflecting updates to base and improvement assumptions reflecting latest experience analyses.

As well as annual persistency updates to reflect latest experience, assumption changes were made for late retirements and GAO take-up rates

during the year.

The £3m increase in loss component is due to changes in mortality assumptions largely driven by modelling change and partly offset by a release in

the mortality provision.

The £(119) million net of reinsurance decrease in CSM and £72 million increase in loss component are due to changes in expense assumptions driven

by an increase in reserves principally in respect of delivery of the Group Target Operating Model for IT and Operations included the migration of

policyholder administration onto the TCS platform and Group expense provisions. This is partly offset by changes in modelled expenses in relation

to the Group’s cost saving programme together with investment expenses and release of an investment manual.

2023

The £320 million net of reinsurance increase in CSM due to changes in longevity assumptions reflects updates to base and improvement

assumptions to reflect latest experience analyses, including moving to the latest CMI model.

As well as annual persistency updates to reflect latest experience, assumption changes were made for late retirements and GAO take-up rates

during the year.

The £(87) million net of reinsurance decrease in CSM due to change in mortality assumptions is driven by changes in Europe & Other base mortality

valuation assumptions.

The £(183) million net of reinsurance decrease in CSM and £(35) million decrease in loss component are due to changes in expense assumptions

driven by an increase in reserves principally in respect of delivery of the Group Target Operating Model for IT and Operations included the

migration of policyholder administration onto the TCS platform together with Group expense provisions and an increase in modelled maintenance

expenses assumptions. This is partly offset by changes in modelled investment expenses and release of an investment manual.

F11.3 Managing product risk

The following sections give an assessment of the risks associated with the Group’s main life assurance products and the ways in which the Group

manages those risks.

Product	Primary segment	Main insurance risks
With-profits:
Unitised & Traditional – without guarantees	With-profits	Longevity & Lapse
Unitised & Traditional – with guarantees	With-profits	Lapse
Annuities	With-profits	Longevity
Non-profit:
Deferred annuities – with guarantees	Retirement Solutions	Longevity
Deferred annuities – without guarantees	Retirement Solutions	Longevity
Immediate annuities	Retirement Solutions	Longevity
Protection	Europe & Other	Mortality, Morbidity & Lapse
Unit-linked – with guarantees	Pensions & Savings	Longevity & Lapse
Unit-linked – without guarantees	Pensions & Savings	Mortality, Morbidity & Lapse

The above products will also be exposed to market risk and further details are included in note E6.2.

£15,692 million (2023: £12,966 million) of liabilities are subject to longevity swap arrangements.

With-profits fund (unitised and traditional)

The Group operates a number of with-profits funds in which the with-profits policyholders benefit from a discretionary annual bonus (guaranteed

once added in most cases) and a discretionary final bonus. Non-participating business is also written in some of the with-profits funds and some

of the funds may include immediate annuities and deferred annuities with Guaranteed Annuity Rates (‘GAR’).

The investment strategy of each fund differs, but is broadly to invest in a mixture of fixed interest investments and equities and/or property and

other asset classes in such proportions as is appropriate to the investment risk exposure of the fund and its capital resources.

The Group has significant discretion regarding investment policy, bonus policy and early termination values. The process for exercising discretion in

the management of the with-profits funds is set out in the PPFM for each with-profits fund and is overseen by with-profits committees. Advice is also

taken from the with-profits actuary of each with-profits fund. Compliance with the PPFM is reviewed annually and reported to the PRA, Financial

Conduct Authority (‘FCA’) and policyholders.

The bonuses are designed to distribute to policyholders a fair share of the return on the assets in the with-profits funds together with other elements

of the experience of the fund. The shareholders of the Group are entitled to receive one-ninth of the cost of bonuses declared for some funds and

£nil for others. For the Heritage With-Profits Fund (‘HWPF’), under the Scheme of Demutualisation, shareholders are entitled to receive certain

defined cash flows arising on specified blocks of UK and Irish business.

Unitised and traditional with-profits policies are exposed to equivalent risks, the main difference being that unitised with-profits policies purchase

notional units in a with-profits fund whereas traditional with-profits policies do not. Benefit payments for unitised policies are then dependent on

unit prices at the time of a claim, although charges may be applied. A unitised with-profits fund price is typically guaranteed not to fall and increases

in line with any discretionary bonus payments over the course of one year.

Financials

Notes to the consolidated financial statements continued

268 Phoenix Group Holdings plc Annual Report and Accounts 2024

Deferred annuities

Deferred annuity policies are written to provide either a cash benefit at retirement, which the policyholder can use to buy an annuity on the terms

then applicable, or an annuity payable from retirement. The policies contain an element of guarantee expressed in the form that the contract is

written in, i.e. to provide cash or an annuity. Deferred annuity policies written to provide a cash benefit may also contain an option to convert the

cash benefit to an annuity benefit on guaranteed terms; these are known as GAR policies. Deferred annuity policies written to provide an annuity

benefit may also contain an option to convert the annuity benefit into cash benefits on guaranteed terms; these are known as Guaranteed Cash

Option (‘GCO’) policies. In addition, certain unit prices in the HWPF are guaranteed not to decrease.

Long-term interest rates remain relatively low compared to historical levels and life expectancy has increased more rapidly than originally

anticipated. The guaranteed terms on GAR policies are more favourable than the annuity rates currently available in the market available for cash

benefits. The guaranteed terms on GCO policies are currently not valuable. Deferred annuity policies which are written to provide annuity benefits

are managed in a similar manner to immediate annuities and are exposed to the same risks.

The option provisions on GAR policies are particularly sensitive to downward movements in interest rates, increasing life expectancy and the

proportion of customers exercising their option. Adverse movements in these factors could lead to a requirement to increase reserves which could

adversely impact profit and potentially require additional capital. In order to address the interest rate risk (but not the risk of increasing life

expectancy or changing customer behaviour with regard to exercise of the option), insurance subsidiaries within the Group have purchased

derivatives that provide protection against an increase in liabilities and have thus reduced the sensitivity of profit to movements in interest rates (see

note E6.2.2).

The Group seeks to manage this risk in accordance with both the terms of the issued policies and the interests of customers, and has obtained

external advice supporting the manner in which it operates the long-term funds in this respect.

Immediate annuities

This type of annuity is purchased with a single premium at the outset, and is paid to the policyholder for the remainder of their lifetime. Payments

may also continue for the benefit of a surviving spouse or partner after the annuitant’s death. Annuities may be level, or escalate at a fixed rate, or

may escalate in line with a price index and may be payable for a minimum period irrespective of whether the policyholder remains alive.

The main risks associated with this product are longevity and investment risks. Longevity risk arises where the annuities are paid for the lifetime of

the policyholder, and is managed through the initial pricing of the annuity and through reinsurance (appropriately collateralised) or transfer of

existing liabilities. Annuities may also be a partial ‘natural hedge’ against losses incurred in protection business in the event of increased mortality

(and vice versa) although the extent to which this occurs will depend on the similarity of the demographic profile of each book of business. In

addition, the Group has in place longevity swaps that provide downside protection over longevity risk.

The pricing assumption for mortality risk is based on both historic internal information and externally-generated information on mortality

experience, including allowances for future mortality improvements. Pricing will also include a contingency margin for adverse deviations

in assumptions.

Market and credit risk is influenced by the extent to which the cash flows under the contracts have been matched by suitable assets which is

managed under the ALM framework. Asset/liability modelling is used to monitor this position on a regular basis.

Protection

These contracts are typically secured by the payment of a regular premium payable for a period of years providing benefits payable on certain

events occurring within the period. The benefits may be a single lump sum or a series of payments and may be payable on death, serious

illness or sickness.

The main risk associated with this product is the claims experience and this risk is managed through the initial pricing of the policy (based

on actuarial principles), the use of reinsurance and a clear process for administering claims.

Market and credit risk is influenced by the extent to which the cash flows under the contracts have been matched by suitable assets which is

managed under the ALM framework. Asset/liability modelling is used to monitor this position on a regular basis.

G. Other statement of consolidated financial position notes

G1. Pension schemes

Defined contribution pension schemes

Obligations for contributions to defined contribution pension schemes are recognised as an expense in the consolidated income

statement as incurred.

Defined benefit pension schemes

The net surplus or deficit (the economic surplus or deficit) in respect of the defined benefit pension schemes is calculated by estimating the

amount of future benefit that employees have earned in return for their service in the current and prior years; that benefit is discounted to

determine its present value and the fair value of any scheme assets is deducted. The Group recognises a pension surplus on the basis that it is

entitled to the surplus of each scheme in the event of a gradual settlement of the liabilities, due to its ability to order a winding up of the Trust.

The economic surplus or deficit is subsequently adjusted to eliminate on consolidation the carrying value of insurance policies issued by Group

entities to the defined benefit pension schemes (the reported surplus or deficit). A corresponding adjustment is made to the carrying values of

insurance contract liabilities and investment contract liabilities .

F. Insurance contracts, investment contracts with DPF and reinsurance continued

F11. Risk management – insurance risk continued

F11.3 Managing product risk continued

Financials

269Phoenix Group Holdings plc Annual Report and Accounts 2024

The Group determines the net interest expense or income on the net pension scheme asset/liability for the period by applying the discount rate

used to measure the defined benefit obligation at the beginning of the annual period to the opening net pension scheme asset/liability. The

discount rate is the yield at the period end on AA credit rated bonds that have maturity dates approximating to the terms of the Group’s

obligations. The calculation is performed by a qualified actuary using the projected unit credit method.

The movement in the net pension scheme asset/liability is analysed between the service cost, past service cost, curtailments and settlements (all

recognised within administrative expenses in the consolidated income statement), the net interest cost on the net pension scheme asset/liability,

including any reimbursement assets (recognised within net investment income in the consolidated income statement), remeasurements of the net

pension scheme asset/liability (recognised in other comprehensive income) and employer contributions.

The longevity swaps and quota share reinsurance arrangements in respect of the pension scheme buy-ins are treated as reimbursement rights

and are recognised at fair value.

This note describes the Group’s five main defined benefit pension schemes for its employees, the Pearl Group Staff Pension Scheme (‘Pearl

Scheme’), the PGL Pension Scheme, the Abbey Life Staff Pension Scheme (‘Abbey Life Scheme’) the ReAssure Staff Pension Scheme (‘ReAssure

Scheme’) and from 3 April 2023, the Sun Life Assurance Company of Canada 1988 UK and Irish Employee Benefits Scheme (‘Sun Life of Canada

Scheme’), and explains how the pension scheme asset/liability is calculated.

An analysis of the pension scheme (liability)/asset for each pension scheme is set out in the table below:

		2023
	2024	restated 1
	£m	£m
Pearl Group Staff Pension Scheme
Economic surplus	48	50
Adjustment for insurance policies eliminated on consolidation	(1,358)	(1,507)
Net pension scheme liability, as reported	(1,310)	(1,457)
Add: value attributed to assets held by PLL within financial assets 2	1,348	1,506
Reimbursement right in respect of reinsurance, as reported (restated 1 )	147	168
Adjusted net pension scheme asset	185	217
PGL Pension Scheme
Economic surplus	–	20
Adjustment for insurance policies eliminated on consolidation	–	(1,093)
Amounts due from subsidiary eliminated on consolidation	–	(18)
Net pension scheme liability, as reported	–	(1,091)
Add: assets held by PLL within financial assets 2	–	1,206
Reimbursement right in respect of reinsurance, as reported (restated 1 )	–	(34)
Adjusted net pension scheme asset	–	81
Abbey Life Staff Pension Scheme
Economic deficit	(2)	(7)
Minimum funding requirement obligation	–	(2)
Net pension scheme liability	(2)	(9)
ReAssure Staff Pension Scheme
Economic surplus	20	14
Provision for tax on that part of the economic surplus available as a refund on a winding-up of the Scheme	–	(5)
Net pension scheme asset	20	9
Sun Life of Canada Scheme
Net pension scheme asset	15	17
Reimbursement right	2	2

1 See note A3 for details of the prior year restatements.

2 The Pearl Scheme and the PGL Pension Scheme both previously executed buy-in transactions with a Group life company and subsequently assets supporting the Group’s actuarial liabilities were

recognised on a line-by-line basis within financial assets in the statement of consolidated financial position. Further details are included in notes G1.1 and G1.2 below.

An adjusted net pension scheme asset has been presented in both the current and prior years in relation to the Pearl Scheme and in the comparative period in relation to the PGL Scheme. The value of the

assets held by PLL within financial assets in respect of the PGL Pension Scheme buy-ins was equal to the assets posted to a ring-fenced collateral account. For the Pearl Scheme the assets held by PLL

supporting the buy-ins are not ring-fenced and the value has been determined as the value of the insurance contract liability within the PLL financial statements less the value of the associated

reinsurance asset. Movements in these financial assets are reflected in the consolidated income statement within net investment income, however as noted in the accounting policy, the movement in the

net pension scheme liability (as shown in notes G1.1 and G1.2) is primarily reflected in other comprehensive income.

Financials

Notes to the consolidated financial statements continued

270 Phoenix Group Holdings plc Annual Report and Accounts 2024

Risks

The Group’s defined benefit schemes typically expose the Group to a number of risks, the most significant of which are:

Asset volatility – the value of the schemes’ assets will vary as market conditions change and as such is subject to considerable volatility. The liabilities

are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will create a deficit. The

majority of the assets are held within a liability driven investment strategy which is linked to the funding basis of the schemes (set with reference to

government bond yields). As such, to the extent that movements in corporate bond yields are out of line with movements in government bond yields,

volatility will arise.

Inflation risk – a significant proportion of the schemes’ benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities

(although in most cases, caps on the level of inflationary increases are in place to protect against extreme inflation). The majority of the assets are

held within a liability driven investment strategy which allows for movements in inflation, meaning that changes in inflation should not materially

affect the surplus.

Life expectancy – the majority of the schemes’ obligations are to provide benefits for the life of the member therefore increases in life expectancy

will result in an increase in the liabilities. For the Pearl and PGL schemes, this is largely offset by the buy-in policies that move in line with the

liabilities. These buy-in policies are eliminated on consolidation (see notes G1.1 and G1.2 for further details).

Other risk – A High Court legal ruling in June 2023 (Virgin Media Limited v NTL Pension Trustees II Limited) decided that certain rule amendments

were invalid if they were not accompanied by the correct actuarial confirmation. In July 2024, an appeal by Virgin Media Limited was dismissed by

the High Court, affirming the initial judgment. While the ruling only applied to the specific pension scheme in question, it now forms part of case law

and can therefore be expected to apply across other pension schemes.

The Group has begun assessing the impact of the ruling on each of the Group’s pension schemes.

For the Abbey Life Scheme, an exercise to update the scheme rules in 2017 identified several earlier rule amendments where the correct actuarial

confirmation could not be located. The legal advice the Scheme received at the time was that it was unlikely that any of these amendments would

lead to a retrospective increase in benefits. Some precautionary remedial measures were taken at the time, including a benefit recertification

exercise. The Group’s view is that none of these rule amendments are sufficiently likely or material to warrant the recognition of a potential

obligation in the consolidated statement of financial position at 31 December 2024.

For the Pearl Scheme and the ReAssure Scheme, the Group is not aware of any previous rule changes that are sufficiently likely to warrant the

recognition of a potential obligation at 31 December 2024. The stability of trustees and advisors over the period leads the Group to take the

presumption of regularity. This is consistent with legal advice that the respective schemes have received as to whether the Trustees must take any

further action at this stage.

The Sun Life of Canada Scheme was not ‘contracted-out’ over the relevant period, so has no exposure to this ruling. Information on each of the

Group’s pension schemes is set out below.

G1.1 Pearl Group Staff Pension Scheme

G1.1.1 Scheme details

The Pearl Scheme comprises a final salary section, a money purchase section and a hybrid section (a mix of final salary and money purchase).

The Pearl Scheme is closed to new members and has no active members.

Defined benefit scheme

The Pearl Scheme is established under, and governed by, the trust deeds and rules and has been funded by payment of contributions to a

separately administered trust fund. A Group company, Pearl Life Holdings Limited (‘PeLHL’), is from 1 October 2023 the principal employer of the

Pearl Scheme (previously Pearl Group Holdings No.2 Limited (‘PGH2’)). PeLHL assumed the Scheme covenant together with all obligations of the

Scheme following the transfer.

The principal employer meets the administration expenses of the Pearl Scheme. The Pearl Scheme is administered by a separate trustee company,

P.A.T. (Pensions) Limited, which is separate from PeLHL. The trustee company is comprised of three representatives from the Group, three member

nominated representatives and one independent trustee in accordance with the trustee company’s articles of association. The trustee is required by

law to act in the interest of all relevant beneficiaries and is responsible for the investment policy with regard to the assets.

The valuation has been based on an assessment of the liabilities of the Pearl Scheme as at 31 December 2024, undertaken by qualified actuaries.

The present values of the defined benefit obligation and the related interest costs have been measured using the projected unit credit method.

A triennial funding valuation of the Pearl Scheme as at 30 June 2021 was completed in 2022 by a qualified actuary. This showed a surplus as at

30 June 2021 of £67 million, on the agreed technical provisions basis. The funding and IFRS accounting bases of valuation can give rise to different

results for a number of reasons. The funding basis of valuation is based on general principles of prudence whereas the accounting valuation is

based on best estimates. Discount rates are gilt-based for the funding valuation whereas the rate used for IFRS valuation purposes is based on a

yield curve for high quality AA-rated corporate bonds. In addition, the values are prepared at different dates which will result in differences arising

from changes in market conditions and employer contributions made in the subsequent period.

G. Other statement of consolidated financial position notes continued

G1. Pension schemes continued

Financials

271Phoenix Group Holdings plc Annual Report and Accounts 2024

Pension Scheme Commitment Agreement and buy-in transactions

On 17 November 2020, the Pearl Scheme entered into a Commitment Agreement with PGH2 to complete a series of buy-ins. At the same time, the

Pearl Scheme completed the first buy-in with Phoenix Life Limited (‘PLL’) covering 25% of the Scheme’s pensioner and deferred member liabilities,

transferring the associated risks, including longevity improvement risk, to PLL effective from 30 September 2020.

Two further buy-in transactions were completed in July 2021 and October 2021 covering 35% and 15% respectively of the Scheme’s pensioner and

deferred member liabilities and the final buy-in transaction was completed in November 2022. Risks, including longevity improvement risk, were

transferred to PLL effective from 28 May 2021 and 31 August 2021 and 30 September 2022 respectively.

Upon completion of each buy-in transaction the Scheme transferred plan assets to PLL and these assets are recognised in the relevant line within

financial assets in the consolidated statement of financial position. The economic effect of the buy-in transactions in the Scheme is to replace the

plan assets transferred with a single line insurance policy reimbursement right asset which is subsequently eliminated on consolidation. The value

of this insurance policy at 31 December 2024 was £1,358 million (2023: £1,507 million).

No contributions were paid to the Pearl Scheme in either the current or prior period. PeLHL meets the administrative and non-investment running

expenses of the Scheme as set out in the schedule of contributions (PGH2 prior to 1 October 2023).

During 2022, the Company reached an agreement for the removal of a trustee discretion to pay some pension increases in excess of the 5% cap.

The trustee agreed to give up this discretion in exchange for a single 1.6% uplift for current pensions in payment effective from 1 April 2022 and a

1.3% increase to eligible benefits of both pension and deferred members effective from 1 April 2023. In 2023, the financial impact of the 1.3% uplift

was to recognise an increase in the defined benefit obligation of £12 million and a past service cost in the consolidated income statement.

Reimbursement right asset in respect of reinsurance arrangements

As part of the third buy-in arrangement, PLL entered into a quota share reinsurance arrangement with external reinsurers to reinsure a total of

approximately 91% of the liabilities. As PLL expects to use the claims received to pay for its obligations under the insurance contract between it and

the Pearl Scheme (i.e. to settle the defined benefit obligation) the reinsurance arrangement is considered to be a non-qualifying insurance policy

and is classified as a reimbursement right. The reinsurance arrangement is expected to match a proportion of the defined benefit obligation of the

Pearl Scheme therefore the valuation of the reimbursement right is consistent with the valuation of the associated defined benefit obligation.

The value of the reimbursement right asset amounted to £181 million (31 December 2023: £202 million).

PLL also entered into longevity swap arrangements with external reinsurers to reinsure a proportion of the risks transferred as part of the first,

second and fourth buy-in transactions. The fair value of the reimbursement right liabilities amounted to £34 million (31 December 2023: £34 million

(restated)). Further details of the restatement are included in note A3.

G1.1.2 Summary of amounts recognised in the consolidated financial statements

The amounts recognised in the consolidated financial statements are as follows:

2024

	Fair value of	Defined benefit	Pension Scheme	Reimbursement
	scheme assets	obligation	Liability	rights 2
	£m	£m	£m	£m
At 1 January as reported	50	(1,507)	(1,457)	202
Restatement 1	–	–	–	(34)
At 1 January (restated)	50	(1,507)	(1,457)	168
Interest income/(expense)	2	(67)	(65)	7
Included in profit or loss	2	(67)	(65)	7
Remeasurements:
Return on plan assets excluding amounts included in interest income	(4)	–	(4)	–
Loss from changes in demographic assumptions	–	(9)	(9)	–
Gain from changes in financial assumptions	–	142	142	–
Experience loss	–	(17)	(17)	–
Movement in valuation of reimbursement right asset/liabilities	–	–	–	(15)
Included in other comprehensive income	(4)	116	112	(15)
Income received from insurance policies	100	–	100	–
Benefit payments	(100)	100	–	(13)
At 31 December	48	(1,358)	(1,310)	147

1 See note A3 for details of the prior year restatements.

2 Reimbursement right asset £181 million and reimbursement right liabilities £(34) million (2023: £202 million and £(34).

Financials

Notes to the consolidated financial statements continued

272 Phoenix Group Holdings plc Annual Report and Accounts 2024

2023

	Fair value	Defined benefit	Pension Scheme	Reimbursement
	of scheme assets	obligation	Liability	right 1,2
	£m	£m	£m	£m
At 1 January as reported	46	(1,501)	(1,455)	205
Restatement 1	–	–	–	(17)
At 1 January (restated)	46	(1,501)	(1,455)	188
Interest income/(expense)	2	(72)	(70)	9
Past service cost	–	(12)	(12)	–
Included in profit or loss	2	(84)	(82)	9
Remeasurements:
Return on plan assets excluding amounts included in interest income	2	–	2	–
Gain from changes in demographic assumptions	–	12	12	–
Loss from changes in financial assumptions	–	(51)	(51)	–
Experience gain	–	15	15	–
Movement in valuation of reimbursement right asset/liabilities	–	–	–	(16)
Included in other comprehensive income	2	(24)	(22)	(16)
Income received from insurance policies	102	–	102	–
Benefit payments	(102)	102	–	(13)
At 31 December	50	(1,507)	(1,457)	168

1 See note A3 for details of the prior year restatements

2 Reimbursement right asset £202 million and reimbursement right liabilities £(34) million (2022: £205 million and £(17) million).

G1.1.3 Scheme assets

The distribution of the scheme assets at the end of the year was as follows:

		2024		2023
		Of which not		Of which not
		quoted in an active		quoted in an active
	Total	market	Total	market
	£m	£m	£m	£m
Private equities	3	3	5	5
Hedge funds	2	2	3	3
Cash and other	43	–	42	–
Reported scheme assets	48	5	50	8
Add back:
Insurance policies eliminated on consolidation	1,358	1,358	1,507	1,507
Economic value of assets	1,406	1,363	1,557	1,515

G1.1.4 Defined benefit obligation

The calculation of the defined benefit obligation can be allocated to the scheme’s members as follows:

• Deferred scheme members: 29% (2023: 33%); and

• Pensioners: 71% (2023: 67%).

The weighted average duration of the defined benefit obligation at 31 December 2024 is 10 years (2023: 13.5 years).

Principal assumptions

The principal financial assumptions of the Pearl Scheme are set out in the table below:

2024

2023

Rate of increase for pensions in payment (5% per annum or RPI if lower) 3.00 2.90

Rate of increase for deferred pensions (‘CPI’) 2.70 2.60

Discount rate 5.55 4.60

Inflation – RPI 3.20 3.10

Inflation – CPI 2.70 2.60

The discount rate and inflation rate assumptions have been determined by considering the shape of the appropriate yield curves and the duration

of the Pearl Scheme’s liabilities. This method determines an equivalent single rate for each of the discount and inflation rates, which is derived from

the profile of projected benefit payments.

G. Other statement of consolidated financial position notes continued

G1. Pension schemes continued

G1.1.2 Summary of amounts recognised in the consolidated financial statements continued

Financials

273Phoenix Group Holdings plc Annual Report and Accounts 2024

The post-retirement mortality assumptions are in line with a scheme-specific table which was derived from the actual mortality experience in recent

years based on the SAPS standard tables for males and for females based on year of use. Future longevity improvements from 1 January 2017 are

based on amended CMI 2023 Core Projections (2023: From 1 January 2017 based on amended CMI 2022 Core Projections) and a long-term rate

of improvement of 1.6% (2023: 1.5%) per annum for males and 1.2% (2023: 1.2%) per annum for females. Under these assumptions, the average life

expectancy from retirement for a member currently aged 40 retiring at age 60 is 29.1 years and 30.4 years for male and female members

respectively (2023: 29.0 years and 30.3 years respectively).

A quantitative sensitivity analysis for significant actuarial assumptions is shown below:

2024	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	1,358	(35)	34	19	(18)	37	(37)

2023	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	1,507	(41)	43	23	(22)	37	(37)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to

occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant

actuarial assumptions the same method has been applied as when calculating the defined benefit obligation recognised within the statement of

consolidated financial position.

G1.2 PGL Pension Scheme

In January 2024, the trustees of the PGL Pension Scheme completed the buy-out of the scheme liabilities with PLL whereby the existing annuity

insurance policies were exchanged for individual policies between PLL and the scheme’s members. As a result, all the Group’s obligations under the

pension scheme have now been fully extinguished. Further details are included in the section below.

G1.2.1 Scheme details

Defined contribution scheme

On 1 July 2020 the Group closed the defined contribution section of the PGL Scheme and ceased making contributions from this date.

Defined benefit scheme

The defined benefit section of the PGL Pension Scheme was, prior to the completion of the buy-out, a final salary arrangement which was closed

to new entrants and had no active members. The Scheme is administered by a separate trustee company, PGL Pension Trustee Ltd. The trustee

company is comprised of two representatives from the Group, three member nominated representatives and one independent trustee in

accordance with the trustee company’s articles of association. The trustee is required by law to act in the interest of all relevant beneficiaries and

was responsible for the day-to-day administration of the benefits.

A triennial funding valuation of the PGL Pension Scheme as at 30 June 2021 was completed in 2022 by a qualified actuary. This showed a surplus

as at 30 June 2021 of £2 million.

During the period, the trustees of the PGL Pension Scheme completed the buy-out of the scheme liabilities with PLL whereby the existing annuity

insurance policies between the two parties were exchanged for individual policies between PLL and the scheme’s members. As a result, all the

Group’s obligations under the pension scheme have now been fully extinguished and the defined benefit obligation as at the settlement date of

£1,097 million, reimbursement right assets of £11 million and reimbursement right liabilities of £45 million were derecognised.

An additional premium (in excess of the value of the collateral assets transferred as premium for the original buy-in transactions) of £18 million was

prepaid by the Scheme to PLL in 2023 and has been recognised upon completion of the settlement. The difference between the defined benefit

obligation and associated reimbursement rights at this date and the total premium paid resulted in a loss on settlement of £208 million being

recognised within administration expenses in the consolidated income statement. This loss reflects the difference between the measurement basis

for the liabilities as prescribed by IAS 19 and the value prescribed for the buy-out transfer in the original buy-in agreement which is primarily based

on collateral determined using the best estimate assumptions of PLL and the risk margin associated with those liabilities on a Solvency II basis. On

completion of the buy-out, the Scheme held minimal residual assets which were used during the period to cover wind-up expenses. Further details

of the full impact of the buy-out transaction are included in note B1.1.

Insurance policies with Group entities and reinsurance arrangements

Prior to completion of the buy-out, the PGL Pension Scheme completed two buy-in transactions. The plan assets transferred to PLL as premium

were held in a collateral account and recognised in the relevant line within financial assets in the statement of consolidated financial position. The

economic effect of these transactions in the Scheme was to replace the plan assets transferred with a single line insurance policy reimbursement

asset which was eliminated on consolidation along with the relevant insurance contract liabilities in PLL. The value of the insurance policies with

Group entities at 31 December 2024 is £nil (2023: £1,093 million).

During 2023, £18 million of scheme assets were transferred to PLL as premium for the buy-out transaction which completed in January 2024.

At 31 December 2023, a debtor of £18 million to reflect the prepayment of this premium was eliminated on consolidation.

PLL entered into longevity swap arrangements with external reinsurers to reinsure a proportion of the risks transferred as part of both the buy-in

transactions. The fair value of the reimbursement right liabilities amounted to £nil (31 December 2023: £34 million (restated)). Further details of the

restatement are included in note A3.

Financials

Notes to the consolidated financial statements continued

274 Phoenix Group Holdings plc Annual Report and Accounts 2024

G1.2.2 Summary of amounts recognised in the consolidated financial statements

The amounts recognised in the consolidated financial statements are as follows:

	Fair value of	Defined benefit	Pension scheme	Reimbursement
	scheme assets	obligation	liability	right
2024	£m	£m	£m	£m
At 1 January as reported	6	(1,097)	(1,091)	–
Restatement 1	–	–	–	(34)
At 1 January (restated)	6	(1,097)	(1,091)	(34)
Administrative expenses	(6)	–	(6)	–
Settlement gain	–	1,097	1,097	34
Included in profit or loss	(6)	1,097	1,091	34
At 31 December	–	–	–	–

1 See note A3 for details of the prior year restatements.Reimbursement right asset £11 million and reimbursement rights liability £(45) million.

	Fair value of	Defined benefit	Pension scheme	Reimbursement
	scheme assets	obligation	liability	right
2023	£m	£m	£m	£m
At 1 January as reported	27	(1,083)	(1,056)	–
Restatement 1	–	–	–	(21)
At 1 January (restated)	27	(1,083)	(1,056)	(21)
Interest income/(expense)	1	(52)	(51)	(1)
Administrative expenses	(3)	–	(3)	–
Included in profit or loss	(2)	(52)	(54)	(1)
Remeasurements:
Return on plan assets excluding amounts included in interest income	(1)	–	(1)	–
Gain from changes in demographic assumptions	–	13	13	–
Loss from changes in financial assumptions	–	(27)	(27)	–
Experience loss	–	(17)	(17)	–
Movement in valuation of reimbursement right asset/liability	–	–	–	(12)
Included in other comprehensive income	(1)	(31)	(32)	(12)
Income received from insurance policies	69	–	69	–
Benefit payments	(69)	69	–	–
Assets transferred as premium for scheme buy-out	(18)	–	(18)	–
At 31 December	6	(1,097)	(1,091)	(34)

1 See note A3 for details of the prior year restatements. Reimbursement rights asset £12 million and reimbursement right liability £(33) million.

G1.2.3 Scheme assets

The distribution of the scheme assets at the end of the year was as follows:

		2024		2023
		Of which not		Of which not
		quoted in an active		quoted in an active
	Total	market	Total	market
	£m	£m	£m	£m
Cash and other	–	–	6	–
Reported scheme assets	–	–	6	–
Add: Insurance policies eliminated on consolidation	–	–	1,093	1,093
Amounts due from subsidiary eliminated on consolidation	–	–	18	18
Economic value of assets	–	–	1,117	1,111

G. Other statement of consolidated financial position notes continued

G1. Pension schemes continued

Financials

275Phoenix Group Holdings plc Annual Report and Accounts 2024

G1.2.4 Defined benefit obligation

The calculation of the defined benefit obligation can be allocated to the scheme’s members as follows:

• Deferred scheme members: nil% (2023: 36%); and

• Pensioners: nil% (2023: 64%).

The weighted average duration of the defined benefit obligation at 31 December 2023 was 13.5 years.

Principal assumptions

The principal assumptions of the PGL Pension Scheme as at 31 December 2023 are set out below.

	2024	2023
	%	%
Rate of increase for pensions in payment (7.5% per annum or RPI if lower)	–	3.10
Rate of increase for deferred pensions (‘CPI’)	–	2.60
Discount rate	–	4.60
Inflation – RPI	–	3.10
Inflation – CPI	–	2.60

The discount rate and inflation rate assumptions have been determined by considering the shape of the appropriate yield curves and the duration

of the PGL Pension Scheme’s liabilities. This method determines an equivalent single rate for each of the discount and inflation rates, which is

derived from the profile of projected benefit payments.

The post-retirement mortality assumptions are in line with 86%/94% of S1P Light base tables for males and females. Future longevity improvements

in 2023 were from 1 January 2021 based on amended CMI 2022 Core Projections with a long-term rate of improvement of 1.5% per annum for

males and 1.2% per annum for females. Under these assumptions, the average life expectancy from retirement for a member currently aged 40

retiring at age 62 was 27.4 years and 28.8 years for male and female members respectively.

A quantitative sensitivity analysis for significant actuarial assumptions as at 31 December 2023 is shown below:

2023	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	1,097	(32)	33	22	(21)	31	(31)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to

occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant

actuarial assumptions the same method has been applied as when calculating the defined benefit obligation recognised within the statement of

consolidated financial position.

G1.3 Abbey Life Staff Pension Scheme

G1.3.1 Scheme details

The Abbey Life Scheme is a registered occupational pension scheme, set up under trust, and legally separate from its principal employer PeLHL.

The scheme is administered by Abbey Life Trust Securities Limited (the trustee), a corporate trustee. There are three trustee directors, one of whom

is nominated by the Abbey Life Scheme members and two of whom are appointed by PeLHL. The trustee is responsible for administering the

scheme in accordance with the trust deed and rules and pensions laws and regulations. The Abbey Life Scheme is closed to new entrants and has

no active members.

The valuation has been based on an assessment of the liabilities of the Abbey Life Scheme as at 31 December 2024 undertaken by independent

qualified actuaries. The present values of the defined benefit obligation and the related interest costs have been measured using the projected unit

credit method.

Funding

The last funding valuation of the Abbey Life Scheme was carried out by a qualified actuary as at 31 March 2021 and showed a deficit of £86 million.

The funding valuation as at 31 March 2024 was in progress as at the end of the year and will be finalised during 2025. Following completion of the

funding valuation a recovery plan was agreed between the Group and the trustee of the Abbey Life Scheme for PeLHL to pay monthly

contributions of £400,000 into the Scheme until 31 July 2025 to eliminate the funding shortfall. In addition, the entire balance of the 2013 Charged

Account of £42 million was paid to the Scheme in December 2021.

A new schedule of contributions was agreed effective from November 2021, for PeLHL to pay the following amounts in respect of deficit

contributions in addition to the amounts payable under the recovery plan:

• fixed monthly contributions of £400,000 payable from 1 August 2025 to 30 June 2026;

• monthly contributions in respect of administration expenses of £106,295 payable up to 31 March 2022, then increasing annually in line with the

Retail Prices Index assumption to 30 June 2028; and

• annual payments of £4 million into the New 2016 Charged Account by 31 July each year, with the last payment due by 31 July 2025.

The charged account is an Escrow account which was created to provide the trustees with additional security in light of the funding deficit.

The amounts held in the charged account does not form part of Abbey Life Scheme assets.

Under the terms of the New 2016 Funding Agreement the funding position of the Abbey Life Scheme will be assessed as at 31 March 2027.

A payment will be made from the New 2016 Charged Account to the Scheme if the results of the assessment reveal a shortfall calculated in

accordance with the terms of the New 2016 Funding Agreement. The amount of the payment will be the lower of the amount of the shortfall and the

amount held in the New 2016 Charged Account.

Financials

Notes to the consolidated financial statements continued

276 Phoenix Group Holdings plc Annual Report and Accounts 2024

G1.3.2 Summary of amounts recognised in the consolidated financial statements

The amounts recognised in the consolidated financial statements are as follows:

			Minimum funding
	Fair value of	Defined benefit	requirement
	scheme assets	obligation	obligation	Total
2024	£m	£m	£m	£m
At 1 January	211	(218)	(2)	(9)
Interest income/(expense)	9	(9)	–	–
Administration expenses	(2)	–	–	(2)
Included in profit or loss	7	(9)	–	(2)
Remeasurements:
Return on plan assets excluding amounts included in interest income	(19)	–	–	(19)
Gain from changes in financial assumptions	–	20	–	20
Change in minimum funding requirement obligation	–	–	2	2
Included in other comprehensive income	(19)	20	2	3
Employer’s contributions	6	–	–	6
Benefit payments	(13)	13	–	–
At 31 December	192	(194)	–	(2)

			Minimum funding
	Fair value of	Defined benefit	requirement
	scheme assets	obligation	obligation	Total
2023	£m	£m	£m	£m
At 1 January	206	(211)	(3)	(8)
Interest income/(expense)	10	(10)	–	–
Administrative expenses	(2)	–	–	(2)
Included in profit or loss	8	(10)	–	(2)
Remeasurements:
Return on plan assets excluding amounts included in interest income	2	–	–	2
Experience loss	–	(4)	–	(4)
Gain from changes in demographic assumptions	–	2	–	2
Loss from changes in geographic assumptions	–	(6)	–	(6)
Change in minimum funding requirement obligation	–	–	1	1
Included in other comprehensive income	2	(8)	1	(5)
Employer’s contributions	6	–	–	6
Benefit payments	(11)	11	–	–
At 31 December	211	(218)	(2)	(9)

G1.3.3 Scheme assets

The distribution of the scheme assets at the end of the year was as follows:

	2024			2023
		Of which not		Of which not
		quoted in an active		quoted in an active
	Total	market	Total	market
	£m	£m	£m	£m
Diversified income fund	54	–	45	–
Fixed interest government bonds	131	–	148	–
Corporate bonds	86	–	97	–
Derivatives	(86)	(86)	(85)	(85)
Cash and cash equivalents	7	–	6	–
Pension scheme assets	192	(86)	211	(85)

G. Other statement of consolidated financial position notes continued

G1. Pension schemes continued

Financials

277Phoenix Group Holdings plc Annual Report and Accounts 2024

G1.3.4 Defined benefit obligation

The calculation of the defined benefit obligation can be allocated to the scheme’s members as follows:

• Deferred scheme members: 35% (2023: 44%); and

• Pensioners: 65% (2023: 56%).

The weighted average duration of the defined benefit obligation at 31 December 2024 is 11 years (2023: 13.5 years).

Principal assumptions

The principal financial assumptions of the Abbey Life Scheme are set out in the table below:

	2024	2023
	%	%
Rate of increase for pensions in payment (5% per annum or RPI if lower)	3.00	2.90
Rate of increase for deferred pensions (‘CPI’ subject to caps)	2.70	2.60
Discount rate	5.55	4.60
Inflation – RPI	3.20	3.10
Inflation – CPI	2.70	2.60

The discount rate and inflation rate assumptions have been determined by considering the shape of the appropriate yield curves and the duration

of the Abbey Life Scheme’s liabilities. This method determines an equivalent single rate for each of the discount and inflation rates, which is derived

from the profile of projected benefit payments.

The post-retirement mortality assumptions are in line with a scheme-specific table which was derived from the actual mortality experience in recent

years, performed as part of the actuarial funding valuation as at 31 March 2024, using the SAPS S4 ‘Light’ tables for males and for females based on

year of use. Future longevity improvements from 1 January 2024 are based on amended CMI 2023 Core Projections (2023: From 1 January 2021

based on amended CMI 2021 Core Projections) and a long-term rate of improvement of 1.6% (2023: 1.5%) per annum for males and 1.2% (2023:

1.2%) per annum for females. Under these assumptions the average life expectancy from retirement for a member currently aged 45 retiring at age

65 is 24.6 years and 25.6 years for male and female members respectively (2023: 24.5 years and 25.6 years respectively).

A quantitative sensitivity analysis for significant actuarial assumptions is shown below:

2024	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	194	(5)	5	4	(4)	6	(6)

2023	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	218	(7)	7	5	(5)	7	(7)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to

occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant

actuarial assumptions the same method has been applied as when calculating the pension liability recognised within the statement of consolidated

financial position.

G1.4 ReAssure Life Staff Pension Scheme

G1.4.1 Scheme details

The ReAssure Scheme is a registered occupational pension scheme, set up under trust, and legally separate from the employer ReAssure Midco

Limited (‘RML’). The scheme is administered by ReAssure Pension Trustees Limited, a corporate trustee. There are six trustee directors, two of whom

are nominated by the ReAssure Scheme members and four of whom are appointed by RML. The trustee is responsible for administering the scheme

in accordance with the trust deed and rules and pensions laws and regulations. The ReAssure Scheme is closed to new entrants and to future

accrual for active members.

The valuation has been based on an assessment of the liabilities of the ReAssure Scheme as at 31 December 2024 undertaken by independent

qualified actuaries. The present values of the defined benefit obligation and the related interest costs have been measured using the projected unit

credit method.

Funding

The last funding valuation of the ReAssure Scheme was carried out by a qualified actuary as at 31 December 2020 and showed a deficit of

£77 million. The funding valuation as at 31 December 2023 was in progress as at the end of the year and was finalised in February 2025.

Following completion of the 2020 valuation a recovery plan was agreed in September 2021 between the trustee and RML in order to make good

the deficit. RML agreed to pay contributions of £17.7 million into the existing Custody Account spread over four annual payments of £4.425 million

payable on 1 April 2022, 1 April 2023, 1 April 2024 and 1 April 2025. The 2023 Recovery plan, agreed in February 2025, no longer requires the

payment of the remaining contribution on 1 April 2025. It is anticipated that £26 million will be paid from the Custody Account on or shortly after

1 July 2026 to remove any remaining deficit at 31 December 2025.

The amounts held in this account do not form part of the Scheme’s plan assets and are instead held in the Custody Account and are included within

financial assets in the statement of consolidated financial position.

The Group agrees to cover those expenses incurred by the ReAssure Scheme and up to the end of 2024 the cost of the death-in-service benefits for

those members of the scheme entitled to those benefits. Payments of £2 million (2023: £2 million) have been made during the year to cover these costs.

Financials

Notes to the consolidated financial statements continued

278 Phoenix Group Holdings plc Annual Report and Accounts 2024

G1.4.2 Summary of amounts recognised in the consolidated financial statements

The amounts recognised in the consolidated financial statements are as follows:

			Provision for tax on
			the economic
	Fair value of	Defined benefit	surplus available
	scheme assets	obligation	as a refund	Total
2024	£m	£m	£m	£m
At 1 January	287	(273)	(5)	9
				–
Interest income/(expense)	13	(12)	–	1
Administrative expenses	(2)	–	–	(2)
Included in profit or loss	11	(12)	–	(1)
Remeasurements:
Return on plan assets excluding amounts included in interest income	(29)	–	–	(29)
Gain from changes in financial assumptions	–	33	–	33
Change in provision for tax on economic surplus available as a refund	–	–	5	5
Included in other comprehensive income	(29)	33	5	9
Employer’s contributions	3	–	–	3
Benefit payments	(10)	10	–	–
At 31 December	262	(242)	–	20

			Provision for tax on
			the economic
	Fair value of	Defined benefit	surplus available
	scheme assets	obligation	as a refund	Total
2023	£m	£m	£m	£m
At 1 January	288	(266)	(8)	14
Interest income/(expense)	14	(13)	–	1
Administrative expenses	(1)	–	–	(1)
Included in profit or loss	13	(13)	–	–
Remeasurements:
Return on plan assets excluding amounts included in interest income	(7)	–	–	(7)
Gain from changes in demographic assumptions	–	13	–	13
Loss from changes in financial assumptions	–	(10)	–	(10)
Experience loss	–	(7)	–	(7)
Change in provision for tax on economic surplus available as a refund	–	–	3	3
Included in other comprehensive income	(7)	(4)	3	(8)
Employer’s contributions	3	–	–	3
Benefit payments	(10)	10	–	–
At 31 December	287	(273)	(5)	9

G1.4.3 Scheme assets

The distribution of the scheme assets at the end of the year was as follows:

		2024		2023
		Of which not		Of which not
		quoted in an		quoted in an
	Total	active market	Total	active market
	£m	£m	£m	£m
Equities	33	–	32	–
Government bonds	91	–	118	–
Corporate bonds	100	–	92	–
Other quoted securities	33	–	41	–
Cash and cash equivalents	6	–	4	–
Pension scheme assets	263	–	287	–

G. Other statement of consolidated financial position notes continued

G1. Pension schemes continued

Financials

279Phoenix Group Holdings plc Annual Report and Accounts 2024

G1.4.4 Defined benefit obligation

The calculation of the defined benefit obligation can be allocated to the scheme’s members as follows:

• Deferred scheme members: 66% (2023: 66%); and

• Pensioners: 34% (2023: 34%).

The weighted average duration of the defined benefit obligation at 31 December 2024 is 15 years (2023: 17 years).

Principal assumptions

The principal financial assumptions of the ReAssure Scheme are set out in the table below:

	2024	2023
	%	%
Rate of increase for pensions in payment (5% per annum or RPI if lower)	3.00	2.90
Rate of increase for deferred pensions	2.70	2.60
Rate of increase in salaries	3.70	3.60
Discount rate	5.55	4.60
Inflation – RPI	3.20	3.10
Inflation – CPI	2.70	2.60

The discount rate and inflation rate assumptions have been determined by considering the shape of the appropriate yield curves and the duration

of the ReAssure Scheme’s liabilities. This method determines an equivalent single rate for each of the discount and inflation rates, which is derived

from the profile of projected benefit payments.

The post-retirement mortality assumptions are in line with SAPS Series 3 light base tables with a 102% (2023: 102%) multiplier for males and a 95%

(2023: 95%) multiplier for females, with CMI 2019 projections in line with a 1.5% pa long-term trend up to and including 31 December 2020. Future

longevity improvements from 1 January 2021 onwards are in line with amended CMI 2023 Core Projections (2022: from 1 January 2021 in line with

amended CMI 2022 Core Projections) with a long-term trend of 1.6% pa (2023: 1.5%) for males and 1.2% (2023: 1.2%) for females.

Under these assumptions the average life expectancy from retirement for a member currently aged 45 retiring at age 60 is 29.9 years and 31.5 years

for male and female members respectively (2023: 29.7 years and 31.3 years for male and female members respectively).

A quantitative sensitivity analysis for significant actuarial assumptions is shown below:

2024	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	242	(9)	9	7	(7)	5	(5)

2023	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	273	(11)	11	9	(9)	7	(7)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to

occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant

actuarial assumptions the same method has been applied as when calculating the pension liability recognised within the statement of consolidated

financial position.

G1.5 Sun Life Assurance Company of Canada 1988 UK and Irish Employee Benefits scheme

G1.5.1 Scheme details

The Sun Life Assurance Company of Canada 1988 UK and Irish Employee Benefits scheme (‘Sun Life of Canada Scheme’) was consolidated within

the Group financial statements following the acquisition of the Sun Life businesses on 3 April 2023. The Sun Life of Canada Scheme is a registered

occupational pension scheme, set up under trust, and legally separate from the principal employer Phoenix Life CA Limited (formerly known as Sun

Life Assurance Company of Canada (U.K.) Limited). The Scheme is administered by a specialist third party administrator, Hymans Robertson LLP. A

Trustee Board is responsible for ensuring the Scheme is run in accordance with the Trust Deed and Rules and for ensuring compliance with

legislation although certain tasks are delegated to third parties. The Trustee Board is made up of three Trustees; an Independent Trustee who is also

the Chair, a Principal Employer appointed Trustee and a Member-Nominated Trustee. The Independent Trustee is Capital Cranfield Pension

Trustees Limited. The Sun Life of Canada Scheme is closed to new entrants and to future accrual for active members.

The valuation has been based on an assessment of the liabilities of the Sun Life of Canada Scheme as at 31 December 2024 undertaken by

independent qualified actuaries. The present values of the defined benefit obligation and the related interest costs have been measured using the

projected unit credit method.

The economic surplus of the Scheme is anticipated to be used to cover future costs of the Scheme and will be fully utilised prior to any winding-up

of the Scheme. As a result, no provision for tax is deducted from the surplus.

Funding

The last funding valuation of the Sun Life of Canada Scheme was carried out by a qualified actuary as at 31 December 2022 and showed a surplus

of £6 million. No contributions are required to be paid by the employer into the Scheme.

Financials

Notes to the consolidated financial statements continued

280 Phoenix Group Holdings plc Annual Report and Accounts 2024

G1.5.2 Summary of amounts recognised in the consolidated financial statements

The amounts recognised in the consolidated financial statements are as follows:

	Fair value of	Defined benefit		Reimbursement
	scheme assets	obligation	Total	right
2024	£m	£m	£m	£m
At January	297	(280)	17	2
Interest income/(expense)	14	(13)	1	–
Administrative expenses	(2)	–	(2)	–
Included in profit or loss	12	(13)	(1)	–
Remeasurements:
Return on plan assets excluding amounts included in interest income	(27)	–	(27)	–
Gain from changes in demographic assumptions	–	1	1	–
Gain from changes in financial assumptions	–	27	27	–
Experience loss	–	(2)	(2)	–
Included in other comprehensive income	(27)	26	(1)	–
Benefit payments	(15)	15	–	–
At 31 December	267	(252)	15	2

	Fair value of	Defined benefit		Reimbursement
	scheme assets	obligation	Total	right
2023	£m	£m	£m	£m
On acquisition of Phoenix Life CA Holdings Limited (formerly SLF of Canada
UK Limited)(note H2)	302	(286)	16	2
Interest income/(expense)	14	(13)	1	–
Included in profit or loss	14	(13)	1	–
Remeasurements:
Return on plan assets excluding amounts included in interest income	(5)	–	(5)	–
Gain from changes in demographic assumptions	–	5	5	–
Loss from changes in financial assumptions	–	(4)	(4)	–
Experience gain	–	4	4	–
Included in other comprehensive income	(5)	5	–	–
Benefit payments	(14)	14	–	–
At 31 December	297	(280)	17	2

G1.5.3 Scheme assets

The distribution of the scheme assets at the end of the year was as follows:

		2024		2023
		Of which not		Of which not
		quoted in an active		quoted in an active
	Total	market	Total	market
	£m	£m	£m	£m
Debt securities	28	–	36	–
Cash and cash equivalents	8	–	4	–
Qualifying insurance contracts 1	231	231	257	257
Pension scheme assets	267	231	297	257

1 In 2018 and 2021 the Scheme completed two buy-in transactions with external parties which cover approximately 90% of the Scheme’s liabilities.

G1.5.4 Defined benefit obligation

The calculation of the defined benefit obligation can be allocated to the scheme’s members as follows:

• Deferred scheme members: 40% (2023: 40%); and

• Pensioners: 60% (2023: 60%).

The weighted average duration of the defined benefit obligation at 31 December 2024 is 11.7 years (2023: 12.8 years).

G. Other statement of consolidated financial position notes continued

G1. Pension schemes continued

Financials

281Phoenix Group Holdings plc Annual Report and Accounts 2024

Principal assumptions

The principal financial assumptions of the Sun Life of Canada Scheme are set out in the table below:

	2024	2023
	%	%
Rate of increase for pensions in payment	3.10	3.05
Rate of increase for deferred pensions	2.20	2.15
Discount rate	5.55	4.60
Inflation – RPI	3.20	3.10
Inflation – CPI	2.30	2.30

The discount rate and inflation rate assumptions have been determined by considering the shape of the appropriate yield curves and the duration

of the Sun Life of Canada Scheme’s liabilities. This method determines an equivalent single rate for each of the discount and inflation rates, which is

derived from the profile of projected benefit payments.

The post-retirement mortality assumptions are in line with 2022 VITA Lite tables (2023: 2022 tables). Future longevity improvements are in line with

the 2023 CMI model with no weight on 2020 and 2021 experience and 15% weighting on 2022 and 2023 experience (2023: 2022 CMI model with

no weight on 2020 and 2021 experience and 25% weighting on 2022 experience), with a long-term trend of 1.5% p.a. for males (2023: 1.5%) and

1.5% p.a. for females (2023: 1.5%).

Under these assumptions the average life expectancy from retirement for a member currently aged 45 retiring at age 65 is 23.1 years and 26.1 years

for male and female members respectively (2023: 23.1 years and 26.1 years for male and female members respectively).

A quantitative sensitivity analysis for significant actuarial assumptions is shown below:

2024	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	252	(7)	7	5	(5)	6	(6)

2023	Base	Discount rate			RPI	Life expectancy
Assumptions		25bps	25bps	25bps	25bps	1 year	1 year
Sensitivity level		increase	decrease	increase	decrease	increase	decrease
Impact on the defined benefit obligation (£m)	280	(9)	9	7	(8)	11	(11)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely

to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to

significant actuarial assumptions the same method has been applied as when calculating the pension liability recognised within the statement

of consolidated financial position.

G2. Intangible assets

Goodwill

Business combinations are accounted for by applying the acquisition method. Goodwill represents the difference between the cost of the

acquisition and the fair value of the net identifiable assets acquired.

Goodwill is measured on initial recognition at cost. Following initial recognition, goodwill is stated at cost less any accumulated impairment losses.

Goodwill is not amortised but is tested for impairment annually or when there is evidence of possible impairment. For impairment testing,

goodwill is allocated to relevant cash generating units. Goodwill is impaired when the recoverable amount is less than the carrying value.

In certain acquisitions an excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities, contingent liabilities

and non-controlling interests over cost may arise. Where this occurs, the surplus of the fair value of net assets acquired over the fair value of the

consideration is recognised in the consolidated income statement.

Acquired in-force business (‘AVIF’)

Investment contracts without DPF acquired in business combinations and portfolio transfers are measured at fair value at the time of acquisition.

At initial recognition the AVIF represents the difference between the fair value of the contractual rights acquired and obligations assumed and

the liability measured in accordance with the Group’s accounting policies. The liability measured in accordance with the Group’s accounting

policies is determined using a valuation technique to provide a reliable estimate of the amount for which the liability could be transferred in an

orderly transaction between market participants at the measurement date, subject to a minimum equal to the surrender value. This acquired

in-force business is amortised on a diminishing balance basis.

An impairment review is performed whenever there is an indication of impairment. When the recoverable amount is less than the carrying value,

an impairment loss is recognised in the consolidated income statement.

The acquired in-force business is allocated to relevant cash generating units for the purposes of impairment testing.

Brands

Brands are measured on initial recognition at cost. The cost of an intangible asset acquired in a business combination is the fair value as at the

date of the acquisition. The cost of an intangible asset acquired in exchange for a non-monetary asset is measured at fair value as at the date of

the transaction. Following initial recognition, the brand and other contractual arrangement intangible assets are carried at cost less accumulated

amortisation and any accumulated impairment losses.

Financials

Notes to the consolidated financial statements continued

282 Phoenix Group Holdings plc Annual Report and Accounts 2024

Amortisation is calculated using the straight-line method to allocate the cost of brands over their estimated useful lives. They are tested for

impairment whenever there is evidence of possible impairment. For impairment testing, they are allocated to the relevant cash generating unit.

Brands are impaired when the recoverable amount is less than the carrying value.

Internally generated software assets

Intangible assets arising from development costs are capitalised when it has been established that the project is technically and financially

feasible and the Group has both the intention and the ability to use the completed asset. Internally generated software assets are measured on

initial recognition at cost which comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of

operating in the manner intended by management. Following initial recognition, the assets are carried at cost less accumulated amortisation and

any accumulated impairment losses.

Amortisation is calculated using the straight-line method to allocate the cost of the internally generated software assets over their estimated

useful lives which is estimated to be between 3 and 10 years. They are tested for impairment whenever there is evidence of possible impairment.

				Other intangible assets
				Internally
		Acquired in-force		generated
	Goodwill	business	Brands	software assets	Total
2024	£m	£m	£m	£m	£m
Cost or valuation
At 1 January	57	4,196	131	–	4,384
Additions	–	–	–	29	29
At 31 December	57	4,196	131	29	4,413
Amortisation and impairment
At 1 January	(47)	(2,284)	(25)	–	(2,356)
Amortisation charge for the year	–	(266)	(6)	(1)	(273)
At 31 December	(47)	(2,550)	(31)	(1)	(2,629)
Carrying amount at 31 December	10	1,646	100	28	1,784
Amount recoverable after 12 months	10	1,417	94	24	1,545

2023

		Acquired in-force
	Goodwill	business	Brands	Total
	£m	£m	£m	£m
Cost or valuation
At 1 January	57	4,180	131	4,368
Acquisition of Phoenix Life CA Holdings Limited
(Formerly known as SLF of Canada UK Limited)	–	16	–	16
At 31 December	57	4,196	131	4,384
Amortisation and impairment
At 1 January	(47)	(1,966)	(19)	(2,032)
Amortisation charge for the year	–	(290)	(6)	(296)
Impairment charge for the year	–	(28)	–	(28)
At 31 December	(47)	(2,284)	(25)	(2,356)
Carrying amount at 31 December	10	1,912	106	2,028
Amount recoverable after 12 months	10	1,654	100	1,764

G2.1 Goodwill

The carrying value of goodwill has been tested for impairment at the year end and the results of this exercise are detailed below.

Goodwill with a carrying value of £10 million (2023: £10 million) was recognised on the acquisition of AXA Wealth during 2016 and has been

allocated to the Pensions & Savings and Europe & Other segments. This represents the value of the workforce assumed and the potential for future

value creation, which relates to the ability to invest in and grow the SunLife brand. Value in use has been determined as the present value of certain

future cash flows associated with that business. The cash flows used in the calculation are consistent with those adopted by management in the

Group’s operating plan, and for the period 2028 and beyond, assume a zero growth rate. The underlying assumptions of these projections include

market share, customer numbers, commission rates and expense inflation. The cash flows have been valued at a risk adjusted discount rate of 15%

(2023: 14%) that makes prudent allowance for the risk that future cash flows may differ from that assumed.

This test demonstrated that value in use was greater than carrying value. Given the magnitude of the excess of the value in use over carrying value,

management does not believe that a reasonably foreseeable change in key assumptions would cause the carrying value to exceed value in use.

G. Other statement of consolidated financial position notes continued

G2. Intangible assets continued

Financials

283Phoenix Group Holdings plc Annual Report and Accounts 2024

G2.2 Acquired in-force business

AVIF on investment contracts without DPF is amortised in line with emergence of economic benefits over their expected term. AVIF balances are

assessed for impairment where an indicator of impairment has been identified and none were identified and none were identified in either the

current or prior periods.

AVIF of £16 million was recognised during 2023 upon acquisition of Phoenix Life CA Holdings Limited (formerly known as SLF of Canada UK

Limited). Further details are included in note H2.

On 23 February 2021, the Group entered into an agreement with Aberdeen Group plc to simplify the arrangements of their Strategic Partnership.

Under the terms of the transaction, the Group agreed to sell its UK investment and platform related products, comprising Wrap SIPP, Onshore bond

and UK TIP to Aberdeen Group plc through a Part VII transfer. In 2021, the balances in the statement of consolidated financial position relating to

this business were classified as a disposal group held for sale.

The total proceeds of disposal for this business were not expected to exceed the carrying value of the related net assets and accordingly the

disposal group was recognised at fair value less costs to sell. The value of the AVIF at 23 February 2021, which related to the SIPP and Onshore

business, was £122 million and an initial impairment charge of £59 million was recognised at the date of the transaction. Further impairment charges

have subsequently been recognised each year up to 31 December 2023 (2023: £28 million).

As at 31 December 2023, it had been agreed with Aberdeen Group plc that the insured funds element of the Wrap SIPP and Onshore Bond

businesses would no longer transfer to Aberdeen Group (see note H3 for further details). As a result, this business no longer met the requirements to

be classified as held for sale. Consequently, the AVIF, which had a carrying value of £9 million at 31 December 2023, was no longer deducted from

the AVIF line item reported in the consolidated statement of financial position. The remaining AVIF has been fully amortised during the period in

line with the transfer of the economic risk and rewards for this business to Aberdeen Group plc via the profit transfer arrangement.

G2.3 Brands

An intangible asset was recognised at cost on acquisition of AXA Wealth and represents the value attributable to the SunLife brand as

at 1 November 2016. The intangible asset was valued on a ‘multi-period excess earnings’ basis and was recognised at a cost of £20 million.

Impairment testing was performed in a combined test with the AXA goodwill (see section G2.1). The value in use continues to exceed its carrying

value. This brand intangible is being amortised over a 10 year period. The carrying value of the AXA Wealth brand as at 31 December 2024 is

£3 million (2023: £6 million).

On 23 February 2021, the Group entered into an agreement to acquire ownership of the Standard Life brand as part of a larger transaction with

Aberdeen Group plc, which transferred to the Group in May 2021. The Standard Life brand was initially recognised at a value of £111 million which

represented the fair value attributable to the brand as at the transaction date. The intangible asset was valued on a ‘multi-period excess earnings’

basis and is being amortised over a period of 30 years. The carrying value of the Standard Life brand as at 31 December 2024 is £97 million

(2023: £100 million).

G2.4 Internally generated software assets

The Group’s strategic priorities are to ‘grow, optimise and enhance‘ the business through investment. As a result of its investment in new technology

and software capability, the Group has met the requirements to capitalise internally generated software costs. During 2024, the Group capitalised

£29 million (2023: £nil) of development costs and amortised £1 million of these costs (2023: £nil).

G3. Property, plant and equipment

Owner-occupied property is stated at its revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated

depreciation and impairment. Owner-occupied property is depreciated over its estimated useful life, which is taken as 20-50 years. Land is not

depreciated. Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the owner-occupied

property and the net amount is restated to the revalued amount of the asset. Gains in owner-occupied property are recognised in other

comprehensive income. When a revaluation loss arises on a previously revalued asset it is first deducted against any previous revaluation gain.

Any excess impairment is then recorded as an impairment expense in the consolidated income statement.

The right-of-use assets are initially measured at cost, and subsequently at cost less any accumulated depreciation and impairments, and adjusted

for certain remeasurements of the lease liability. The right-of-use assets are depreciated over the remaining lease term which is between 1 and 8

years (2023: 1 and 11 years).

Equipment consists primarily of computer equipment and fittings. Equipment is stated at historical cost less deprecation. Where acquired in a

business combination, historical cost equates to the fair value at the acquisition date. Depreciation on equipment is charged to the consolidated

income statement over its estimated useful life of between 2 and 15 years.

Financials

Notes to the consolidated financial statements continued

284 Phoenix Group Holdings plc Annual Report and Accounts 2024

	Owner-occupied	Right-of-use assets
	properties	- property	Equipment	Total
2024	£m	£m	£m	£m
Cost or valuation
At 1 January	28	96	75	199
Additions	–	4	8	12
Revaluation losses	(6)	–	–	(6)
Disposals	–	–	(1)	(1)
At 31 December	22	100	82	204
Depreciation
At 1 January	–	(42)	(51)	(93)
Depreciation	–	(8)	(13)	(21)
Disposals	–	–	1	1
At 31 December	–	(50)	(63)	(113)
Carrying amount at 31 December	22	50	19	91

	Owner-occupied	Right-of-use assets
	properties	- property	Equipment	Total
2023	£m	£m	£m	£m
Cost or valuation
At 1 January	32	96	67	195
Additions	1	–	8	9
Revaluation losses	(5)	–	–	(5)
At 31 December	28	96	75	199
Depreciation
At 1 January	–	(32)	(38)	(70)
Depreciation	–	(10)	(13)	(23)
At 31 December	–	(42)	(51)	(93)
Carrying amount at 31 December	28	54	24	106

Owner-occupied properties have been valued by accredited independent valuers at 31 December 2024 on an open market basis in accordance

with the Royal Institution of Chartered Surveyors’ requirements, which is deemed to equate to fair value. The fair value measurement for the

properties of £22 million (2023: £28 million) has been categorised as Level 3 based on the non-observable inputs to the valuation technique used.

Unrealised loss for the current year is £6 million (2023: £5 million).

The fair value of the owner-occupied properties was derived using the investment method supported by comparison with similar market

transactions for similar properties. The significant non-observable inputs used in the valuations are the expected rental values per square foot and

the capitalisation rates.

The fair value of the owner-occupied properties valuation would increase (decrease) if the expected rental values per square foot were to be higher

(lower) and the capitalisation rates were to be lower (higher).

Since the year end the Group has agreed to the sale of an owner-occupied building and the sale is expected to be completed before the end

of 2025. The value of this property at 31 December 2024 was £10 million and no profit or loss is expected upon completion of the sale.

G4. Investment property

Investment property, including right of use assets, is initially recognised at cost, including any directly attributable transaction costs.

Subsequently investment property is measured at fair value. Fair value is the price that would be received to sell a property in an orderly

transaction between market participants at the measurement date. Fair value is determined without any deduction for transaction costs that may

be incurred on sale or disposal. Gains and losses arising from the change in fair value are recognised as income or an expense in the statement of

comprehensive income.

Investment property includes right-of-use assets, where the Group acts as lessee. Leases, where a significant portion of the risks and rewards of

ownership are retained by the lessor, are classified as operating leases. Where investment property is leased out by the Group, rental income

from these operating leases is recognised as income in the consolidated income statement on a straight-line basis over the period of the lease.

G. Other statement of consolidated financial position notes continued

G3. Property, plant and equipment continued

Financials

285Phoenix Group Holdings plc Annual Report and Accounts 2024

	2024	2023
	£m	£m
At 1 January	5,742	6,233
Additions	920	49
Acquisition of Phoenix Life CA Holdings Limited (Formerly known as SLF of Canada UK Limited (note H2)	–	283
Improvements	81	27
Disposals	(1,173)	(484)
Movement in foreign exchange	(18)	(4)
Losses on adjustments to fair value (recognised in consolidated income statement)	(100)	(362)
	5,452	5,742
Less amounts classified as held for sale (note H3)	(1,082)	(2,044)
At 31 December	4,370	3,698
Unrealised losses on properties held at end of year	(58)	(180)

As at 31 December 2024, a property portfolio, including amounts classified held for sale of £5,368 million (2023: £5,621 million), is held by the Life

Companies in a mix of commercial sectors, spread geographically throughout the UK and Europe.

Investment properties also includes £29 million (2023: £42 million) of property reversions arising from sales of the NPI Extra Income Plan (see note

E5 for further details) and £47 million (2023: £64 million) from the Group’s interest in the residential property of policyholders who have previously

entered into an Equity Release Income Plan (’ERIP’) policy.

Certain investment properties held by the Life Companies possess a ground rent obligation which gives rise to both a right-of-use asset and a lease

liability. The right-of-use asset associated with the ground rent obligation is valued at fair value and is included within the total investment property

valuation. The value of the ground rent right-of-use asset as at 31 December 2024 was £8 million (2023: £15 million). The remeasurement resulted in

no change in value of the ground rent right-of-use asset (2023: no change). There were disposals of £7 million (2023: £6 million) of ground rent

right-of-use assets during the period.

Commercial investment property is measured at fair value by independent property valuers having appropriate recognised professional

qualifications and recent experiences in the location and category of the property being valued. The valuations are carried out in accordance with

the Royal Institute of Chartered Surveyors (‘RICS’) guidelines with expected income and capitalisation rate as the key non-observable inputs.

The NPI residential property reversions, an interest in customers’ properties which the Group will realise upon their death, are valued using

a discounted cash flow model based on the Group’s proportion of the current open market value, and discounted for the expected lifetime of the

policyholder derived from published mortality tables, the mortality rates are 130% for both males and females based on the IFL92C15 table for

males and the IML92C15 table for females. The open market value is measured by independent local property surveyors having appropriate

recognised professional qualifications with reference to the assumed condition of the property and local market conditions. The individual

properties are valued triennially and indexed using regional house price indices to the year end date. The discount rate is a three-year swap rate

plus 1.7% margin (2023: three-year swap rate plus 1.7% margin), and adjusted for the deferred possession rate of 3.7% (2023: 3.7%). Assumptions

are also made in the valuation for future movements in property prices, based on a risk free rate. The residential property reversions have been

substantially refinanced under the arrangements with Santander as described in note E5.

The ERIP residential property reversions, an interest in the residential property of policyholders who have previously entered into an ERIP policy

and been provided with a lifetime annuity in return for the legal title to their property, are valued using unobservable inputs and management’s best

estimates. As the inward cash flows on these properties will not be received until the lifetime lease is no longer in force, which is usually upon the

death of the policyholder, these interests are valued on a reversionary basis which is a discounted current open market value.

The open market values of the properties are independently revalued every two years by members of the Royal Institution of Chartered Surveyors

and in the intervening period are adjusted by reference to the Nationwide Building Society regional indices of house prices. The discount period is

based on the best estimates of the likely date the property will become available for sale and the discount rate applied is determined by the general

partner as its best estimate of the appropriate discount rate. The mortality assumption is based on the PMLO8HAWP table for males and the

PFLO8HAWP table for females, adjusted to reflect the historic experience of the business concerned. The mortality rates are projected using

future mortality improvements from the CMI Mortality Projection Model. No explicit allowance is made for house price inflation in the year through

to their realisation. Therefore, the key assumptions used in the valuation of the reversionary interests are the interest discount rate and the mortality

assumption. The discount rate was 5% (2023: 5%).

The fair value measurement of the investment properties has been categorised as Level 3 based on the inputs to the valuation techniques

used. The following table shows the valuation techniques used in measuring the fair value of the investment properties, the significant

non-observable inputs used, the inter-relationship between the key non-observable inputs and the fair value measurement of

the investment properties:

			Weighted average	Weighted average
Description	Valuation techniques	Significant non-observable inputs	2024	2023
Commercial Investment	RICS valuation	Expected income per sq. ft.	£25.46	£23.41
Property		Estimated rental value per hotel room	£6,026	£7,156
		Estimated rental value per parking space	£1,071	£1,123
		Capitalisation rate	4.91%	5.13%

Financials

Notes to the consolidated financial statements continued

286 Phoenix Group Holdings plc Annual Report and Accounts 2024

The estimated fair value of commercial properties would increase (decrease) if:

• the expected income were to be higher (lower); or

• the capitalisation rate were to be lower (higher).

The estimated fair value of the NPI residential property reversions would increase (decrease) if:

• the deferred possession rate were to be lower (higher);

• the mortality rate were to be higher (lower).

The estimated fair value of the ERIP residential property reversions would increase (decrease) if:

• the discount rate were to be lower (higher);

• the mortality rate were to be higher (lower).

Direct operating expenses (offset against rental income in the consolidated income statement) in respect of investment properties that generated

rental income during the year amounted to £35 million (2023: £36 million). The direct operating expenses arising from investment property that did

not generate rental income during the year amounted to £2 million (2023: £5 million).

Future minimum lease rental receivables in respect of non-cancellable operating leases on investment properties were as follows:

	2024	2023
	£m	£m
Not later than 1 year	259	278
Later than 1 year and not later than 5 years	830	919
Later than 5 years	2,305	2,903

G5. Other receivables

Other receivables are recognised when due and measured on initial recognition at the fair value of the amount receivable. Subsequent to initial

recognition, these receivables are measured at amortised cost using the effective interest rate method.

		2023
	2024	restated 1
	£m	£m
Investment broker balances	338	115
Cash collateral pledged and initial margins posted	1,995	1,728
Property related receivables	158	165
Deferred acquisition costs relating to investment contracts	98	82
Other debtors	454	562
At 31 December	3,043	2,652
Amount recoverable after 12 months	91	13

1 See note A3 for details of the prior year restatements.

G6. Cash and cash equivalents

Cash and cash equivalents comprise cash balances and short-term deposits with an original maturity term of three months or less at the date of

placement. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are deducted from cash

and cash equivalents for the purpose of the statement of consolidated cash flows. Balances held within collective investment schemes to meet

both short and long term liquidity requirements of the Group are excluded from cash and cash equivalents.

	2024	2023
	£m	£m
Bank and cash balances	3,040	2,751
Short-term deposits (including notice accounts and term deposits)	6,446	4,469
	9,486	7,220
Less amounts classified as held for sale	(33)	(52)
At 31 December	9,453	7,168

Deposits are subject to a combination of fixed and variable interest rates. The carrying amounts of balances held at amortised cost approximate

to fair value at the period end. Cash and cash equivalents in long-term business operations and consolidated collective investment schemes of

£9,255 million (2023: £6,994 million) are primarily held for the benefit of policyholders and so are not generally available for use by the owners.

G. Other statement of consolidated financial position notes continued

G4. Investment property continued

Financials

287Phoenix Group Holdings plc Annual Report and Accounts 2024

G7. Provisions

A provision is recognised when the Group has a present legal or constructive obligation, as a result of a past event, which is likely to result in an

outflow of resources and where a reliable estimate of the amount of the obligation can be made. If the effect is material, the provision is

determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money

and, where appropriate, the risks specific to the liability.

A provision is recognised for onerous contracts when the expected benefits to be derived from the contracts are less than the related

unavoidable costs. The unavoidable costs reflect the net cost of exiting the contract, which is the lower of the cost of fulfilling it and any

compensation or penalties arising from failure to fulfil it. Costs that meet the requirements to be classified as a provision but are determined to be

directly attributable to insurance contracts and investment contracts with DPF are classified within the insurance contract assets and liabilities.

Additions and reductions to provisions are recognised within administrative expenses within the consolidated income statement.

Where it is expected that a part of the expenditure required to settle a provision will be reimbursed by a third party the reimbursement is

recognised when, and only when, it is virtually certain that the reimbursement will be received. This reimbursement is recognised as a separate

asset within other receivables and will not exceed the amount of the provision.

							Restructuring provisions
								Transfer of
	Leasehold					Transfer of		ReAssure
	properties		Known	Indirect	Transition and	policy	Operational	policy
	dilapidations	Staff related	incidents	Taxation	Transformation	administration	simplification	administration	Other	Total
2024	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January	9	11	15	59	47	5	–	–	9	155
Additions in the year	3	–	7	12	29	2	34	36	18	141
Utilised during the year	–	–	(5)	(6)	(17)	(4)	(17)	–	(14)	(63)
Released during the year	–	(2)	(2)	(15)	–	–	–	–	(1)	(20)
Discounting during the year	–	–	–	–	(5)	–	–	(2)	–	(7)
At 31 December	12	9	15	50	54	3	17	34	12	206

Staff related

Staff related provisions include provisions for unfunded pensions of £7 million (2023: £8 million), and private medical and other insurance costs for

former employees of £2 million (2023: £3 million).

Known incidents

The known incidents provision was created for historical data quality, administration systems problems and process deficiencies on the policy

administration, financial reconciliations and operational finance aspects of business outsourced. These balances represent the best estimates of

costs payable to customers. Additional information has been given below in respect of the more significant balances within this provision.

During 2021, a £15 million provision was recognised in relation to errors in final encashment calculations for With Profits Trustee Investment Plans

and in 2022 it was increased to £29 million. During the year, £1 million (2023: £18 million) was utilised and £nil (2023: £7 million) was released. The

remaining balance at 31 December 2024 is £3 million (2023: £4 million). An £11 million provision was also recognised in April 2021 following

identification that certain customers who have a Protected Pension Age or a Protected Tax-free Lump Sum may not have had their benefits settled

correctly. The balance at 31 December 2024 of £3 million (2023: £3 million) remained unchanged (2023: £4 million released). These provisions will

be utilised within one to two years.

The remaining provisions of £9 million as at 31 December 2024 (2023: £8 million) are expected to be utilised within one to two years. As at

31 December 2024, there are no significant uncertainties which could give rise to a material change to the value of the provisions held for current

known incidents.

Indirect taxation

The indirect taxation relates to various indirect tax matters across operational taxes, employment taxes and VAT. During the year, the provision was

strengthened by £12 million (2023: £43 million), £6 million (2023: £3 million) was utilised and a further £15 million (2023: £10 million) was released.

The remaining balance at 31 December 2024 of £50 million (2023: £59 million) represents the Group’s estimate of the maximum exposure as at the

reporting date and is expected to be utilised in one to three years.

Restructuring provisions

Transition and transformation provision

Following the acquisition of the Standard Life Assurance businesses in August 2018, the Group established a transition and transformation

programme which aims to deliver the integration of the Group’s operating models via a series of phases. During 2019, the Group announced its

intention to extend its strategic partnership with Tata Consultancy Services (‘TCS’) to provide customer servicing, to develop a digital platform and

for migration of existing Standard Life policies to this platform which raised a valid expectation of the impacts in those likely to be affected.

The initial provision was established in 2019 and included migration costs, severance costs and other expenses. Migration costs are considered a

direct expenditure necessarily entailed by the restructuring and represent an obligation arising from arrangements entered into with TCS during

2019. No costs have been provided for that relate to the ongoing servicing of policies. Migration costs payable to TCS are subject to limited

uncertainty as they are fixed under the terms of the agreement entered into. The severance costs are subject to uncertainty and will be impacted by

the number of staff that transfer to TCS, and the average salaries and number of years’ service of those affected. There was an increase in costs

during the year following on from a strategic review of the programme to provide for decommissioning costs associated with the restructure. These

costs are subject to uncertainty and will be impacted by the phasing of the decommissioning activities and any subsequent updates made to the

best estimate view of the costs.

Financials

Notes to the consolidated financial statements continued

288 Phoenix Group Holdings plc Annual Report and Accounts 2024

During the year, the provision was increased by £29 million (2023: £6 million), a further £17 million (2023: £20 million) was utilised and £nil

(2023: £11 million) was released. The impact of discounting the provision was £5 million in the year. The remaining £54 million (2023: £47 million)

is expected to be utilised within one to four years.

Transfer of policy administration

During 2018, the Group announced its intention to move to a single outsourcer platform and to transfer a further 2 million of the Group’s legacy

policies to TCS. An initial provision was recognised in 2018 for the expected cost of the platform migration, severance costs and other costs

associated with exiting from the current arrangements. Migration costs, severance costs and associated exit costs were considered a direct

expenditure necessarily entailed by the restructuring and represent an obligation arising from arrangements entered into with TCS during 2018.

No costs have been provided for that relate to the ongoing servicing of policies.

There is considered to be limited uncertainty associated with the remaining costs as the restructuring programme is very close to completion.

During the year the provision was increased by £2 million (2023: £1 million) and a further £4 million (2023: £4 million) was utilised. The remaining

provision of £3 million (2023: £5 million) is expected to be fully utilised in 2025.

Operational simplification

This Group-wide programme includes activity to take the Group from being a financial engineering business to a purpose led, organically growing

business over the next three years. As part of this, an operational simplification workstream is undertaking activity to simplify the Group’s operating

model such that the business is more efficient and focused on the Group’s new strategic direction through review of the Group’s organisational

structure and ultimately by reducing headcount in the business.

During the year, a severance costs provision of £34 million was established representing the costs that are considered to be necessarily entailed by

this restructure. The severance costs are subject to uncertainty and will be impacted by the number of staff that leave the Group, and the average

salaries and number of years’ service of those affected. Costs of £17 million were utilised during the year and the remaining provision of £17 million

is expected to be utilised within one year.

Transfer of ReAssure policy administration

During 2023, the Group announced its intention to further extend its strategic partnership with TCS through the migration of all ReAssure policies

onto the TCS BaNCS platform and the consolidation of its operating locations, thereby raising a valid expectation of the impacts in those likely to

be affected. During the year, an accounting provision of £36 million was recognised in respect of the element of migration costs, severance costs

and associated exit costs not considered to be directly attributable to insurance contracts and investment contracts with DPF.

As with similar provisions, migration costs payable to TCS are subject to limited uncertainty as they are fixed under the terms of the agreement

entered into and the severance costs are subject to uncertainty and will be impacted by the number of staff that transfer to TCS, and the average

salaries and number of years’ service of those affected.

The remaining provision of £34 million is after the impact of discounting of £2 million and is expected to be utilised within one to four years.

Other provisions

Other provisions include £4 million (2023: £3 million) of obligations arising under a gift voucher scheme operated by the SunLife business and a

commission clawback provision which represents the expected future clawback of commission income earned by the SunLife business as a result

of assumed lapses of policies or associated benefits.

The remaining other provisions of £8 million (2023: £6 million) consist of a number of small balances.

Discounting

The impact of discounting on provisions during the year from either the passage of time or from a change in the discount rate has been allowed for

where the impact is considered to be material.

G8. Tax assets and liabilities

Deferred tax is provided for on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and

the amounts used for taxation purposes. Deferred tax is not provided in respect of the initial recognition of goodwill and the initial recognition of

assets or liabilities in a transaction that is not a business combination and that, at the time of the transaction, affects neither accounting nor

taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets

and liabilities, using tax rates and laws enacted or substantively enacted at the period end.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be

utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

		2023
	2024	restated 1
	£m	£m
Current tax:
Current tax receivable	523	502
Current tax payable	(21)	(41)
Deferred tax:
Deferred tax assets	146	143
Deferred tax liabilities (restated) 1	(198)	(320)

1 See note A3 for details of the prior year restatements .

G. Other statement of consolidated financial position notes continued

G7. Provisions continued

Financials

289Phoenix Group Holdings plc Annual Report and Accounts 2024

Movement in deferred tax liabilities

				Recognised in	Recognised
				consolidated	in other
	1 January		1 January	income	comprehensive
	as reported	Restatements 1	restated 1	statement	income	31 December
2024	£m	£m	£m	£m	£m	£m
Trading losses	355	44	399	137	–	536
Capital losses	2	–	2	(2)	–	–
Expenses and deferred acquisition costs carried forward	422	–	422	(177)	–	245
Provisions and other temporary differences	4	–	4	(1)	–	3
Non-refundable pension scheme surplus	(108)	17	(91)	66	(32)	(57)
Committed future pension contributions	3	–	3	(3)	–	–
Transitional adjustment relating to IFRS 9/17	10	–	10	5	–	15
Accelerated capital allowances	23	–	23	3	–	26
Intangibles	31	–	31	(30)	–	1
Acquired in-force business	(361)	–	(361)	47	–	(314)
Customer relationships	(27)	–	(27)	2	–	(25)
Unrealised gains	(361)	–	(361)	(51)	–	(412)
Actuarial liability differences between local GAAP and IFRS	(118)	(124)	(242)	173	–	(69)
Other	11	–	11	(12)	–	(1)
	(114)	(63)	(177)	157	(32)	(52)

1 See note A3 for details of the prior year restatements.

				Recognised in
				consolidated	Recognised	Phoenix Life
				income	in other	CA Holdings		Less amounts
	1 January		1 January	statement	comprehensive	Limited	Other	classified as
	as reported	Restatements 1	restated 1	restated 1	income	acquisition	movements	held for sale	31 December
2023 (restated)	£m	£m	£m	£m	£m	£m	£m	£m	£m
Trading losses	196	–	196	176	–	27	–	–	399
Capital losses	24	–	24	(22)	–	–	–	–	2
Expenses and deferred acquisition
costs carried forward	397	–	397	6	–	19	–	–	422
Provisions and other temporary differences	32	–	32	(28)	–	–	–	–	4
Non-refundable pension
scheme surplus	(151)	9	(142)	34	19	(4)	2	–	(91)
Committed future pension
contributions	9	–	9	(5)	(1)	–	–	–	3
Transitional adjustment
relating to IFRS 9/17	–	–	–	(1)	2	9	–	–	10
Accelerated capital allowances	17	–	17	4	–	1	–	1	23
Intangibles	14	–	14	17	–	–	–	–	31
Acquired in-force business	(405)	–	(405)	55	–	(4)	–	(7)	(361)
Customer relationships	(28)	–	(28)	1	–	–	–	–	(27)
Unrealised gains	(261)	–	(261)	(77)	–	(23)	–	–	(361)
Actuarial liability differences
between local GAAP and IFRS	2	(9)	(7)	(224)	–	(16)	5	–	(242)
Other	3	–	3	8	–	–	–	–	11
	(151)	–	(151)	(56)	20	9	7	(6)	(177)

1 See note A3 for details of the prior year restatements.

The standard rate of UK corporation tax for the year ended 31 December 2024 is 25% (2023: 23.5%).

Shareholder deferred tax assets and liabilities, where provided, are reflected at 25%. Deferred income tax assets are recognised for tax losses

carried forward only to the extent that realisation of the related tax benefit is probable.

Financials

Notes to the consolidated financial statements continued

290 Phoenix Group Holdings plc Annual Report and Accounts 2024

The deferred tax asset relating to trading losses has increased in 2024 from £399 million to £536 million, as shown in the table above (2023:

increase from £196 million to £399 million). This has arisen principally due to net taxable losses arising within the constituent entities of the Group.

The Group utilises profit forecasts to support recognition of a deferred tax asset in relation to the losses. The profit forecasts are prepared for the

Annual Operating Plan which is used for various purposes including target setting, dividend affordability assessments and going concern.

The Group considers the forecasts to be a reliable source of information to support the recognition of a deferred tax asset in relation to the losses.

The forecasts suggest that the losses will be utilised in full within 8 years.

		2023
	2024	restated 1
	£m	£m
Deferred tax assets have not been recognised in respect of:
Tax losses carried forward	54	99
Excess expenses and deferred acquisition costs	–	12
Actuarial liability differences between local GAAP and IFRS 17	–	14
Intangibles	–	12
Deferred tax assets not recognised on capital losses	116	119

1 The adjustment to the 2023 deferred tax assets not recognised relates principally to Phoenix Life CA Limited’s (formerly known as Sun Life Assurance Company of Canada (U.K.) Limited) tax losses

following acquisition of the company in 2023. The adjustment now includes these tax losses at their tax value rather than the gross amount, aligning with the Group’s other deferred tax assets

not recognised.

At 31 December 2023, the Group also had £12 million of gross BLAGAB (life business) trading losses that were projected to be utilised, however

no value was attributed to these deferred tax assets given the interaction with other deductible temporary differences. At 31 December 2024,

the quantum of BLAGAB trading losses that no value has been attributed to is £nil.

There is a technical matter which is currently being discussed with HMRC in relation to the L&G insurance business transfer to ReAssure Limited.

These discussions are not sufficiently progressed at this stage for recognition of any potential tax benefit arising.

The Group in conjunction with a number of other companies has challenged HMRC’s position on the corporation tax treatment of overseas

portfolio dividends from companies resident in the EU (‘EU dividends’) using a Group Litigation Order (‘GLO’). The issue relates to whether the UK

tax rules, which taxed EU dividends received prior to 1 July 2009, was contrary to EU law given that dividends received from UK companies were

exempt from tax. In 2009 UK tax law was changed with both overseas and UK dividends being treated as exempt from corporation tax.

In July 2018, the Supreme Court concluded in favour of the tax payer and a tax benefit of £13 million was recognised at the end of 2018 in relation

to enhanced double tax relief claims which the Group is entitled to in accordance with the Court judgement. As a result of the insurance business

transfer from Legal and General Assurance Society during 2020, the tax refund for the benefit of the Group’s with-profits and unit linked funds

increased to £45 million and £23 million respectively. During 2024 tax refunds totaling £11 million were received and the value of the remaining tax

reclaims were revised downwards by a further £11m. At 31 December 2024, the tax refunds for Group’s with-profits funds and unit linked funds are

£36 million and £10 million respectively. In the case of the with-profits funds there was an increase in unallocated surplus and for the unit linked

funds there was a corresponding increase in investment contract liabilities as a result of the recognition of the tax asset.

Settlement of this issue is subject to ongoing litigation with most recently, the Court of Appeal ruling in favour of HMRC in February 2025.

Consideration is being given as to whether this ruling will be appealed at the Supreme Court.

The Group is continuing to monitor developments in relation to the G20-OECD Inclusive Framework “Pillar Two” rules, as the Group is within scope

of the rules from 1 January 2024. Broadly, these rules seek to ensure that, on a jurisdiction-by-jurisdiction basis, large multinational enterprises pay

a minimum tax rate of 15% on worldwide profits arising after 31 December 2023.

In May 2023, the scope of IAS 12 has been amended to clarify that the standard applies to income taxes arising from tax law enacted or

substantively enacted to implement the Pillar Two model rules published by the OECD, including tax law that implements qualified domestic

minimum top-up taxes described in those rules. The amendments introduce a temporary exception to the accounting requirements for deferred

taxes in IAS 12, so that an entity would neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two

income taxes. The Group confirms that it has applied this exception during the period.

The main jurisdictions in which the Group may have exposures to Pillar Two income taxes are Ireland and the UK. As at 31 December 2024, the

Group has accrued £nil in respect of Pillar Two income taxes based on its latest assessment. The Group also notes that the Pillar Two income taxes

legislation is expected to continue developing, the rules are inherently complex and can potentially lead to arbitrary outcomes and therefore, the

Group is continuing to assess the impact of the Pillar Two income taxes legislation on its operations.

The Group also notes the enactment of legislation in Bermuda in December 2023 which introduced a Corporate Income Tax with a headline rate

of 15% effective from 1 January 2025. This legislation applies to the Group’s local Bermudian operations. Given the current size of local operations,

the Group does not expect the immediate impact to be material.

G. Other statement of consolidated financial position notes continued

G8. Tax assets and liabilities continued

Financials

291Phoenix Group Holdings plc Annual Report and Accounts 2024

G9. Lease Liabilities

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using

the Group’s incremental borrowing rate as the interest rate implicit in the lease cannot be readily determined. For ground rent leases, the

incremental borrowing rate of investment funds holding the associated investment properties is used as the discount rate. The lease liability is

subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change

in future lease payments arising from, for example, rent reviews or from changes in the assessment of whether a termination option is reasonably

certain not to be exercised. The Group has applied judgement to determine the lease term for some lease contracts with break clauses.

	2024	2023
	£m	£m
At 1 January	74	92
Leases incepted during the year	6	1
Termination of leases following the disposal of associated investment properties	(7)	(7)
Interest expense	2	2
Lease payments	(11)	(14)
At 31 December	64	74
Amount due within twelve months	13	9
Amount due after twelve months	51	65

Details of the related right-of-use assets are included in notes G3 and G4.

G10. Accruals and deferred income

This note analyses the Group’s accruals and deferred income at the end of the year.

	2024	2023
	£m	£m
Accruals	546	545
Deferred income	37	34
At 31 December	583	579
Amounts due for settlement after 12 months	38	42

G11. Other payables

Other payables are recognised when due and are measured on initial recognition at the fair value of the consideration payable. Subsequent

to initial recognition, these payables are measured at amortised cost using the effective interest rate method.

	2024	2023
	£m	£m
Investment broker balances	718	727
Property related payables	57	51
Investment management fees	18	16
Other payables	1,487	1,478
At 31 December	2,280	2,272
Amounts due for settlement after 12 months	–	–

Financials

Notes to the consolidated financial statements continued

292 Phoenix Group Holdings plc Annual Report and Accounts 2024

H. Interests in subsidiaries and associates

H1. Subsidiaries

Subsidiaries are consolidated from the date that effective control is obtained by the Group (see Basis of consolidation in note A1) and are

excluded from consolidation from the date they cease to be subsidiary undertakings. For subsidiaries disposed of during the year, any difference

arising from the recognition of the net proceeds, recognition of the fair value of any retained interest and derecognition of the carrying amount

of the subsidiary including non-controlling interests, is recognised in the consolidated income statement.

The Group uses the acquisition method to account for the acquisition of subsidiaries. The cost of an acquisition is measured at the fair value of the

consideration. Any excess of the cost of acquisition over the fair value of the net assets acquired is recognised as goodwill. In certain acquisitions

an excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities, contingent liabilities and non-controlling

interests over cost may arise. Where this occurs, the surplus of the fair value of net assets acquired over the fair value of the consideration is

recognised in the consolidated income statement.

Directly attributable acquisition costs are included within administrative expenses, except for acquisitions undertaken prior to 2010 when they

are included within the cost of the acquisition. Costs directly related to the issuing of debt or equity securities are included within the initial

carrying amount of debt or equity securities where these are not carried at fair value. Intra-group balances and income and expenses arising from

intra-group transactions are eliminated in preparing the consolidated financial statements.

The Group has invested in a number of collective investment schemes such as Open-ended Investment Companies (‘OEICs’), unit trusts, Société

d’Investissement à Capital Variable (‘SICAVs’), investment trusts and private equity funds. These invest mainly in equities, bonds, property and

cash and cash equivalents. The Group’s percentage ownership in these collective investment schemes can fluctuate according to the level of

Group and third party participation in the structures.

When assessing control over collective investment schemes, the Group considers those factors described under the Basis of consolidation in

note A1. In particular, the Group considers the scope of its decision-making authority, including the existence of substantive rights (such as power

of veto, liquidation rights and the right to remove the fund manager) that give it the ability to direct the relevant activities of the investee. The

assessment of whether rights are substantive rights, and the circumstances under which the Group has the practical ability to exercise them,

requires the exercise of judgement. This assessment includes a qualitative consideration of the rights held by the Group that are attached to its

holdings in the collective investment schemes, rights that arise from contractual arrangements between the Group and the entity or fund

manager and the rights held by third parties. In addition, consideration is made of whether the Group has de facto power, for example, where

third party investments in the collective investment schemes are widely dispersed.

Where Group companies are deemed to control such collective investment schemes they are consolidated in the Group financial statements,

with the interests of external third parties recognised as a liability (see the accounting policy for ‘Net asset value attributable to unitholders in

note E1 for further details).

Certain of the collective investment schemes have non-coterminous period ends and are consolidated on the basis of additional financial

statements prepared to the period end.

Portfolio transfers

When completing an acquisition, the Group first considers whether the acquisition meets the definition of a business combination under IFRS 3

Business Combinations. IFRS 3, and the use of acquisition accounting, does not apply in circumstances where the acquisition of an asset or a

group of assets does not constitute a business, and is instead a portfolio of assets and liabilities. In such cases, the Group’s policy is to recognise

and measure the assets acquired and liabilities assumed in accordance with the Group’s accounting policies for those assets and liabilities. The

difference between the consideration and the net assets or liabilities acquired is recognised in the consolidated income statement.

H1.1 Significant restrictions

The ability of subsidiaries to transfer funds to the Group in the form of cash dividends or to repay loans and advances is subject to local laws,

regulations and solvency requirements.

Each regulated company and the Group must retain sufficient capital at all times to meet the regulatory capital requirements mandated by or

otherwise agreed with the relevant national supervisory authority. Further information on the capital requirements applicable to Group entities are

set out in the Capital management section (note I3). Under UK company law, dividends can only be paid if a UK company has distributable reserves

sufficient to cover the dividend.

In addition, contractual requirements may place restrictions on the transfer of funds as follows:

• Pearl Life Holdings Limited (‘PeLHL’) is required to make payments of contributions into charged accounts on behalf of the Abbey Life Scheme.

These amounts do not form part of the pension scheme assets and at 31 December 2024, PeLHL held £20 million (2023: £9 million) within debt

securities and £19 million (2023: £24 million) within cash and cash equivalents in respect of these charged accounts. Further details of when the

remaining amounts may become payable to the pension scheme are included in note G1.3.

• ReAssure Midco Limited (‘RML’) is required to make payments of contributions into a ring-fenced account on behalf of the ReAssure Staff

Pension Scheme. These amounts do not form part of the pension scheme assets and at 31 December 2024, RML held £43 million (2023:

£44 million) within debt securities in respect of this account. Further details of when these amounts may become payable to the pension scheme

are included in note G1.4.

Financials

293Phoenix Group Holdings plc Annual Report and Accounts 2024

H2. Acquisition of Phoenix Life CA Holdings Limited

On 3 April 2023, the Group acquired 100% of the issued share capital of Phoenix Life CA Holdings Limited (formerly known as SLF of Canada UK

Limited) from Sun Life Assurance Company of Canada, part of the Sun Life Financial Inc. Group, for total cash consideration of £250 million.

Phoenix Life CA Holdings Limited and its subsidiaries are a closed book life insurance business that has a portfolio of pension, life and

annuity products.

The acquisition was in line with the Group’s strategy to undertake mergers and acquisitions (‘M&A’) to acquire new customers at scale and deliver

better outcomes for them. The Group also transforms acquired businesses to deliver significant cost and capital synergies, creating significant

shareholder value.

The fair value of identifiable assets and acquired liabilities assumed as at the date of acquisition was £316 million and a gain on acquisition of

£66 million was recognised in the consolidated income reflecting the excess of the fair value of the net assets acquired over the consideration paid

for the acquisition of the Phoenix Life CA Holdings businesses.

H3. Assets and liabilities classified as held for sale

The Group classifies disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than

through continuing use. Disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to

sell. Costs to sell are the incremental costs directly attributable to the disposal of the disposal group, excluding finance costs and income tax

expense. Assets and liabilities classified as held for sale are presented separately in the statement of consolidated financial position.

Agreement with Aberdeen Group plc

On 23 February 2021, the Group entered into an agreement with Aberdeen Group plc to simplify the arrangements of their Strategic Partnership,

enabling the Group to control its own distribution, marketing and brands, and focusing the Strategic Partnership on using Aberdeen Group plc’s

asset management services in support of Phoenix Group’s growth strategy. Under the terms of the transaction, the Group agreed to sell its UK

investment and platform-related products, comprising Wrap Self Invested Personal Pension (‘Wrap SIPP’), Onshore Bond and UK Trustee

Investment Plan (‘TIP’) to Aberdeen Group plc through a Part VII transfer. The economic risk and rewards for this business transferred to Aberdeen

Group plc effective from 1 January 2021 via a profit transfer arrangement. Consideration received of £62 million in respect of this business was

deferred until completion of the Part VII and the payments to Aberdeen Group plc in respect of the profit transfer arrangement are being offset

against the deferred consideration balance.

In 2021, the balances in the statement of consolidated financial position relating to the Wrap SIPP, Onshore Bond and TIP business were classified

as a disposal group held for sale. The total proceeds of disposal were not expected to exceed the carrying value of the related net assets and

accordingly the disposal group was measured at fair value less costs to sell, resulting in an impairment of the acquired in-force business (‘AVIF’) of

£59 million at the date of the transaction.

Prior to 31 December 2023, a re-scoping exercise was undertaken with Aberdeen Group plc and it was agreed that the insured funds elements of

the Wrap SIPP and Onshore Bond businesses would no longer transfer to Aberdeen Group plc, and as a result this business was no longer

considered to meet the requirements to be classified as held for sale. The self-invested elements of the Wrap SIPP business, which are held

off-balance sheet, are still expected to transfer after April 2025. Following the re-scoping exercise, effective from 31 December 2023, only the TIP

business has been classified as a disposal group held for sale and as at 31 December 2024 both parties remain committed to completing the transfer

of the TIP business in March 2025. The balances relating to the Wrap SIPP and Onshore Bond business have from 31 December 2023 been

included within the respective line items in the condensed consolidated statement of financial position.

At 31 December 2024, £320 million of pooled property funds were excluded from the assets classified as held for sale. During the period,

agreement was reached with Aberdeen Group to enter into an External Funds Link (‘EFL’) reinsurance arrangement upon completion of the Part VII

to provide access to the retained pooled property funds. On completion of the Part VII in 2025, a financial liability will be recognised in respect of

the EFL arrangement. No profit or loss is expected to be recognised upon completion of the Part VII and the initial recognition of the EFL

reinsurance arrangement. The major classes of assets and liabilities classified as held for sale are as follows:

	2024	2023
	£m	£m
Investment property	1,082	2,044
Financial assets	1,985	2,498
Cash and cash equivalents	33	52
Assets classified as held for sale	3,100	4,594
Assets in consolidated funds 1	75	188
Total assets of the disposal group	3,175	4,782
Investment contract liabilities	(3,175)	(4,780)
Other financial liabilities	–	(2)
Liabilities classified as held for sale	(3,175)	(4,782)

1 Included in assets of the disposal group are assets in consolidated funds, which are held to back investment contract liabilities of the Onshore Bond and TIP business (and at 31 December 2023 the Wrap

SIPP business) and are disclosed within financial assets in the consolidated statement of financial position. The Group controls these funds at 31 December 2024 and therefore consolidates 100% of the

assets with any non-controlling interest recognised as net asset value attributable to unitholders.

Financials

Notes to the consolidated financial statements continued

294 Phoenix Group Holdings plc Annual Report and Accounts 2024

H4. Associates

Associates are entities over which the Group has significant influence, but which it does not control. Generally it is presumed that the Group has

significant influence if it holds between 20% and 50% of the voting rights of the entity. Investments in associates that are held for investment

purposes are accounted for under IFRS 9

Financial Instruments

as permitted by IAS 28

Investments in Associates and Joint Ventures

. These are

measured at fair value through profit or loss. Those held for strategic purposes are accounted for using the equity method of accounting. Under

the equity method, on initial recognition the investment in an associate is recognised at cost. The carrying value is then updated to reflect the

Group’s share of profit or loss of its associate and that share is recognised in the consolidated income statement.

H4.1 Investment in UK commercial property REIT (‘UKCPR’)

In May 2024, Tritax Big Box REIT plc (‘BBOX’) acquired the entire share capital of UK Commercial Property REIT Limited (‘UKCPR’) a property

investment company domiciled in Guernsey which, up until May 2024, was admitted to the official list of the UK Listing Authority and to trading on

the London Stock Exchange. Prior to completion the Group held 43.4% of the shares of UKCPR and held its investment in the associate at fair value.

Upon completion of the all-share combination, the Group held 10.1% of the shares of BBOX and it was determined that it did not have significant

influence over BBOX. Consequently, the investment in BBOX is not treated as an associate and is instead classified as an investment and included

within equities.

As at 31 December 2023, the Group held 43.4% of the issued share capital of UKCPR and the value of this investment, measured at fair value and

included within financial assets, was £349 million.

H4.2 Future Growth Capital

During the year, the Group announced an agreement with Schroders, to launch Future Growth Capital (‘FGC’), the first private market investment

manager to be established in the UK to promote the objectives of the Mansion House Compact. The Group’s investment in FGC is through a 49.9%

holding in Future Growth Capital Holdings Limited and its wholly owned subsidiary undertaking, Future Growth Capital Limited. This investment in

the FGC associate is accounted for using the equity method in the consolidated financial statements. At 31 December 2024, the Group’s share of

the investment is £4 million and its share of the loss from the associate, included within net investment income in the consolidated income statement,

is £(1) million.

Summary consolidated financial information (at 100%) for Future Growth Capital Holdings Limited group is shown below:

	2024
	£m
Total assets	10
Total liabilities	(3)
	7
Loss for the year after tax	(2)

H5. Structured entities

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity,

such as when any voting rights relate to administrative tasks only, and the relevant activities are directed by means of contractual arrangements. A

structured entity often has some or all of the following features or attributes: (a) restricted activities; (b) a narrow and well-defined objective, such as

to provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors; (c)

insufficient equity to permit the structured entity to finance its activities without subordinated financial support; and (d) financing in the form of

multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches).

The Group has determined that all of its investments in collective investment schemes are structured entities. In addition, a number of debt security

structures and private equity funds have been identified as structured entities. The Group has assessed that it has interests in both consolidated and

unconsolidated structured entities as shown below:

• unit trusts;

• OEICs;

• SICAVs;

• private equity funds;

• asset-backed securities;

• Collateralised Debt Obligations (‘CDOs’);

• other debt structures; and

• Phoenix Group Employee Benefit Trust (‘EBT’).

The Group’s holdings in the investments listed above are susceptible to market price risk arising from uncertainties about future values. Holdings in

investment funds are subject to the terms and conditions of the respective fund’s prospectus and the Group holds redeemable shares or units in

each of the funds. The funds are managed by internal and external fund managers who apply various investment strategies to accomplish their

respective investment objectives. All of the funds are managed by fund managers who are compensated by the respective funds for their services.

Such compensation generally consists of an asset-based fee and a performance-based incentive fee and is reflected in the valuation of each fund.

H5.1 Interests in consolidated structured entities

The Group has determined that where it has control over funds, these investments are consolidated structured entities.

The EBT is a consolidated structured entity that holds shares to satisfy awards granted to employees under the Group’s share-based payment

schemes. During the year, the Group granted further loans to the EBT of £16 million (2023: £12 million).

As at the reporting date, the Group has no intention to provide financial or other support to any other consolidated structured entity.

H. Interests in subsidiaries and associates continued

Financials

295Phoenix Group Holdings plc Annual Report and Accounts 2024

H5.2 Interests in unconsolidated structured entities

The Group has interests in unconsolidated structured entities. These investments are held as financial assets in the Group’s consolidated statement

of financial position held at fair value through profit or loss. Any change in fair value is included in the consolidated income statement in ‘net

investment income’. Dividend and interest income is received from these investments.

A summary of the Group’s interest in unconsolidated structured entities is included below. These are shown according to the financial asset

categorisation in the consolidated statement of financial position.

	2024	2023
	Carrying value of	Carrying value of
	financial assets	financial assets
	£m	£m
Equities	1,398	1,051
Collective investment schemes	82,740	78,909
Debt securities	7,542	8,264
	91,680	88,224

The Group’s maximum exposure to loss with regard to the interests presented above is the carrying amount of the Group’s investments. Once the

Group has disposed of its shares or units in a fund, it ceases to be exposed to any risk from that fund. The Group’s holdings in the above

unconsolidated structured entities are largely less than 50% and as such the size of these structured entities are likely to be significantly higher than

their carrying value.

Details of commitments to subscribe to private equity funds and other unlisted assets are included in note I5.

H6. Group entities

The table below sets out the Group’s subsidiaries (including consolidated collective investment schemes), associates and significant holdings in

undertakings (including undertakings in which the holding amounts to 20% or more of the nominal value of the shares or units and they are not

classified as a subsidiary or associate).

			If unincorporated,	Type of investment
		Registered address of	address of principal	(including class of	% of shares/
		incorporated entities	place of business	shares held)	units held
Subsidiaries:
Phoenix Life Limited (life assurance company)		Wythall¹		Ordinary Shares	100.00%
Phoenix Life Assurance Europe DAC (life assurance company)		Dublin³		Ordinary Shares	100.00%
Phoenix Life CA Limited (Formerly Sun Life Assurance Company
of Canada (U.K.) Limited) (life assurance company)		Wythall¹		Ordinary Shares	100.00%
Phoenix Re Limited (life assurance company)		Bermuda 34		Ordinary Shares	100.00%
ReAssure Life Limited (life assurance company)		Telford 4		Ordinary Shares	100.00%
ReAssure Limited (life assurance company)		Telford 4		Ordinary Shares	100.00%
Standard Life Assurance Limited (life assurance
company – directly owned by the Company)		Edinburgh²		Ordinary Shares	100.00%
Standard Life International Designated Activity Company (life
assurance company – directly owned by the Company)		Dublin³		Ordinary Shares	100.00%
Pearl Group Services Limited (management services company)		Wythall¹		Ordinary Shares	100.00%
Phoenix Group Management Services Limited
(management services company)		Wythall¹		Ordinary Shares	100.00%
PGMS (Ireland) Limited (management services company)		Dublin 5		Ordinary Shares	100.00%
Phoenix Management Services (Bermuda) Limited
(management services company)		Bermuda 34		Ordinary Shares	100.00%
ReAssure UK Services Limited (management services company)		Telford 4		Ordinary Shares	100.00%
PA (GI) Limited (non-trading company)		Wythall¹		Ordinary Shares	100.00%
103	Wardour Street Retail Investment Company
Limited (investment company)		Telford 4		Ordinary Shares	100.00%
3 St Andrew Square Apartments Limited
(property management company)		Edinburgh 6		Ordinary Shares	100.00%
Abbey Life Assurance Company Limited (non-trading company)		Wythall¹		Ordinary Shares	100.00%
Abbey Life Trust Securities Limited (pension trustee company)		Wythall¹		Ordinary Shares	100.00%
Abbey Life Trustee Services Limited (dormant company)		Wythall¹		Ordinary Shares	100.00%
Alba LAS Pensions Management Limited (dormant company)		Edinburgh²		Ordinary Shares	100.00%
Alba Life Trustees Limited (non-trading company)		Edinburgh²		Ordinary Shares	100.00%
				Limited Liability
Axial Fundamental Strategies (US Investments) LLC (investment company)		Wilmington 50		Company	100.00%
BA (FURBS) Limited (dormant company)		Wythall¹		Ordinary Shares	100.00%
Barnwood Properties Limited (property investment company)		Wythall¹		Ordinary Shares	100.00%
BL Telford Limited (dormant company)		Telford 4		Ordinary Shares	100.00%
Britannic Finance Limited (finance and insurance services company)		Wythall¹		Ordinary Shares	100.00%
Britannic Group Services Limited (dormant company)		Wythall¹		Ordinary Shares	100.00%

Financials

Notes to the consolidated financial statements continued

296 Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
Britannic Money Investment Services Limited
(investment advice company)	Wythall 1		Ordinary Shares	100.00%
Century Trustee Services Limited (dormant company)	Wythall 1		Ordinary Shares	100.00%
CGE Management Company Limited	Edinburgh 6		Ordinary Shares	100.00%
CH Management Limited (investment company)	Wilmington 50		Ordinary Shares	100.00%
Cityfourinc (dormant company)	Wythall 1		Unlimited with Shares	100.00%
ERIP General Partner Limited (General Partner
to ERIP Limited Partnership)	Telford 4		Ordinary Shares	80.00%
ERIP Limited Partnership (Limited Partnership)	Telford 4		Ordinary Shares	100.00%
G Assurance & Pensions Services Limited (non-trading company)	Telford 4		Ordinary Shares	100.00%
G Financial Services Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
G Life H Limited (holding company)	Telford 4		Ordinary Shares	100.00%
G Trustees Ltd (trustee company)	Telford 4		Ordinary Shares	100.00%
Gallions Reach Shopping Park (Nominee) Limited (dormant company)	London 36		Ordinary Shares	100.00%
Gresham Life Assurance Society Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
Iceni Nominees (No. 2) Limited (dormant company)	London 36		Ordinary Shares	100.00%
IH (Jersey) Limited (dormant company)	Jersey 7		Ordinary Shares	100.00%
Impala Holdings Limited (holding company)	Wythall¹		Ordinary Shares	100.00%
Impala Loan Company 1 Limited (dormant company)	Edinburgh 2		Ordinary Shares	100.00%
Inhoco 3107 Limited (dormant company)	London 36		Ordinary Shares	100.00%
Laurtrust Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
London Life Trustees Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Namulas Pension Trustees Limited (trustee company)	Telford 4		Ordinary Shares	100.00%
			Unlimited without
National Provident Institution (dormant company)	Wythall¹		Shares	100.00%
National Provident Life Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
NM Life Trustees Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
NM Pensions Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
NP Life Holdings Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
NPI (Printworks) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
NPI (Westgate) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Patria Private Equity Trust plc (formerly know as abrdn Private
Equity Opportunities Trust plc) (investment company)	Edinburgh 49		Ordinary Shares	100.00%
Pearl (Covent Garden) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Pearl (Martineau Phase 1) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Pearl (Martineau Phase 2) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Pearl (Moor House) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
			Limited Liability
Pearl (WP) Investments LLC (investment company)	Wilmington 50		Company	100.00%
Pearl AL Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
Pearl Assurance Group Holdings Limited (investment company)	Wythall¹		Ordinary Shares	100.00%
Pearl Customer Care Limited (financial services company)	Wythall¹		Ordinary Shares	100.00%
Pearl Group Holdings (No. 1) Limited (finance company)	London 8		Ordinary Shares	100.00%
Pearl Group Holdings (No. 2) Limited (holding company)	Wythall¹		Ordinary Shares	100.00%
Pearl Group Secretariat Services Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Pearl Life Holdings Limited (holding company)	Wythall¹		Ordinary Shares	100.00%
Pearl MP Birmingham Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Pearl RLG Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Pearl Trustees Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
PG Dormant (No 4) Limited) (formerly know as Phoenix
Life CA Holdings Limited) (dormant company)	Wythall¹		Ordinary Shares	100.00%
PG Dormant (No 5) Limited (formerly known as Phoenix
Group CA Services Limited) (dormant company)	Wythall¹		Ordinary Shares	100.00%

H. Interests in subsidiaries and associates continued

H6. Group entities continued

Financials

297Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
PG Dormant (No 6) Limited (formerly known as Phoenix Life CA Limited) (dormant company)	Wythall¹		Ordinary Shares	100.00%
PG Dormant (No 7) Limited (formerly known as PGH CA Limited) (dormant company)	London 8		Ordinary Shares	100.00%
PGH CA Limited (formerly known as Sun Life of Canada
UK Holdings Limited) (dormant company)	Hampshire 35		Ordinary Shares	100.00%
PGL Pension Trustee Limited	London 8		Limited by Guarantee	100.00%
PGMS (Glasgow) Limited	Edinburgh²		Ordinary Shares	100.00%
PGMS (Ireland) Holdings Unlimited Company (holding company)	Dublin 5		Unlimited with Shares	100.00%
PGS 2 Limited (investment company)	Wythall¹		Ordinary Shares	100.00%
Phoenix & London Assurance Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix (Barwell 2) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix (Chiswick House) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix (Moor House 1) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix (Moor House 2) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix (Printworks) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix (Stockley Park) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Advisers Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix AW Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Customer Care Limited (financial services company)	Wythall¹		Ordinary Shares	100.00%
Phoenix ER1 Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix ER2 Limited (finance company)	Wythall¹		Ordinary Shares	100.00%
Phoenix ER3 Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix ER4 Limited (finance company)	Wythall¹		Ordinary Shares	100.00%
Phoenix ER5 Limited (finance company)	Wythall¹		Ordinary Shares	100.00%
Phoenix ER6 Limited (finance company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Group CA Services Limited (formerly known
as SLFC Services Company (UK) Limited)	Hampshire 35		Ordinary Shares	100.00%
Phoenix Group Employee Benefit Trust	Jersey 51		Trust	100.00%
Phoenix Group Holdings (Bermuda) Limited (holding
company – directly owned by the Company)	Bermuda 34		Ordinary Shares	100.00%
	Cayman
Phoenix Group Holdings (non-trading company)	Islands 9		Private Company	100.00%
Phoenix Group Management Ltd (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Holdings (Bermuda) Limited (holding company)	Bermuda 34		Ordinary Shares	100.00%
Phoenix Life Assurance Limited	Wythall¹		Ordinary Shares	100.00%
Phoenix Life CA Holdings Limited (formerly known as SLF of Canada				100.00%
UK Limited) (holding company – directly owned by the Company)	Hampshire 35		Ordinary Shares
Phoenix Life Holdings Limited (holding company
– directly owned by the Company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Management Services Holdings
(Bermuda) Limited (holding company)	Bermuda 34		Ordinary Shares	100.00%
Phoenix Pension Scheme (Trustees) Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Pensions Trustee Services Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix SCP Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix SCP Pensions Trustees Limited (trustee company)	Wythall¹		Ordinary Shares	100.00%
Phoenix SCP Trustees Limited (trustee company)	Edinburgh²		Ordinary Shares	100.00%
Phoenix SL Direct Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix SPV1 Limited (investment company)	Wythall¹		Ordinary Shares	100.00%
Phoenix SPV2 Limited (investment company)	Wythall¹		Ordinary Shares	100.00%
Phoenix SPV3 Limited (investment company)	Wythall¹		Ordinary Shares	100.00%
Phoenix SPV4 Limited (investment company)	Wythall¹		Ordinary Shares	100.00%
Phoenix ULA Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Unit Trust Managers Limited (unit trust manager)	Wythall¹		Ordinary Shares	100.00%
Phoenix Wealth Holdings Limited (holding company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Wealth Services Limited (financial services company)	Wythall¹		Ordinary Shares	100.00%
Phoenix Wealth Trustee Services Limited (trustee company)	Wythall¹		Ordinary Shares	100.00%
Pilangen Logistik AB (investment company)	Stockholm¹²		Ordinary Shares	100.00%
Pilangen Logistik I AB (investment company)	Stockholm¹²		Ordinary Shares	100.00%

Financials

Notes to the consolidated financial statements continued

298 Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
ReAssure Companies Services Limited	Telford 4		Ordinary Shares	100.00%
ReAssure FS Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure FSH UK Limited (holding company)	Telford 4		Ordinary Shares	100.00%
ReAssure Group plc (holding company – directly owned by the Company)	Telford 4		Ordinary Shares	100.00%
ReAssure Life Pension Trustees Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure LL Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure Midco Limited (holding company)	Telford 4		Ordinary Shares	100.00%
ReAssure Nominees Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure Pension Trustees Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure PM Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure Trustees Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure Two Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
ReAssure UK Life Assurance Company Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
Scottish Mutual Assurance Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
Scottish Mutual Nominees Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
Scottish Mutual Pension Funds Investment Limited (trustee company)	Edinburgh²		Ordinary Shares	100.00%
SL (NEWCO) Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
SL Liverpool Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
SLA Belgium No.1 SA (investment company)	Brussels 10		Société Anonyme	100.00%
SLA Denmark No.1 ApS (investment company)	Copenhagen¹³		Ordinary Shares	100.00%
SLA Denmark No.2 ApS (investment company)	Copenhagen¹³		Ordinary Shares	100.00%
SLA France SCI (investment company)	Luxembourg 16		Ordinary Shares	100.00%
SLA Germany No.1 S.à.r.l. (investment company)	Luxembourg 16		Ordinary Shares	100.00%
SLA Germany No.2 S.à.r.l. (investment company)	Luxembourg 16		Ordinary Shares	100.00%
SLA Germany No.3 S.à.r.l. (investment company)	Luxembourg 16		Ordinary Shares	100.00%
SLA Netherlands No.1 B.V. (investment company)	Amsterdam¹¹		Ordinary Shares	100.00%
SLACOM (No. 8) Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
SLACOM (No. 9) Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
SLACOM (No. 10) Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
SLIF Property Investment GP Limited (General
Partner to SLIF Property Investment)	Edinburgh 6		Ordinary Shares	100.00%
Standard Life Agency Services Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
Standard Life Assets and Employee Services Limited	Edinburgh²		Ordinary Shares	100.00%
Standard Life Assurance (HWPF) Luxembourg
S.à.r.l. (investment company)	Luxembourg 16		Ordinary Shares	100.00%
Standard Life Financial Advice Services Limited	Wythall¹		Ordinary Shares	100.00%
Standard Life Group Limited (formerly known
as Phoenix Group Capital Limited)	Wythall¹		Ordinary Shares	100.00%
Standard Life Investment Funds Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
Standard Life Lifetime Mortgages Limited (mortgage provider company)	Edinburgh²		Ordinary Shares	100.00%
Standard Life Limited (formerly known as London
Life Limited) (dormant company)	Wythall¹		Ordinary Shares	100.00%
Standard Life Master Trust Co. Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Standard Life Mortgages Limited (dormant company)	Wythall¹		Ordinary Shares	100.00%
Standard Life Pension Funds Limited	Edinburgh²		Limited by Guarantee	100.00%
Standard Life Property Company Limited (dormant company)	Edinburgh²		Ordinary Shares	100.00%
Standard Life Trustee Company Limited (trustee company)	Edinburgh²		Ordinary Shares	100.00%
SunLife Limited (financial services distribution company)	Wythall¹		Ordinary Shares	100.00%
The Heritable Securities and Mortgage Investment
Association Ltd (dormant company)	Edinburgh²		Ordinary Shares	100.00%
The London Life Association Limited (dormant company)	Wythall¹		Limited by Guarantee	100.00%
The Pathe Building Management Company Limited (dormant company)	Telford 4		Ordinary Shares	100.00%
The Phoenix Life SCP Institution (dormant company)	Edinburgh²		Limited by Guarantee	100.00%
The Scottish Mutual Assurance Society (dormant company)	Edinburgh²		Limited by Guarantee	100.00%
The Standard Life Assurance Company of Europe
B.V. (financial holding company)	Amsterdam¹¹		Ordinary Shares	100.00%
Vebnet (Holdings) Limited (holding company)	Wythall¹		Ordinary Shares	100.00%

H. Interests in subsidiaries and associates continued

H6. Group entities continued

Financials

299Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
Vebnet Limited	Edinburgh²		Ordinary Shares	100.00%
Welbrent Property Investment Company Limited (dormant company)	London 36		Ordinary Shares	100.00%
ESP General Partner Limited Partnership		Edinburgh 52	Limited Partnership	100.00%
ESP II General Partner Limited Partnership		Edinburgh 52	Limited Partnership	100.00%
European Strategic Partners LP		Edinburgh 6	Limited Partnership	72.70%
Patria Phoenix Global Private Equity III LP		Edinburgh 6	Limited Partnership	100.00%
Phoenix Highvista Venture Capital Partners LP		Boston 46	Limited Partnership	100.00%
Pearl Private Equity LP		Edinburgh 52	Limited Partnership	100.00%
Pearl Strategic Credit LP		Edinburgh 52	Limited Partnership	100.00%
SLIF Property Investment LP		Edinburgh 6	Limited Partnership	100.00%
Janus Henderson Global Funds – Janus Henderson
Institutional Overseas Bond Fund		London 14	OEIC, sub fund	99.28%
Janus Henderson Institutional High Alpha UK Equity Fund		London 14	Unit Trust	92.50%
Janus Henderson Institutional Mainstream UK Equity Trust		London 14	Unit Trust	100.00%
Janus Henderson Institutional Short Duration Bond Fund		London 14	Unit Trust	100.00%
Janus Henderson Institutional UK Equity Tracker Trust		London 14	Unit Trust	100.00%
Janus Henderson Strategic Investment Funds – Janus Henderson
Institutional Asia Pacific ex Japan Index Opportunities Fund		London 14	OEIC, sub fund	96.04%
Janus Henderson Strategic Investment Funds – Janus
Henderson Institutional Japan Index Opportunities Fund		London 14	OEIC, sub fund	86.39%
Janus Henderson Strategic Investment Funds – Janus Henderson
Institutional North American Index Opportunities Fund		London 14	OEIC, sub fund	80.69%
PUTM ACS Asia Pacific ex Japan Fund		Wythall¹	Unit Trust	99.95%
PUTM ACS Emerging Market Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS European ex UK Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Japan Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Lothian European Ex UK Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Lothian North American Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Lothian UK Gilt Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Lothian UK Listed Smaller Companies Fund		Wythall¹	Unit Trust	99.99%
PUTM ACS North American Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS North American 2 Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS North American 3 Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Sterling Credit Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Sustainable Index Asia Pacific ex Japan Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Sustainable Index Emerging Markets Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Sustainable Index European Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Sustainable Index Japan Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Sustainable Index UK Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS Sustainable Index US Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS UK All Share Listed Equity Multi Manager Fund		Wythall¹	Unit Trust	100.00%
PUTM ACS US Dollar Credit Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Asia Pacific (Excluding Japan) Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Emerging Market Debt Unconstrained Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Emerging Markets Equity Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Euro Sovereign Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell European Credit Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Floating Rate ABS Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Global Bond Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Global Credit Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Index-Linked Sterling Hedged Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Long Gilt Sterling Hedged Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Short Duration Credit Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Sterling Credit Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Sterling Government Bond Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Sub-Sovereign A Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Tactical Asset Allocation Fund		Wythall¹	Unit Trust	100.00%
PUTM Bothwell Uk Equity Income Fund		Wythall¹	Unit Trust	100.00%

Financials

Notes to the consolidated financial statements continued

300 Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
PUTM Bothwell Ultra Short Duration Fund		Wythall¹	Unit Trust	100.00%
PUTM Far Eastern Unit Trust		Wythall¹	Unit Trust	99.70%
PUTM UK All-Share Index Unit Trust		Wythall¹	Unit Trust	100.00%
PUTM UK Stock Market Fund		Wythall¹	Unit Trust	100.00%
PUTM UK Stock Market Fund (Series 3)		Wythall¹	Unit Trust	100.00%
Amundi Index Solutions – Amundi MSCI China ESG Leaders Select		Luxembourg²³	SICAV, sub fund	63.46%
iShares 350 UK Equity Index Fund UK		London 20	OEIC, sub fund	97.98%
iShares Bloomberg Roll Select Commodity Strategy ETF		Wilmington 47	OEIC, sub fund	51.90%
Schroders (Future Growth Capital) UK Private Assets LTAF		London 55	OEIC, sub fund	100.00%
Schroders (Future Growth Capital) Global Private Assets LTAF		London 55	OEIC, sub fund	100.00%
abrdn (Lothian) International Trust		London 36	Unit Trust	99.99%
abrdn (Lothian) Japan Trust		London 36	Unit Trust	99.41%
abrdn (Lothian) North American Trust		London 36	Unit Trust	98.33%
abrdn (Lothian) Pacific Basin Trust		London 36	Unit Trust	98.28%
abrdn (Lothian) UK Equity General Trust		London 36	Unit Trust	99.70%
abrdn Emerging Markets Income Equity Fund		London 36	OEIC, sub fund	75.56%
abrdn Europe Ex UK Ethical Equity Fund		London 36	OEIC, sub fund	80.35%
abrdn MT American Equity Unconstrained Fund		London 36	Unit Trust	72.75%
abrdn MyFolio Managed I Fund		London 36	OEIC, sub fund	78.33%
abrdn MyFolio Managed II Fund		London 36	OEIC, sub fund	79.02%
abrdn MyFolio Managed III Fund		London 36	OEIC, sub fund	86.29%
abrdn MyFolio Managed V Fund		London 36	OEIC, sub fund	79.31%
			Special Limited
abrdn Phoenix Fund Financing SCSP		Luxembourg 16	Partnership	100.00%
abrdn Short Dated Global Corporate Bond Tracker Fund		London 36	OEIC, sub fund	95.61%
abrdn Short Dated Sterling Corporate Bond Tracker Fund		London 36	OEIC, sub fund	84.86%
abrdn Standard Liquidity Fund (Lux) – Seabury Euro Liquidity 1 Fund		Luxembourg 16	UCITS, sub fund	100.00%
abrdn Standard Liquidity Fund (Lux) – Seabury Sterling Liquidity
2 Fund		Luxembourg 16	UCITS, sub fund	100.00%
abrdn Standard Liquidity Fund (Lux) – Seabury Sterling Liquidity
3 Fund		Luxembourg 16	UCITS, sub fund	86.85%
abrdn Sustainable Index American Equity Fund		London 36	OEIC, sub fund	59.05%
abrdn Sustainable Index World Equity Fund		London 36	Unit Trust	72.57%
abrdn UK Real Estate Feeder Fund		London 36	Unit Trust	72.12%
abrdn UK Real Estate Fund		London 36	Unit Trust	89.91%
HSBC Investment Funds – Balanced Fund		London 36	OEIC, sub fund	78.31%
		Cayman
Ignis Private Equity Fund LP		Islands 9	Limited Partnership	100.00%
		Cayman
Ignis Strategic Credit Fund LP		Islands 9	Limited Partnership	100.00%
Ignis Strategic Solutions Funds plc – Fundamental Strategies Fund		Dublin 18	OEIC, sub fund	100.00%
Ignis Strategic Solutions Funds plc – Systematic Strategies Fund		Dublin 18	OEIC, sub fund	100.00%
North American Strategic Partners (Feeder) 2008 Limited Partnership		Edinburgh 52	Limited Partnership	100.00%
Legal & General European Equity Income Fund		London²¹	Unit Trust	87.08%
North American Strategic Partners 2008 L.P.		Delaware 7	Limited Partnership	100.00%
Partners Group Phoenix, L.P. Inc.		Guernsey 45	Limited Partnership	100.00%
Quilter Investors Global Dynamic Equity Fund		London²²	OEIC, sub fund	83.31%
			Special Limited
Stonepeak Core Fund (Lux) SCSp		Luxembourg 41	Partnership	83.30%
Associates:
Future Growth Capital (Holdings) Limited	London 42		Ordinary Shares	49.90%
Future Growth Capital Limited	London 42		Ordinary Shares	49.90%
Significant holdings:
AB SICAV I – Diversified Yield Plus Portfolio		Luxembourg 15	SICAV, sub fund	43.09%
AB SICAV I – Sustainable All Market Portfolio		Luxembourg 15	SICAV, sub fund	25.05%

H. Interests in subsidiaries and associates continued

H6. Group entities continued

Financials

301Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
abrdn American Equity Fund		London 36	OEIC, sub fund	56.43%
abrdn American Equity Enhanced Index Fund		London 36	OEIC, sub fund	33.83%
abrdn Asia Pacific Equity Enhanced Index Fund		London 36	OEIC, sub fund	32.83%
abrdn Asia Pacific Equity Fund		London 36	OEIC, sub fund	23.80%
abrdn Dynamic Distribution Fund		London 36	Unit Trust	64.83%
abrdn Ethical Corporate Bond Fund		London 36	OEIC, sub fund	61.90%
abrdn Europe ex UK Equity Fund		London 36	OEIC, sub fund	20.76%
abrdn Europe Ex UK Income Equity Fund		London 36	OEIC, sub fund	35.41%
abrdn European Equity Enhanced Index Fund		London 36	OEIC, sub fund	22.40%
abrdn European Equity Tracker Fund		London 36	OEIC, sub fund	20.89%
abrdn Emerging Markets Equity Enhanced Index Fund		London 36	OEIC, sub fund	23.07%
abrdn Emerging Markets Equity Fund		London 36	OEIC, sub fund	23.56%
abrdn Emerging Markets Equity Tracker Fund		London 36	OEIC, sub fund	23.32%
abrdn Global Government Bond Tracker Fund		London 36	OEIC, sub fund	23.25%
abrdn Global Inflation-Linked Bond Fund		London 36	OEIC, sub fund	23.85%
abrdn Global Inflation-Linked Bond Tracker Fund		London 36	OEIC, sub fund	59.63%
abrdn Global Infrastructure Equity Fund		London 36	OEIC, sub fund	54.78%
abrdn Global Real Estate Fund		London 36	Unit Trust	36.80%
abrdn Global Smaller Companies Fund		London 36	OEIC, sub fund	26.33%
abrdn High Yield Bond Fund		London 36	OEIC, sub fund	20.63%
abrdn Japan Equity Enhanced Index Fund		London 36	OEIC, sub fund	46.04%
abrdn Japanese Equity Fund		London 36	OEIC, sub fund	51.83%
abrdn Liquidity Fund (Lux) – Euro Fund		Luxembourg 16	UCITS, sub fund	32.68%
abrdn MyFolio Managed IV Fund		London 36	OEIC, sub fund	69.51%
abrdn MyFolio Market I Fund		London 36	OEIC, sub fund	44.42%
abrdn MyFolio Market II Fund		London 36	OEIC, sub fund	51.94%
abrdn MyFolio Market III Fund		London 36	OEIC, sub fund	58.67%
abrdn MyFolio Market IV Fund		London 36	OEIC, sub fund	55.52%
abrdn MyFolio Market V Fund		London 36	OEIC, sub fund	60.51%
abrdn MyFolio Multi-Manager II Fund		London 36	OEIC, sub fund	47.27%
abrdn MyFolio Multi-Manager III Fund		London 36	OEIC, sub fund	60.89%
abrdn MyFolio Multi-Manager IV Fund		London 36	OEIC, sub fund	60.88%
abrdn MyFolio Multi-Manager V Fund		London 36	OEIC, sub fund	40.13%
abrdn North American Small & Mid-Cap Equity Fund		London 36	OEIC, sub fund	29.50%
abrdn Short Dated Corporate Bond Fund		London 36	OEIC, sub fund	43.90%
abrdn Short Duration Global Inflation-Linked Bond Fund		London 36	OEIC, sub fund	26.37%
abrdn SICAV I – Diversified Income Fund		Luxembourg 16	SICAV, sub fund	32.42%
abrdn SICAV I – Emerging Markets Low Volatility Equity Portfolio		Luxembourg 15	SICAV, sub fund	87.10%
abrdn SICAV I – Europe Ex UK Sustainable Equity Fund		Luxembourg 16	SICAV, sub fund	67.44%
abrdn SICAV I – GDP Weighted Global Government Bond Fund		Luxembourg 16	SICAV, sub fund	73.72%
abrdn SICAV I – Global Bond Fund		Luxembourg 16	SICAV, sub fund	99.87%
abrdn SICAV I – Global Corporate Sustainable Bond Fund		Luxembourg 16	SICAV, sub fund	42.02%
abrdn SICAV I – Global Government Bond Fund		Luxembourg 16	SICAV, sub fund	76.64%
abrdn SICAV I – Japanese Sustainable Equity Fund		Luxembourg 16	SICAV, sub fund	26.29%
abrdn SICAV I – North American Smaller Companies Fund		Luxembourg 16	SICAV, sub fund	23.45%
abrdn SICAV I – Short Dated Enhanced Income Fund		Luxembourg 16	SICAV, sub fund	24.66%
abrdn SICAV II – Global Equity Impact Fund		Luxembourg 16	SICAV, sub fund	71.00%
abrdn SICAV II – Global Inflation-linked Government Bond Fund		Luxembourg 16	SICAV, sub fund	62.52%
abrdn SICAV II – Global Short Duration Corporate Bond Fund		Luxembourg 16	SICAV, sub fund	83.23%
abrdn SICAV II Absolute Return Global Bond Strategies Fund		Luxembourg 16	SICAV, sub fund	92.89%
abrdn SICAV II Emerging Market Local Currency Debt Fund		Luxembourg 16	SICAV, sub fund	73.27%
abrdn SICAV II European Corporate Bond Fund		Luxembourg 16	SICAV, sub fund	28.99%
abrdn SICAV II European Smaller Companies Fund		Luxembourg 16	SICAV, sub fund	25.67%
abrdn SICAV II Global Corporate Bond Fund		Luxembourg 16	SICAV, sub fund	56.04%
abrdn SICAV II Global High Yield Bond Fund		Luxembourg 16	SICAV, sub fund	56.34%
abrdn SICAV II Global Real Estate Securities Sustainable Fund		Luxembourg 16	SICAV, sub fund	87.01%
abrdn Standard Liquidity Fund (Lux) Sterling Fund		Luxembourg 16	UCITS, sub fund	24.60%
abrdn Standard SICAV I – China Onshore Bond Fund		Luxembourg 16	SICAV, sub fund	78.87%
abrdn Sterling Corporate Bond Fund		London 36	OEIC, sub fund	46.31%

Financials

Notes to the consolidated financial statements continued

302 Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
abrdn Strategic Bond Fund		London 36	OEIC, sub fund	67.00%
abrdn UK Equity Enhanced Index Fund		London 36	OEIC, sub fund	29.23%
abrdn UK Income Equity Fund		London 36	OEIC, sub fund	36.05%
abrdn UK Mid-Cap Equity Fund		London 36	OEIC, sub fund	34.50%
abrdn UK Smaller Companies Fund		London 36	OEIC, sub fund	32.02%
abrdn UK Sustainable and Responsible Investment Equity Fund		London 36	OEIC, sub fund	40.68%
abrdn UK Value Equity Fund		London 36	OEIC, sub fund	45.83%
ACS World Multifactor Equity Tracker Fund		London 20	OEIC, sub fund	23.56%
Amundi Index Solutions – Amundi Global Corp SRI 1-5Y		Luxembourg²³	SICAV, sub fund	32.53%
Amundi Index Solutions – Amundi MSCI Emerging
Ex China ESG Leaders Select		Luxembourg²³	SICAV, sub fund	43.96%
Amundi UCITS Funds – Amundi Global Multi-Factor Equity Fund		Luxembourg²³	UCITS, sub fund	72.37%
AQR Global Risk Premium UCITS Fund		Luxembourg 40	UCITS, sub fund	100.00%
Baillie Gifford Emerging Markets Leading Companies Fund		Edinburgh³²	OEIC, sub fund	32.50%
Baillie Gifford Investment Funds II ICVC –
Baillie Gifford UK Equity Core Fund		Edinburgh³²	OEIC, sub fund	42.73%
Baillie Gifford UK & Balanced Funds ICVC – Baillie
Gifford UK and Worldwide Equity Fund		Edinburgh³²	OEIC, sub fund	30.23%
Barings Emerging Markets Debt Short Duration Fund		Dublin 27	OEIC, sub fund	28.41%
BlackRock Cash Fund		London 20	Unit Trust	23.86%
BlackRock Global Funds – Sustainable World Bond Fund		Luxembourg 15	SICAV, sub fund	25.48%
BlackRock Market Advantage Fund		London 20	UCITS, sub fund	51.40%
BlackRock UK Absolute Alpha Fund		London 20	Unit Trust	20.18%
BNY Mellon Global Equity Fund		London³³	OEIC, sub fund	28.90%
BNY Mellon Multi-Asset Global Balanced Fund		London³³	UCITS, sub fund	37.37%
Brent Cross Partnership		London 24	Limited Partnership	23.83%
Fidelity Multi Asset Open Adventurous Fund		Surrey 28	OEIC, sub fund	40.78%
Gallions Reach Shopping Park Limited Partnership		London 36	Unit Trust	100.00%
Gallions Reach Shopping Park Unit Trust		Jersey 17	Unit Trust	100.00%
Goldman Sachs SICAV – Emerging Markets Total Return Bond Portfolio		Luxembourg 29	SICAV, sub fund	86.71%
Goldman Sachs SICAV – Goldman Sachs
Emerging Markets Debt Portfolio		Luxembourg 29	SICAV, sub fund	23.81%
Invesco Managed Growth Fund		Oxfordshire 30	OEIC, sub fund	51.99%
Janus Henderson All Stocks Credit Fund		London 14	OEIC, sub fund	25.17%
Janus Henderson Diversified Growth Fund		London 14	OEIC, sub fund	65.06%
Janus Henderson Emerging Markets Opportunities Fund		London 14	OEIC, sub fund	23.90%
Janus Henderson Institutional Global Responsible Managed Fund		London 14	OEIC, sub fund	29.35%
Janus Henderson Institutional UK Index Opportunities Fund		London 14	OEIC, sub fund	57.53%
L&G Absolute Return Bond Plus Fund		Luxembourg³¹	SICAV, sub fund	49.33%
L&G Emerging Markets Bond Fund		Luxembourg³¹	SICAV, sub fund	74.74%
L&G Multi-Asset Target Return Fund		Luxembourg 38	SICAV, sub fund	40.81%
Legal & General Active Sterling Corporate Bond Fund		London²¹	Unit Trust	23.99%
Legal & General Emerging Markets Government
Bond (Local Currency) Index Fund		London²¹	Unit Trust	20.34%
Legal & General Emerging Markets Government Bond USD Index Fund		London²¹	Unit Trust	32.42%
Legal & General High Income Trust		London²¹	Unit Trust	41.01%
Legal & General UK Smaller Companies Trust		London²¹	Unit Trust	31.39%
Ninety One Funds Series i Global Macro Allocation Fund		London 54	OEIC, sub fund	23.23%
LGIM Sterling Liquidity Plus Fund		Dublin 27	UCITS, sub fund	21.51%
Quilter Investors Cirilium Balanced Blend Portfolio		London²²	OEIC, sub fund	35.63%
Quilter Investors Ethical Equity Fund		London²²	Unit Trust	34.75%
Quilter Investors Global Equity Growth Fund		London²²	OEIC, sub fund	54.89%
Responsible Global High Yield Bond Fund		Luxembourg 16	SICAV, sub fund	25.38%
Robeco – Phoenix Customized Multi Asset Fund		Rotterdam 39	SICAV, sub fund	98.88%
Robeco QI Emerging Markets Sustainable Enhanced Index Equities II		Luxembourg 37	SICAV, sub fund	100.00%
Schroder European Fund		London 42	Unit Trust	56.43%
Schroder International Selection Fund – Global Diversified Growth		Luxembourg 43	SICAV, sub fund	25.69%

H. Interests in subsidiaries and associates continued

H6. Group entities continued

Financials

303Phoenix Group Holdings plc Annual Report and Accounts 2024

		If unincorporated,	Type of investment
	Registered address of	address of principal	(including class of	% of shares/
	incorporated entities	place of business	shares held)	units held
Schroder UK Mid 250 Fund		London 42	Unit Trust	27.03%
Standard Life Investments Brent Cross LP		Edinburgh 6	Unit Trust	40.13%
Standard Life Investments UK Shopping Centre Trust		Jersey 25	Unit Trust	40.13%
The Marks and Spencer Worldwide Managed Fund		Chester 48	Unit Trust	30.42%
Threadneedle Investment Funds ICVC – American Select Fund		London 26	OEIC, sub fund	20.32%
Vanguard Common Contractual Fund – Vanguard
U.S. Equity Index Common Contractual Fund		Dublin 27	UCITS, sub fund	77.40%
Vanguard Investment Series plc – Vanguard
Global Corporate Bond Index Fund		Dublin 27	UCITS, sub fund	38.21%
Vanguard Investment Series plc – Vanguard Global
Short-Term Corporate Bond Index Fund		Dublin 27	UCITS, sub fund	41.55%
Vanguard Investment Series plc – Vanguard U.K. Short- Term Investment Grade Bond Index Fund		Dublin 27	UCITS, sub fund	42.85%
Vanguard Investments Common Contractual Fund – Vanguard
FTSE Developed Europe ex UK Common Contractual Fund		Dublin 27	UCITS, sub fund	97.13%
Vanguard Investments Common Contractual Fund – Vanguard
FTSE Developed World Common Contractual Fund		Dublin 27	UCITS, sub fund	40.12%
Vanguard Investments Common Contractual Fund – Vanguard
FTSE Developed World ex UK Common Contractual Fund		Dublin 27	UCITS, sub fund	97.04%

1 Wythall Green Way, Wythall, Birmingham, West Midlands, B47 6WG, United Kingdom

2 Standard Life House, 30 Lothian Road, Edinburgh, EH1 2DH, United Kingdom

3 90 St. Stephen’s Green, Dublin, D2, Ireland

4 Windsor House, Telford Centre, Telford, Shropshire, TF3 4NB, United Kingdom

5 Goodbody Secretarial Limited, International Financial Services Centre, 25/28 North Wall Quay, Dublin 1, Ireland

6 1 George Street, Edinburgh, EH2 2LL, United Kingdom

7 22-24 New Street, St Pauls Gate, 4th Floor, JE1 4TR, Jersey

8 20 Old Bailey, London, England, EC4M 7AN, United Kingdom

9 Ugland House, Grand Cayman, KY1-1104, Cayman Islands

10 Avenue Louise 326, bte 33 1050 Brussels, Belgium

11 Telestone 8, Teleport, Naritaweg 165, 1043 BW, Amsterdam, Netherlands

12 Citco (Sweden) Ab, Stureplan 4c, 4 Tr, 114 35 Stockholm, Sweden

13 c/o Citco (Denmark) ApS, Holbergsgade 14, 2 .tv, 1057 København K Denmark

14 201 Bishopsgate, London, EC2M 3AE, United Kingdom

15 2-4, Rue Eugène Ruppert, L-2453 Luxembourg, Luxembourg

16 35a Avenue J.F. Kennedy, L-1855, Luxembourg

17 Ogier House, The Esplanade, St Helier, JE4 9WG, Jersey

18 32 Molesworth Street, Dublin 2, Dublin, D02 Y512, Ireland

19 8 Canada Square, London, E14 5HQ, United Kingdom

20 12 Throgmorton Avenue, London EC2N 2DL, United Kingdom

21 One Coleman Street, London, EC2R 5AA, United Kingdom

22 Senator House, 85 Queen Victoria Street, London, EC4V 4AB, United Kingdom

23 5, Allée Scheffer, L-2520 Luxembourg, Luxembourg

24 Kings Place, 90 York Way, London, N1 9GE, United Kingdom

25 Elizabeth House, 9 Castle Street, St Helier, JE4 2QP, Jersey

26 Cannon Place, 78 Cannon Street, London, EC4N 6AG, United Kingdom

27 70 Sir John Rogerson’s Quay, Dublin 2, Ireland

28 Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP, United Kingdom

29 49, Avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg

30 Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH, United Kingdom

31 10, Château d’Eau, L-3364 Leudelange, Grand Duchy of Luxembourg

32 Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN, United Kingdom

33 160 Queen Victoria Street, London, EC4V 4LA, United Kingdom

34 Canon’s Court, 22 Victoria Street, Hamilton, HM12, Bermuda

35 Matrix House, Basing View, Basingstoke, Hampshire, RG21 4DZ, United Kingdom

36 280 Bishopsgate, London, EC2M 4AG, United Kingdom

37 Senningerberg, 6, Route De Trèves, L-2633, Luxembourg

38 Senningerberg, 6, Lou Hemmer Street, L-1748, Luxembourg

39 Weena 850, 3014 DA, Rotterdam, Netherlands

40 Hesperange, 33, rue de Gasperich, L-5826, Luxembourg

41 20, rue de la Poste, Grand Duchy of Luxembourg, L-2346, Luxembourg

42 1 London Wall Place, London, EC2Y 5AU, United Kingdom

43 Senningerberg, 5, Hohenhof, L-1736, Luxembourg

44 33 Sir John Rogersons Quay, Dublin, D02 XK09, Ireland

45 St. Peter Port, Tudor House, Le Bordage, GY1 6BD, Guernsey

46 Highvista Strategies LLC, 200 Clarendon Street 50th Floor, Boston, Massachusetts, 02116, United States

47 Corporation Trust Centre, 1290 Orange Street, Wilmington, 19801, United States

48 c/o Marks and Spencer Unit Trust Management Limited, Kings Meadow, Chester Business Park, Chester, CH99 9FB, United Kingdom

49 16 Charlotte Square, Edinburgh, EH2 4DF, United Kingdom

50 Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States

51 44 Esplanade, St Helier, Jersey, Channel Islands, JE4 9WG, Jersey

52 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, United Kingdom

53 55 Gresham Street, London, EC2V 7EL, United Kingdom

54 1 Wall Place, London, EC2Y 5AU, United Kingdom

Financials

Notes to the consolidated financial statements continued

304 Phoenix Group Holdings plc Annual Report and Accounts 2024

The following subsidiaries have been granted an audit exemption by parental guarantee by virtue of s.479A of the Companies Act 2006:

• Britannic Finance Limited

• Britannic Money Investment Services Limited

• G Life H Limited

• G Assurance & Pensions Services Limited

• Pearl Assurance Group Holdings Limited

• Pearl Customer Care Limited

• PGH CA Limited (previously known as Sun Life of Canada UK Holdings Limited)

• PGMS (Glasgow) Limited

• PGS 2 Limited

• Phoenix Customer Care Limited

• Phoenix SPV 1 Limited

• Phoenix SPV 2 Limited

• Phoenix SPV 3 Limited

• Phoenix SPV 4 Limited

• Phoenix Wealth Holdings Limited

• ReAssure Companies Services Limited

• ReAssure FSH UK Limited

• Vebnet Limited

The following subsidiaries were dissolved during the period. The subsidiaries were deconsolidated from the date of dissolution:

• abrdn SICAV II European Government All Stocks Fund

• abrdn (Lothian) UK Corporate Bond Trust

• abrdn (Lothian) European Trust

• abrdn (Lothian) European Trust II

• abrdn MT Global REIT Fund

• abrdn MT Japan Fund

• abrdn MT Sterling Intermediate Credit Fund

• PC Management Limited

The following subsidiaries were either fully disposed of or the Group was no longer deemed to control the subsidiary. The subsidiaries were

deconsolidated from either the date of disposal or from the date when the Group was deemed to no longer control the subsidiary:

• 28 Riberia de Loira SL

• 330 Avenida de Aragon SL

• Amundi MSCI World Climate Transition CTB

• G Park Management Company Limited

• IFSL AMR OEIC- IFSL AR Diversified Portfolio

• Legal and General Growth Trust

• BNY Mellon 50/50 Global Equity Fund

• Aviva Investors UK Property Feeder Trust

• UBS Global Optimal Fund

• SLA Ireland No.1 S.à.r.l.

The following associates were dissolved during the period. The investments in associates were derecognised from the date of dissolution:

• UK Commercial Property REIT Limited

• UK Commercial Property Estates Holdings Limited

• UK Commercial Property Estates Limited

• UK Commercial Property Finance Holdings Limited

• Duke Distribution Centres S.à.r.l.

• Duke Offices & Developments S.à.r.l.

The Group no longer has significant holdings in the following undertakings:

• abrdn American Income Equity Fund

• abrdn Global Equity Fund

• abrdn UK Government Bond Fund

• abrdn UK Income Unconstrained Equity Fund

• abrdn Investment Grade Corporate Bond Fund

• abrdn Emerging Markets Local Currency Bond Tracker Fund

• CF Macquaries Global Infrastructure Securities Fund

• Schroder Global Emerging Markets Fund

• Invesco Global Targeted Returns Fund

• The Marks and Spencer Worldwide Managed FundLegal & General European Index L ACC

• Legal & General Future World Sustainable UK Equity Fund

• Legal & General European Index L ACC

• Nomura American Century Concentrated Global Growth Equity Fund

H. Interests in subsidiaries and associates continued

H6. Group entities continued

Financials

305Phoenix Group Holdings plc Annual Report and Accounts 2024

I. Other notes

I1. Share-based payment

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value

excludes the effect of non-market-based vesting conditions. Further details regarding the determination of the fair value of equity-settled

share-based transactions are set out below.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting

period, based on the Group’s estimate of equity instruments that will eventually vest. At each period end, the Group revises its estimate of the

number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the

original estimates, if any, is recognised in the consolidated income statement such that the cumulative expense reflects the revised estimate with a

corresponding adjustment to equity.

I1.1 Share-based payment expense

The expense recognised for employee services receivable during the year is as follows:

	2024	2023
	£m	£m
Expense arising from equity-settled share-based payment transactions	26	22

I1.2 Share-based payment expense

Long-Term Incentive Plan (‘LTIP’)

The purpose of the LTIP is to motivate and incentivise delivery of sustained performance over the long-term in line with our strategy and purpose,

and to promote alignment with shareholders’ interests. The awards under this plan are in the form of nil-cost options to acquire an allocated number

of ordinary shares.

The 2022 and 2023 LTIP awards are subject to performance conditions tied to the Group’s performance in respect of net operating cash receipts,

persistency, relative total shareholder return (‘TSR’), decarbonisation, Group in-force long-term free cash (2023 LTIP only) and return on

shareholder value (2022 LTIP only). The 2024 LTIP awards are subject to performance conditions tied to the Group’s performance in respect of net

operating cash receipts, return on capital, cumulative net flows, decarbonisation and relative TSR and diversity and inclusion. See the Directors’

Remuneration Report for further details of these performance conditions.

A holding period applies to members of the Executive Committee. Once performance vesting requirements are satisfied, awards will not be

released for a further two years from the third anniversary of the original award date. Dividends will accrue on LTIP awards until the end of the

holding period. There are no cash settlement alternatives.

2024 LTIP awards were granted on 28 March 2024 and are expected to vest on 28 March 2027. The 2021 LTIP awards vested on 25 March 2024.

The 2022 awards will vest on 18 March 2025 and the 2023 awards will vest on 17 March 2026.

The fair value of these awards is estimated at the average share price in the three days preceding the date of grant, taking into account the terms

and conditions upon which the instruments were granted. The fair value of the LTIP awards is adjusted in respect of the TSR performance condition

which is deemed to be a ‘market condition’. The fair value of the 2022, 2023 and 2024 TSR elements of the LTIP awards has been calculated using a

Monte Carlo model. The inputs to this model are shown below:

	2024	2023	2022
	TSR performance	TSR performance	TSR performance
	condition	condition	condition
Share price (p)	553	559	639
Expected term (years)	2.8	2.8	2.8
Expected volatility (%)	22	23	31
Risk-free interest rate (%)	4	3.31	1.21
Expected dividend yield (%)	Dividends are received by holders of the awards
	therefore no adjustment to fair value is required

On 20 September 2024, 4 October 2023 and 19 August 2022, LTIP awards were granted to certain senior management employees. The vesting

periods and performance conditions for these awards are linked to the core 2022, 2023 and 2024 LTIP awards respectively.

On 3 April 2023, 28 March 2024 and 20 September 2024 LTIP Buy-out awards were granted to certain senior management employees. There are

discrete vesting periods for these awards are made on the condition that employees remain in employment with the Group for the vesting period.

Similar awards were also issued in prior periods.

Each year, the Group issues a Chair’s share award under the terms of the LTIP which is granted to a small number of employees in recognition of

their outstanding contribution in the previous year. The awards are granted on the same dates as the core 2022, 2023 and 2024 LTIP awards. These

grants of shares are conditional on the employees remaining in employment with the Group for the vesting period and achieving an established

minimum good/good performance grading. Good leavers will be able to, exercise their full award at vesting.

Deferred Bonus Share Scheme (‘DBSS’)

Each year, under the rules of the Annual Incentive Plan (‘AIP’) a percentage of the cash payment is deferred into shares of the Company. The

requirement to defer is specifically linked to senior management and the Executive Committee is deferred into shares of the parent company.

The grant of these shares is conditional on the employee remaining in employment with the Group for a period of three years from the date of grant.

Good leavers will be able to, at the discretion of the Remuneration Committee, exercise their full award at vesting. Dividends will accrue for DBSS

awards over the three-year deferral period.

The 2024 DBSS was granted on 28 March 2024 and is expected to vest on 28 March 2027. The 2021 DBSS awards vested on 12 March 2024.

The 2022 awards are expected to vest on 18 March 2025 and the 2023 awards are expected to vest on 17 March 2026.

The fair value of these awards is estimated at the average share price in the three days preceding the date of the grant, taking into account the terms

and conditions upon which the options were granted.

Financials

Notes to the consolidated financial statements continued

306 Phoenix Group Holdings plc Annual Report and Accounts 2024

ShareSave scheme

The ShareSave scheme allows participating employees in the UK to save up to £500 each month for a period of three or five years. The 2024

ShareSave options were granted on 21 October 2024. Irish ShareSave options are no longer granted.

Under the ShareSave arrangement, participants remaining in the Group’s employment at the end of the three or five year saving period are entitled

to use their savings to purchase shares at a discounted price (’exercise price’) The exercise price is calculated using the three-day average price,

discounted by 20% prior to the date of invitation. Employees leaving the Group for certain reasons are able to use their savings to exercise and

purchase a prorated number of shares if they leave prior to the end of their three or five year period.

The fair value of the options has been determined using a Black-Scholes valuation model. Key assumptions within this valuation model include

expected share price volatility and expected dividend yield.

The following information was relevant in the determination of the fair value of the 2019 to 2023 UK ShareSave options:

	2024	2023	2022	2021	2020
	ShareSave	ShareSave	ShareSave	ShareSave	ShareSave
Share price (£)	4.912	4.448	6.142	7.486	5.664
Exercise price (£)	4.18	3.78	5.09	5.89	4.97
Expected life (years)	3.1 and 5,1	3.1 and 5,1	3.25 and 5.25	3.25 and 5.25	3.25 and 5.25
Risk-free rate (%) – based on UK government gilts	4.2 (for 3.1	4.7 (for 3.1	2.0 (for 3.25	0.5 (for 3.25	0.5 (for 3.25
commensurate with the expected term of the award	year scheme)	year scheme)	year scheme)	year scheme)	year scheme)
	and 4.1 (for	and 4.5 (for	and 1.9 (for	and 0.7 (for	and 0.5 (for
	5.25 year	5.25 year	5.25 year	5.25 year	5.25 year
	scheme)	scheme)	scheme)	scheme)	scheme)
Expected volatility (%) based on the Company’s share price	22.0	23.0	30.0	30.0	30.0
volatility to date
Dividend yield (%)	10.9	11.5	8	6.3	8.2

The information for determining the fair value of the 2021 Irish ShareSave options differed from that included in the table above as follows:

- Share price (€): 8.618

- Exercise price (€): 6.880

- Risk-free rate (%): (0.3) (for 5.25 year scheme)

- No ShareSave awards have been granted to Irish employees since 2022.

Share Incentive Plan

The Group operates two Share Incentive Plans (‘SIP’) available to UK and Irish employees. Each plan allows participating employees to purchase

‘Partnership shares’ in the Group through monthly contributions from salary. In respect of the UK SIP, employees can contribute up to £150 per

month or 10% of salary (whichever is lower). For each ‘Partnership shares awarded, the Group awards ‘Matching shares’ on a 1:1 basis up to a

maximum of £50. Dividend payments are reinvested into further shares. The Irish SIP, allows employees to contribute up to a€40 per month or 7.5%

(whichever is lower). ‘Matching shares’ are awarded on a 1.4 basis up a maximum of €40. Dividends are paid in cash under the Irish SIP.

The fair value of the Matching shares granted is estimated as the share price at date of grant, taking into account terms and conditions upon which

the instruments were granted. At 31 December 2024, 611,207 matching shares (excluding unrestricted shares) were conditionally awarded to

employees (2023: 546,430).

I1.3 Movements in the year

The following tables illustrate the number of, and movements in, LTIP, ShareSave and DBSS share options during the year:

		2024
		Number of share options
	LTIP	ShareSave	DBSS
Outstanding at the beginning of the year	11,111,405	6,844,865	3,367,966
Granted during the year	4,595,364	1,426,648	2,525,215
Forfeited during the year	(2,270,979)	(176,532)	(33,470)
Cancelled during the year	(4,258)	(471,709)	–
Exercised during the year	(1,545,139)	(75,229)	(730,869)
Expired during the year	(33,884)	(576,565)	(11,753)
Dividends on vested awards	635,085	–	151,311
Outstanding at the end of the year	12,487,594	6,971,478	5,268,400

I. Other notes continued

I1. Share-based payment continued

I1.2 Share-based payment expense continued

Financials

307Phoenix Group Holdings plc Annual Report and Accounts 2024

		2023
		Number of share options
	LTIP	ShareSave	DBSS
Outstanding at the beginning of the year	9,387,235	5,001,906	2,301,801
Granted during the year	4,202,695	5,038,820	1,675,548
Forfeited during the year	(1,750,509)	(223,565)	(29,932)
Cancelled during the year	–	(1,371,617)	–
Exercised during the year	(1,217,227)	(1,184,132)	(701,644)
Expired during the year	(13,908)	(416,547)	(11,227)
Dividends on vested awards	503,119	–	133,420
Outstanding at the end of the year	11,111,405	6,844,865	3,367,966

The weighted average fair value of options granted during the year was £3.98 (2023: £2.92).

The weighted average share price at the date of exercise for the rewards exercised is £5.18 (2023: £5.46).

The weighted average remaining contractual life for the awards outstanding as at 31 December 2024 is 5.0 years (2023: 5.3 years).

I2. Cash flows from operating activities

Operating cash flows include purchases and sales of investment property and financial investments as the purchases are funded from cash flows

associated with the origination of insurance and investment contracts, net of payments of related benefits and claims.

The following analysis gives further detail behind the ‘cash (utilised)/generated by operations’ figure in the statement of consolidated cash flows.

Notes

			2023
		2024	restated 1
		£m	£m
(Loss)/profit for the year before tax		(1,107)	262
Adjustments for non-cash movements in loss/(profit) before tax for the year:
Loss on PGL Pension Scheme buy-out transaction	G1	100	–
Gain on acquisition of Phoenix Life CA Holdings Limited
(Formerly known as SLF of Canada UK Limited)	H2	–	(66)
Fair value losses/(gains) on:
Investment property	G4	100	362
Financial assets and derivative liabilities		(7,884)	(11,045)
Change in fair value of borrowings	E5.2	1	(82)
Amortisation and impairment of intangible assets	G2	273	324
Depreciation of property, plant and equipment	G3	21	23
Share-based payment charge	I1.1	26	22
Finance costs	C7	290	258
Net interest expense on Group defined benefit pension scheme liability/asset	G1	56	111
Pension past service costs	G1	–	12
Other costs of pension schemes	G1	12	6
Movement in assets and liabilities relating to operations:
Increase in investment assets		(913)	(7,986)
Decrease/(increase) in reinsurers’ share of investment contract liabilities		342	(621)
Increase in reinsurance contract assets/liabilities		(305)	(818)
Decrease in assets classified as held for sale		1,475	2,593
(Decrease)/increase in insurance contract liabilities		(166)	4,037
Increase in investment contract liabilities		13,405	13,385
Decrease in obligation for repayment of collateral received		(156)	(703)
Decrease in liabilities classified as held for sale		(1,606)	(3,571)
Net (increase)/decrease in working capital		(406)	2,736
Other cash movements relating to operations:
Contributions to defined benefit pension schemes	G1	(9)	(9)
Cash generated/(utilised) by operations		3,549	(770)

1 See note A3 for further details of the prior year restatements.

Financials

Notes to the consolidated financial statements continued

308 Phoenix Group Holdings plc Annual Report and Accounts 2024

I3. Capital management

The Group’s capital management is based on the principles of Solvency II, as modified by the PRA’s 2024 reforms (‘Solvency UK’). This involves

a valuation of the Group’s Own Funds and a risk-based assessment of the Group’s Solvency Capital Requirement (‘SCR’) in line with

Solvency UK rules.

This note sets out the Group’s approach to managing capital and provides an analysis of Own Funds and SCR.

Risk and capital management objectives

The risk management objectives and policies of the Group are based on the requirement to protect the Group’s regulatory capital position, thereby

safeguarding policyholders’ guaranteed benefits whilst also ensuring the Group can meet its various cash flow requirements. Subject to this, the Group

seeks to use available capital to achieve increased returns, balancing risk and reward, to generate additional value for policyholders and shareholders.

In pursuing these objectives, the Group deploys financial and other assets and incurs insurance contract liabilities and financial and other liabilities.

Financial and other assets principally comprise investments in equity securities, debt securities, collective investment schemes, property,

derivatives, reinsurance, trade and other receivables, and banking deposits. Financial liabilities principally comprise investment contracts,

borrowings for financing purposes, derivative liabilities and net asset value attributable to unitholders.

The Group’s Risk Management Framework is described in the risk management commentary on pages 46 to 57 of the Annual Report and Accounts

and the Risk Universe component of this framework summarises the comprehensive set of risks to which the Group is exposed. The major risks

(‘Level 1’ risks) that the Group’s businesses are exposed to and the Group’s approach to managing those risks are outlined in the following notes:

• note E6: Credit risk, market risk, financial soundness risk, strategic risk, customer risk and operational risk; and

• note F11: Insurance risk.

The section on capital management objectives is included below.

Capital Management Framework

The Group’s Capital Management Framework is designed to achieve the following objectives:

• to provide appropriate security for policyholders and meet all regulatory capital requirements under the Solvency UK regime while not retaining

unnecessary excess capital, operating within a Solvency II Shareholder Capital Coverage ratio of 140-180%;

• to ensure sufficient liquidity to meet obligations to policyholders and other creditors;

• to manage the leverage position, including optimisation of the Solvency II leverage ratio and the Fitch leverage ratio to maintain an investment

grade credit rating; and

• to maintain a dividend policy to pay an ordinary dividend that is progressive and sustainable.

The framework comprises a suite of capital management policies that govern the allocation of capital throughout the Group to achieve

the framework objectives under a range of stress conditions. The policy suite is defined with reference to policyholder security, creditor obligations,

owner dividend policy and regulatory capital requirements.

Group capital

Group capital is managed on a Solvency UK basis, under which the primary sources of capital managed by the Group comprise the Group’s Own

Funds as measured under Solvency UK rules adjusted to exclude surplus funds attributable to the Group’s unsupported with-profits funds and

unsupported pension schemes.

A Solvency UK capital assessment involves valuation in line with Solvency UK rules of the Group’s Own Funds and a risk-based assessment of the

Group’s Solvency Capital Requirement (‘SCR’). Solvency II surplus is the excess of Own Funds over the SCR.

The Group aims to maintain a Solvency II surplus at least equal to its Board-approved capital policy, which reflects Board risk appetite for meeting

prevailing solvency requirements.

The capital policy of each Life Company is set and monitored by each Life Company Board. These policies ensure there is sufficient capital within

each Life Company to meet regulatory capital requirements under a range of stress conditions. The capital policy of each Life Company varies

according to the risk profile and financial strength of the company.

The capital policy of each Group Holding Company is designed to ensure that there is sufficient liquidity to meet creditor obligations through the

combination of cash buffers and cash flows from the Group’s operating companies.

Own Funds and SCR

Basic Own Funds represents the excess of assets over liabilities from the Solvency II balance sheet adjusted to add back any relevant subordinated

liabilities that meet the criteria to be treated as capital items.

The Basic Own Funds are classified into three Tiers based on permanency and loss absorbency (Tier 1 being the highest quality and Tier 3 the

lowest). The Group’s Own Funds are assessed for their eligibility to cover the Group SCR with reference to both the quality of capital and its

availability and transferability. Surplus funds in with-profits funds of the Life Companies and in the pension schemes are restricted and can only be

included in Eligible Own Funds up to the value of the SCR they are used to support.

Eligible Own Funds to cover the SCR are obtained after applying the prescribed Tiering limits and availability restrictions to the Basic Own Funds.

The SCR is calibrated so that the likelihood of a loss exceeding the SCR is less than 0.5% over one year. This ensures that capital is sufficient

to withstand a broadly ‘1 in 200-year event’.

The Group operates an Internal Model to calculate Group SCR, all Group companies are within the scope of the single internal model, with the

exception of acquired ReAssure businesses, the Irish life entities, Standard Life International Designated Activity Company and Phoenix Life

Assurance Europe Designated Activity Company, and Phoenix Life CA Limited (formerly known as Sun Life Assurance Company of Canada (U.K.)

Limited), which determine their capital requirements in accordance with the Standard Formula.

I. Other notes continued

Financials

309Phoenix Group Holdings plc Annual Report and Accounts 2024

Group capital resources – unaudited

The Group capital resources presented on a shareholder basis, are based on the Group’s Eligible Own Funds adjusted to remove amounts

pertaining to unsupported with-profits funds and Group pension schemes:

	2024	2023
Unaudited	£bn	£bn
PGH plc Eligible Own Funds	10.3	11.1
Remove Own Funds pertaining to unsupported with-profits funds and pension schemes	(1.9)	(2.2)
Group capital resources	8.4	8.9

Reconciliation between IFRS equity and estimated Eligible Own Funds under Solvency II

A reconciliation summarising the key differences between total IFRS equity and the Group’s Eligible Own Funds under Solvency II is shown in the

following table:

	2024	2023
	£bn	£bn
Total IFRS equity	2.2	3.8
Deduct non-controlling interests	(0.5)	(0.5)
Deduct goodwill, intangible assets and deferred acquisition costs	(1.9)	(2.1)
Revaluation of subordinated liabilities	0.2	0.2
Net impact of valuing technical provisions, net of reinsurance recoverables 1 , on Solvency II basis 1	11.6	10.6
Deferred tax impact of valuation differences 1	(1.1)	(1.0)
Other valuation differences 1	(0.1)	(0.2)
Excess of assets over liabilities under Solvency II	10.4	10.8
Subordinated liabilities 1	3.3	3.5
Ring-fenced fund restrictions 1	(2.6)	(2.2)
Other availability restrictions 1	(0.8)	(1.0)
PGHP plc eligible own funds	10.3	11.1

1 These balances are unaudited and reflect Solvency II adjustments.

I4. Related party transactions

In the ordinary course of business, the Group and its subsidiaries carry out transactions with related parties as defined by IAS 24 Related Party

Disclosures, which comprise Group pension schemes, an associate and key management personnel.

I4.1 Related party transactions

During the year, the Group entered into the following related party transactions with a Group pension scheme and an associate:

	Transactions	Transactions
	2024	2023
	£m	£m
Pearl Group Staff Pension Scheme:
Payment of administrative expenses	(5)	(4)
UK Commercial Property REIT (‘UKCPR’):
Dividend income 1	–	19
Future Growth Capital Holdings Limited:
Initial investment in associate	(5)	–

1 Transactions with UKCPR only include those that took place prior to the entity ceasing to be an associate and therefore a related party of the Group (see note H4.1 for further details).

In addition to the above, Phoenix Life Limited completed the buy-out of the PGL Pension Scheme liabilities. Further details are included

in note G1.2.

I4.2 Transactions with key management personnel

The total compensation of key management personnel, being those having authority and responsibility for planning, directing and controlling the

activities of the Group, including the Executive, Non-Executive Directors and members of the Group’s Executive Committee is as follows:

	2024	2023
	£m	£m
Salary and other short-term benefits	17	15
Equity compensation plans	10	8

Details of the shareholdings and emoluments of individual Directors are provided in the Remuneration report on pages 134 to 160.

During the year to 31 December 2024 key management personnel and their close family members contributed £240,610 (2023: £203,234)

to Pensions and Savings products sold by the Group and transferred out £nil (2023: £110,074) of investments. At 31 December 2024, the total value

of key management personnel’s investments in Group Pensions and Savings products was £2,332,709 (2023: £1,989,979).

Financials

Notes to the consolidated financial statements continued

310 Phoenix Group Holdings plc Annual Report and Accounts 2024

I 5. Commitments

This note analyses the Group’s other commitments.

	2024	2023
	£m	£m
To subscribe to private equity funds and other unlisted assets	2,425	1,738
To purchase, construct or develop investment property and income strips	16	23
For repairs, maintenance or enhancements of investment property	22	15

I6. Contingent liabilities

Where the Group has a possible future obligation as a result of a past event, or a present legal or constructive obligation but it is not probable that

there will be an outflow of resources to settle the obligation or the amount cannot be reliably estimated, this is disclosed as a contingent liability.

Legal proceedings

Where the Group has a possible future obligation as a result of a past event, or a present legal or constructive obligation but it is not probable that

there will be an outflow of resources to settle the obligation or the amount cannot be reliably estimated, this is disclosed as a contingent liability.

As a long-term savings and retirement business, the Group operates in a highly regulated environment. Therefore, in the normal course of business

the Group is exposed to certain legal issues, which can involve litigation and arbitration, complaints, and regulatory and tax authority reviews. At

31 December 2024, the Group has a number of contingent liabilities in this regard, none of which are considered by the Directors to be material.

I7. Events after the reporting period

The financial statements are adjusted to reflect significant events that have a material effect on the financial results and that have occurred

between the period end and the date when the financial statements are authorised for issue, provided they give evidence of conditions that

existed at the period end. Events that are indicative of conditions that arise after the period end that do not result in an adjustment to the financial

statements are disclosed.

On 4 February 2025, the Group redeemed its US $250 million Perpetual Contingent Convertible Tier 1 notes at their principal amount together

with interest accrued to the repayment date.

On 12 March 2025, the Group received court approval for the Part VII transfer of the TIP business, currently classified as held for sale (see note H3),

to Aberdeen Group. The effective date for this transaction is expected to be 28 March 2025.

On 16 March 2025, the Board recommended a final dividend of 27.35p per share for the year ended 31 December 2024 (2023: 26.65p). Payment of

the final dividend is subject to shareholder approval at the AGM. The cost of this dividend has not been recognised as a liability in the consolidated

financial statements for 2024 and will be charged to the statement of consolidated changes in equity in 2025.

Sir Nicholas Lyons

Andy Briggs

Nicolaos Nicandrou

Eleanor Bucks

Karen Green

Mark Gregory

Hiroyuki Iioka

Katie Murray

Belinda Richards

David Scott

Margaret Semple, OBE

Nicholas Shott

16 March 2025

I. Other notes continued

311Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Parent company financial statements

Notes

2024

£m

2023

restated

£m

ASSETS

Property, plant and equipment 10 15 17

Investments in Group entities 11 9,247 10,536

Financial assets

Loans and deposits 12 1,398 1,302

Derivatives 6 112 119

Debt securities 13 1 1

Collective investment schemes 13 1,095 1,017

Deferred tax 14 309 185

Prepayments and accrued income 47 50

Other amounts due from Group entities 20 105 25

Cash and cash equivalents 15 1 1

Total assets 12,330 13,253

EQUITY AND LIABILITIES

Equity attributable to ordinary shareholders

Share capital 3 100 100

Share premium 3 16 16

Merger relief reserve 3 593 1,819

Other reserve 3 (4) (4)

Retained earnings

At 1 January 4,632 5,072

Profit for the year 3 249 80

Other movements in retained earnings 690 (520)

Total retained earnings 5,571 4,632

Total equity attributable to ordinary shareholders 6,276 6,563

Tier 1 Notes 4 411 411

Total equity 6,687 6,974

Liabilities

Financial liabilities

Borrowings 5 4,926 5,813

Derivatives 6 4 1

Obligations for repayment of collateral received 6 37 30

Other amounts due to Group entities 20 341 77

Provisions 7 207 222

Lease liabilities 8 16 18

Accruals and deferred income 9 112 118

Total liabilities 5,643 6,279

Total equity and liabilities 12,330 13,253

1 See note 1(d) for details of the prior year restatement.

The notes identified numerically on pages 314 to 324 are an integral part of these separate financial statements. Where items also appear in the

consolidated financial statements, reference is made to the notes (identified alphanumerically) on pages 197 to 310.

Approved by the Board on 16 March 2025.

Andy Briggs Nicolaos Nicandrou

Chief Executive Officer Chief Financial Officer

Company registration number 11606773.

Statement of financial position

As at 31 December 2024

Parent company financial statements continued

312 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Share capital

(note 3)

£m

premium

(note 3)

£m

Merger relief

reserve

(note 3)

£m

Other

reserve

(note 3)

£m

Retained

earnings

£m

Total

£m

Tier 1 Notes

(note 4)

£m

Total

equity

£m

At 31 December 2023 as reported 100 16 1,819 (4) 4,621 6,552 411 6,963

Restatement

– – – – 11 11 – 11

At 1 January 2024 (restated

) 100 16 1,819 (4) 4,632 6,563 411 6,974

Total comprehensive income for

the year attributable to owners – – – – 249 249 – 249

Dividends paid on ordinary shares (note B4) – – – – (533) (533) – (533)

Coupon paid on Tier 1 Notes – – – – (29) (29) – (29)

Credit to equity for equity-settled

share-based payments (note I1) – – – – 26 26 – 26

Transfer of merger reserve – – (1,226) – 1,226 – – –

At 31 December 2024 100 16 593 (4) 5,571 6,276 411 6,687

For the year ended 31 December 2023

Share capital

(note 3)

£m

premium

(note 3)

£m

Merger relief

reserve

(note 3)

£m

Other

reserve

(note 3)

£m

Retained

earnings

£m

Total

£m

Tier 1 Notes

(note 4)

£m

Total

equity

£m

At 31 December 2022 as reported 100 10 1,819 (4) 5,062 6,987 411 7,398

Restatement

– 10 10 – 10

At 1 January 2023 (restated

) 100 10 1,819 (4) 5,072 6,997 411 7,408

Total comprehensive income for the year

attributable to owners (restated

) – – – – 80 80 – 80

Issue of ordinary share capital, net of

associated commissions and expenses – 6 – – – 6 – 6

Dividends paid on ordinary shares (note B4) – – – – (520) (520) – (520)

Coupon paid on Tier 1 Notes, net of tax relief – – – – (22) (22) – (22)

Credit to equity for equity-settled

share-based payments (note I1) – – – – 22 22 – 22

At 31 December 2023 (restated

) 100 16 1,819 (4) 4,632 6,563 411 6,974

1 See note 1(d) for details of the prior year restatement.

Statement of changes in equity

For the year ended 31 December 2024

313Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Notes

2024

£m

2023

£m

Cash flows from operating activities

Cash utilised by operations 16 (312) (589)

Net cash flows from operating activities (312) (589)

Cash flows from investing activities

Acquisition of Phoenix Life CA Holdings Limited (formerly known as SLF of Canada UK Limited) – (250)

Advances to Group entities (63) (129)

Dividends received from Group entities 1,032 103

Interest received from Group entities 188 219

Capital contribution to subsidiary (note 11) – (55)

Repayment of amounts due from Group entities – 1,425

Derivative settlements 62 72

Net cash flows from investing activities 1,219 1,385

Cash flows from financing activities

Proceeds from issuing ordinary shares 3 – 6

Proceeds from new shareholder borrowings, net of associated expenses 5 1,579 1,450

Repayment of shareholder borrowings 5 (1,621) (1,362)

Ordinary share dividends paid 17 (533) (520)

Interest paid on borrowings (301) (338)

Lease payments 8 (2) (2)

Coupon paid on Tier 1 Notes (29) (29)

Net cash flows from financing activities (907) (795)

Net increase/(decrease) in cash and cash equivalents – 1

Cash and cash equivalents at the beginning of the year 1 –

Cash and cash equivalents at the end of the year 1 1

Statement of cash flows

For the year ended 31 December 2024

Financials

314 Phoenix Group Holdings plc Annual Report and Accounts 2024

1. Accounting policies

(a) Basis of preparation

The financial statements have been prepared on a going concern basis and under the historical cost convention, except for those financial assets

and financial liabilities (including derivative instruments) that have been measured at fair value.

The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own income statement in these

financial statements. Total comprehensive income for the year attributable to owners was £249 million (2023 restated: £80 million).

Statement of Compliance

The Company’s financial statements have been prepared in accordance with UK – adopted international accounting standards as applied in

accordance with section 408 of the Companies Act 2006.

The financial statements are presented in sterling (£) rounded to the nearest million except where otherwise stated.

Assets and liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to

offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously.

(b) Accounting policies

Where applicable, the accounting policies in the separate financial statements are the same as those presented in the consolidated financial

statements on pages 197 to 310 with the exception of the one policy whereby the Company has not adopted the Group’s policy of

hedge accounting.

Where an accounting policy can be directly attributed to a specific note to the consolidated financial statements, the policy is presented within that

note. Each note within the Company financial statements makes reference to the note to the consolidated financial statements containing the

applicable accounting policy. The accounting policy in relation to foreign currency transactions is included within note A3 to the consolidated

financial statements.

Investments in Group entities

Investments in Group entities are carried in the statement of financial position at cost less impairment.

The Company assesses at each reporting date whether an investment is impaired by assessing whether any indicators of impairment exist. If

objective evidence of impairment exists, the Company calculates the amount of impairment as the difference between the recoverable amount of

the Group entity and its carrying value and recognises the amount as an expense in the income statement.

The recoverable amount is determined based on the cash flow projections of the underlying entities.

Critical accounting estimates are those which involve the most complex or subjective judgements or assessments. The area of the Company’s

business that typically requires such estimates and judgement is the impairment assessment for investments in Group entities.

Impairment of investments in Group entities

The Company conducts impairment reviews of investments in subsidiaries whenever events or changes in circumstances indicate that their carrying

amounts may not be recoverable. Determining whether an asset is impaired requires an estimation of the recoverable amount, which requires the

Company to estimate the value in use. The value in use is based on projections of future cash flows and a suitable discount rate in order to calculate

the present value. Where the actual future cash flows are less than expected, an impairment loss may arise. Further details are included in note 11.

(d) Prior year restatements

Prior year comparative information has been restated due to changes in the tax position of certain Group companies for the years ended

31 December 2022 and 31 December 2023. This impacts the Company due to the resulting change in the quantum of losses surrendered by the

Company as Group relief. Consequently, to the extent losses are carried forward to prior periods the resulting deferred tax asset balances have also

been restated.

The following table sets out the impact of the restatements as at 31 December 2022 and 31 December 2023:

31 December 2022

as reported

£m

Correction of errors

£m

31 December 2022

restated

£m

31 December 2023

as reported

£m

Correction of errors

£m

31 December 2023

restated

£m

Statement of financial position:

Deferred tax assets 113 42 155 159 26 185

Other amounts due to Group entities (43) (32) (75) (62) (15) (77)

Retained earnings 5,062 10 5,072 4,621 11 4,632

Notes to the parent company financial statements

Financials

315Phoenix Group Holdings plc Annual Report and Accounts 2024

2. Financial information

New accounting pronouncements not yet effective

Details of the standards, interpretations and amendments to be adopted in future periods are detailed in note A5 to the consolidated financial

statements, none of which are expected to have a significant impact on the Company’s financial statements.

3. Share capital, share premium, and reserves

2024

£m

2023

£m

Issued and fully paid:

1,003.1 million ordinary shares of £0.10 each (2023: 1,001.5 million) 100 100

2024

£m

2023

£m

1,003.1 million ordinary shares of £0.10 each (2023: 1,001.5 million) 100 100

2024

Number

2024

2023

Number

2023

Shares in issue at 1 January 1,001,538,419 100,153,841 1,000,352,477 100,035,247

Ordinary shares issued in the year 1,573,419 157,342 1,185,942 118,594

Shares in issue at 31 December 1,003,111,838 100,311,183 1,001,538,419 100,153,841

During 2024, the Company issued 1,573,419 shares (2023: 1,185,942 shares) with a premium of £nil (2023: £6 million) in order to satisfy its obligations

to employees under the Group’s share schemes. This includes 1,500,000 shares that were issued to the Group’s Employee Benefit Trust.

The Company has applied the relief in section 612 of the Companies Act 2006 to present the difference between the consideration received and

the nominal value of the shares issued of £1,819 million in a merger reserve as opposed to in share premium. During the year £1,226 million of the

reserve was transferred to retained earnings following the impairment of the Company’s investment in the ReAssure group of companies as a result

of the distribution of dividends to the Company.

On 12 December 2018, the Company became the ultimate parent undertaking of the Group by acquiring the entire share capital of ’Old PGH’ (the

Group’s ultimate parent company until December 2018) via a share for share exchange. The cost of investment in Old PGH was determined as the

carrying amount of the Company’s share of the equity of Old PGH on the date of the transaction. The difference between the cost of investment

and the market capitalisation of Old PGH immediately before the share for share exchange of £4 million has been recognised as an Other reserve

and is shown as a separate component of equity.

Profit for the year, included within Retained earnings, primarily includes dividend income from subsidiaries of £2,070 million (2023: £655 million),

other investment income of £240 million (2023: £261 million), administrative expenses of £582 million (2023: £597 million), impairment of

subsidiaries £1,289 million (2023: £nil), finance costs of £380 million (2023: £407 million) and a tax credit of £190 million (2023: £168 million).

4. Tier 1 notes

The accounting policy and details of the terms for the Tier 1 Notes are included in note D4 to the consolidated financial statements.

2024

£m

2023

£m

Tier 1 Notes 411 411

On 12 December 2018, the Company was substituted in place of Old PGH as issuer of the Tier 1 Notes and these were recognised at the fair value

of£411 million in the form of an intragroup loan which was received as consideration.

On 27 October 2020, the terms of the Tier 1 Notes were amended and the consequence of a trigger event, linked to the Solvency II capital position,

was changed. Previously, the Tier 1 Notes were subject to a permanent write-down in value to zero. The amended terms require that the Tier 1 Notes

would automatically be subject to conversion to ordinary shares of the Company at the conversion price of £1,000 per share, subject to adjustment

in accordance with the terms and conditions of the notes and all accrued and unpaid interest would be cancelled. Following any such conversion

there would be no reinstatement of any part of the principal amount of, or interest on, the Tier 1 Notes at any time.

316 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Notes to the parent company financial statements continued

5. Borrowings

The accounting policy for borrowings is included in note E5 to the consolidated financial statements.

Carrying value Fair value

2024

£m

2023

£m

2024

£m

2023

£m

Loans due to third-parties

£428 million Tier 2 notes 197 199 199 202

US $500 million Tier 2 notes 381 368 399 377

€500 million Tier 2 notes 394 409 423 419

US $750 million Perpetual Contingent Convertible Tier 1 notes 199 587 200 563

£500 million 5.625% Tier 2 notes 490 489 485 476

US $500 million Fixed Rate Reset Callable Tier 2 notes 279 274 275 262

£500 million 5.867% Tier 2 notes 529 536 500 493

£250 million Fixed Rate Reset Callable Tier 2 notes – 254 – 239

£250 million Tier 3 notes 252 253 246 250

£350 million Fixed Rate Reset Callable Tier 2 notes 347 346 367 368

US $500 million Perpetual Contingent Convertible Tier 1 notes 398 – 415 –

3,466 3,715 3,509 3,649

Loans due to Group companies:

€100 million loan due to Standard Life International DAC (note a) 90 90 90 90

£130 million loan due to ReAssure Life Limited (note b) 98 138 98 138

£250 million loan due to ReAssure Limited (note c) – 261 – 261

£250 million loan due to ReAssure Limited (note d) – 257 – 257

€50 million loan due to Standard Life International DAC (note e) 44 44 44 44

Cash-pooling with other Group entities (note f) 1,228 1,308 1,228 1,308

1,460 2,098 1,460 2,098

Total borrowings 4,926 5,813 4,969 5,747

Amount due for settlement after 12 months 3,457 4,505

1 Details of the principal features of loans due to third parties are included in note E5 to the consolidated financial statements.

a. On 20 December 2022, SLIDAC issued a €100 million floating term loan to the Company with a maturity date of 30 June 2028 (on 25 March

2024 the term of the loan was changed from 31 March 2024). Interest accrues on the term loan at a rate of EURIBOR plus 1.15%. As at

31 December 2024, the interest rate was 4.82%.

b. On 16 December 2022, ReAssure Life Limited (’RLL’) issued a £130 million floating term loan to the Company for a term of 5 years. Interest

accrues on the term loan at a rate of SONIA plus 1.49%. On 17 December 2024, RLL made a partial repayment of £50 million. As at 31 December

2024, the interest rate was 6.19%.

c. On 5 May 2023, ReAssure Limited (’RAL’) issued a £250 million floating term loan to the Company for a term of 5 years. Interest accrues on the

term loan at a rate of SONIA plus 1.62%. On 20 June 2024 RAL paid a dividend in specie of £269 million, removing the Company’s obligation

under the loan.

d. On 21 July 2023, RAL issued a £250 million loan to the Company for a term of 5 years. Interest accrues on the term loan at a rate of SONIA plus

1.51%. The Company repaid the loan in full on 17 December 2024.

e. On 15 June 2023, SLIDAC issued a €50 million floating term loan to the Company with a maturity date of 31 March 2025. Interest accrues on the

term loan at a rate of EURIBOR plus 0.79%. As at 31 December 2024, the interest rate was 4.46%.

f. On 13 September 2022, the Company entered into an uncommitted intra-group cash-pooling facility with certain subsidiaries, under which the

Company will either borrow funds from, or lend funds to, the relevant subsidiary. All amounts due under the facility attract interest at SONIA and

are repayable on demand. On 16 December 2024 ReAssure Group plc paid a dividend in specie of £700 million, thereby reducing the

Company’s liability under the cash-pooling facility.

On 18 November 2024, the Group replaced its £1.75 billion unsecured revolving credit facility with a new £1.5 billion unsecured revolving credit

facility (the ’revolving facility’), maturing in November 2029. The new facility remains undrawn as at 31 December 2024.

Borrowings initially recognised at fair value are being amortised to par value over the life of the borrowings.

For the purposes of the additional fair value disclosures for liabilities recognised at amortised cost, all borrowings have been categorised as Level 2

financial instruments.

Financials

317Phoenix Group Holdings plc Annual Report and Accounts 2024

Reconciliation of liabilities arising from financing activities

The table below details changes in the Company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities

arising from financing activities are those for which cash flows were, or future cash flows will be, classified inthe Company’s statement of cash flows

as cash flows from financing activities.

Loans due to third

parties

£m

Loans due to Group

companies

£m

Total borrowings

£m

Derivative assets

(note 6)

£m

Accrued

interest

£m

Total

£m

At 1 January 2024 3,715 2,098 5,813 (118) 78 5,773

Cash movements

New borrowings, net of costs 390 1,189 1,579 – – 1,579

Repayments (643) (978) (1,621) – (301) (1,922)

Non-cash movements

Dividend in specie payment – (969) (969) – – (969)

Movement in foreign exchange 5 (8) (3) – – (3)

Amortisation (1) – (1) – – (1)

Capitalised interest – 128 128 – – 128

Movement in fair value – – – 12 – 12

Other movements

– – – – 298 298

At 31 December 2024 3,466 1,460 4,926 (106) 75 4,895

1 Cross currency swaps to hedge against adverse currency movements in respect of the Group’s Euro and US Dollar denominated borrowings (see note 6 for further details).

2 Other movement represents the non-cash movement in the interest liability on borrowings.

Loans due to third

parties

£m

Loans due to Group

companies

£m

Total borrowings

£m

Derivative assets

(note 6)

£m

Accrued

interest

£m

Total

£m

At 1 January 2023 3,805 2,424 6,229 (225) 78 6,082

Cash movements

New borrowings, net of costs 346 1,104 1,450 – – 1,450

Repayments (350) (1,012) (1,362) – (338) (1,700)

Non-cash movements

Dividend in specie payment – (513) (513) – – (513)

Movement in foreign exchange (82) (2) (84) – – (84)

Amortisation (4) (5) (9) (1) – (10)

Capitalised interest – 102 102 – – 102

Movement in fair value – – – 108 – 108

Other movements

– – – – 338 338

At 31 December 2023 3,715 2,098 5,813 (118) 78 5,773

1 Cross currency swaps to hedge against adverse currency movements in respect of the Group’s Euro and US Dollar denominated borrowings (see note 6 for further details).

2 Other movement represents the non-cash movement in the interest liability on borrowings.

318 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Notes to the parent company financial statements continued

6. Derivatives

The accounting policy for derivatives is included in note E3 to the consolidated financial statements.

At 31 December 2023, the Company had in place four cross currency swaps in order to hedge against adverse currency movements in respect of its

Euro and US Dollar denominated borrowings. On 12 June 2024, the Company issued US $500 million Contingent Convertible Tier 1 notes and the

related cross currency swap that was entered into at this time. On 18 June 2024, $500 million of the $750 million Contingently Convertible T1 notes

were repurchased via a tender offer, leading to an unwinding of $500 million of the related swap arrangement.

The Company also hedged certain Euro, US Dollar, Japanese Yen and Hong Kong Dollar exposures to adverse foreign currency movements in

respect of underlying business within its subsidiaries.

The fair value of the derivative financial instruments is as follows:

Asset Liability

2024

£m

2023

£m

2024

£m

2023

£m

Cross currency swaps 106 118 – –

Foreign currency swaps 6 1 4 1

112 119 4 1

Derivative collateral arrangements

The accounting policy for collateral arrangements is included in note E4 to the consolidated financial statements.

Assets accepted

The maximum exposure to credit risk in respect of over-the-counter (’OTC’) derivative assets is £112 million (2023: £119 million) of which credit risk of

£37 million (2023: £30 million) is mitigated by use of collateral arrangements (which are settled net after taking account of any OTC derivative

liabilities owed by the counterparty).

Assets pledged

The Company has not pledged any collateral in respect of its OTC derivative liabilities.

7. Provisions

The accounting policy for provisions is included in note G7 to the consolidated financial statements.

Restructuring provisions

Total

£m

2024

Transition and

Transformation

£m

Transfer of

ReAssure policy

administration

£m

At 1 January 63 159 222

Additions in the year 39 30 69

Utilised during the year (22) (46) (68)

Discounting (7) (9) (16)

At 31 December 73 134 207

Transition and transformation

In 2019, the Company recognised a Standard Life transition and transformation restructuring provision, which included migration costs, severance

costs and other expenses. During the year, £22 million (2023: £27 million) of the restructuring provision was utilised and the provision was increased

by £39 million (2023: decreased by £7 million). The impact of discounting the provision was £7 million in the year. The remaining provision of

£73 million (2023: £63 million) is expected to be utilised within one to four years.

Transfer of ReAssure policy administration

Following the acquisition of the ReAssure businesses in 2020, the Group established a transition and transformation programme which aims to

deliver the integration of the Group’s operating models via a series of phases. During 2023, the Group announced its intention to migrate existing

ReAssure policies to the TCS platform and recognised a provision which included migration costs, severance costs and other expenses.

During the year, the provision was increased by £30 million (2023: £65 million) and £46 million was utilised (2023: £33 million). The impact of

discounting the provision was £9 million in the year The remaining provision of £134 million (2023: £159 million) is expected to be utilised within one

to four years.

See note G7 to the consolidated financial statements for further details of each of these provisions.

Financials

319Phoenix Group Holdings plc Annual Report and Accounts 2024

8. Lease liabilities

The accounting policy for lease liabilities is included in note G9 to the consolidated financial statements.

Lease liabilities relate to office premises at 20 Old Bailey, London. The lease was assigned on 24 March 2021 for a term of 12 years and 9 months,

with an option to break the contract on 25 December 2028. It is currently not expected that the break clause will be exercised.

2024

£m

2023

£m

At 1 January 18 20

Lease payments (2) (2)

At 31 December 16 18

Amount due within twelve months 2 2

Amount due after twelve months 14 16

9. Accruals and deferred income

The accounting policy for accruals and deferred income is included in note G10 to the consolidated financial statements.

2024

£m

2023

£m

Accruals and deferred income 112 118

Amount due for settlement after 12 months 5 5

10. Property, plant and equipment

The accounting policy for property, plant and equipment is included in note G3 to the consolidated financial statements.

Property, plant and equipment includes the right-of-use asset relating to office premises leased at 20 Old Bailey, London. Depreciation is being

charged on a straight-line basis over the term of the lease.

Total Property,

plant and

equipment

2024

£m

Total Property,

plant and

equipment

2023

£m

Cost or valuation

At 1 January and 31 December 22 22

Depreciation

At 1 January (5) (3)

Depreciation (2) (2)

At 31 December (7) (5)

Carrying amount

At 31 December 15 17

320 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Notes to the parent company financial statements continued

11. Investments in Group entities

2024

£m

2023

£m

Cost

At 1 January 14,725 14,420

Additions – 305

At 31 December 14,725 14,725

Impairment

At 1 January (4,189) (4,189)

Charge for the year (1,289) –

At 31 December (5,478) (4,189)

Carrying amount

At 31 December 9,247 10,536

During 2024 the servicing activities of Phoenix Group CA Services Limited (formerly known as SLFC Services Company (UK) Limited) were

transferred to Pearl Group Management Services Limited.

As at 31 December 2024 and 31 December 2023, the market capitalisation of the Company was lower than the net asset value, and this was

considered to be an indicator that the Company’s investments in its subsidiaries may have been impaired. Dividends were also paid to the Company

by ReAssure Group plc (’RGP’) and Phoenix Life CA Holdings Limited (’PLCAH’) during 2024 that were in excess of previously identified

impairment headroom. Accordingly, an impairment test has been performed to assess the recoverable amount of each investment against

carrying value.

The recoverable amount of each subsidiary is based on its value in use. The value in use of the life insurance subsidiaries has been calculated based

on dividend projections on a consistent basis to that set out in the Group’s business plan approved by the Board. These dividend projections reflect

the emergence of surplus from in-force business on a Solvency II basis, together with the impact of planned management actions in the next five

years and any anticipated new business. The contribution to value in use of the non-life entities, which do not generate revenues external to the

Group, was based on their Solvency II Own Funds as at the balance sheet date. The value in use calculation has used a discount rate of 9.2%,

calculated using a risk adjusted weighted average cost of capital approach.

For Phoenix Life Holdings Limited (’PLHL’), which includes the vast majority of the Group’s new business franchise, an assumption for the terminal

rate of growth after the initial five-year business plan period was set at 2%.

For all other subsidiaries of the Company, which predominantly comprise closed-book life insurance businesses, ten-year cash flow projections

were utilised with a value at the ten-year point determined with reference to projected Solvency II shareholder Own Funds.

The impairment test resulted in a £1,226 million impairment charge being recognised in respect of RGP and £43 million in respect of PLCAH.

Thevalue in use of these entities has declined over time as the life insurance business has run off and distributions have been made to the Company.

In addition, a £20 million impairment to the investment in Phoenix Group Holdings (Bermuda) Limited was recognised. This reflects the strategic

decision not to proceed with further reinsurance transactions through this entity.

The value in use calculation for certain subsidiaries is particularly sensitive to the discount rate, and in respect of PLHL, the terminal growth rate,

asset out below:

• For PLHL, a 1% increase in the discount rate would reduce the recoverable amount by £908 million and would not have resulted in any

impairment being recognised. A 0.5% decrease in the terminal growth rate would reduce the recoverable amount by £361 million.

• For RGP, a 1% increase in the discount rate would decrease the value in use and increase the impairment recognised by £68 million.

• For PLCAH, a 1% increase in the discount rate would decrease the value in use and increase the impairment recognised by £10 million.

In April 2023, the Company acquired 100% of the issued share capital of Phoenix Life CA Holdings Limited (formerly SLF of Canada UK Limited)

for a cost of £250 million. In addition, during 2023 the Company established a Bermuda-based entity, Phoenix Group Holdings (Bermuda) Limited,

and capital contributions totalling £55 million were paid to the entity.

During 2023, the following Part VII schemes (transfer of insurance business) were undertaken which had the effect of reallocating the value of the

Company’s investment in Group entities between certain subsidiaries:

• the PLL and RLL EU business policies were transferred into a new EU regulated Life Company, Phoenix Life Assurance Europe DAC (‘PLAE’),

within the Group.

• the business of PLAL, SLAL and Standard Life Pension Funds Limited (‘SLPF’) was transferred to PLL. In line with the strategic objectives of the

Group, the transfer simplifies the operating model whilst resulting in financial, operational and liquidity benefits with the excess capital position,

after allowing for costs and capital policy, of the Life Companies improving significantly.

Additionally, during 2023 the servicing activities of Pearl Group Services Limited and Standard Life Asset and Employee Services Limited were

transferred to Phoenix Group Management Services Limited. In line with the strategic objectives of the Group, the transfer simplifies the operating

model resulting in operational benefits.

For a list of principal Group entities, refer to note H6 of the consolidated financial statements in which the entities directly held by the Company are

separately identified.

Financials

321Phoenix Group Holdings plc Annual Report and Accounts 2024

12. Loans and deposits

Carrying value Fair value

2024

£m

2023

£m

2024

£m

2023

£m

Loans due from Phoenix Life Holdings Limited (note a) 1,327 1,284 1,349 1,299

Cash-pooling to other Group entities (note b) 53 5 53 5

Loan due from Phoenix Group Employee Benefit Trust (note c) 18 13 18 13

Total loans and deposits 1,398 1,302 1,420 1,317

Amounts due after 12 months 915 1,297

All loans and deposit balances are due from Group entities and are measured at amortised cost using the effective interest method. The fair value of

these loans anddeposits are also disclosed. None of the loans are considered to be overdue.

a On 12 December 2018, the Company assigned a £428 million subordinated loan to Phoenix Life Holdings Limited (’PLHL’). The loan accrues

interest at a rate of 6.675% andmatures on 18 December 2025. This loan was initially recognised at fair value of £439 million and isamortised to

par over the period to 2025. At 31 December 2024, the carrying value of the loan was £430 million (2023: £432 million).

On 12 December 2018, the Company assigned a£450 million subordinated loan to PLHL. The loan accrues interest at a rate of 4.158% and

matured on 20 July 2022. On 20 July 2022, the amount due on the maturity of the subordinated loan of £450 million was advanced under a

new loan to PLHL. The new loan accrues interest at a compounded rate of SONIA plus a margin of 1.30% and is capitalised. During the year

interest of £32 million (2023: £27 million) was capitalised. The loan matures on 31 December 2027. At 31 December 2024, thecarrying value of

the loan was £516 million (2023: £484 million).

On 12 December 2018, the Company assigned a US$500 million loan to PLHL due to mature in 2027 with a coupon of5.375%. This loan was

initially recognised at fair value of £349 million and is accreted to par over the period to 2027. Movement in foreign exchange during the year

increased the carrying value by £7 million (2023: £20 million decrease). At 31 December 2024, the carrying value of the loan was £381 million

(2023: £368 million).

b On 13 September 2022, the Company entered into an uncommitted intra-group cash-pooling facility with certain subsidiaries, under which the

Company will either borrow funds from, or lend funds to, the relevant subsidiary. All amounts due under the facility attract interest at SONIA

and are repayable on demand.

c On 18 June 2019, the Company was assigned an interest free facility arrangement with Phoenix Group Employee Benefit Trust (’EBT’). As at

31 December 2024, the carrying value of the loan was £18 million (2023: £13 million). The loan is fully recoverable until the awards held in the

EBT vest to the participants, at which point the loan is reviewed for impairment. Any impairments are determined by comparing the carrying

value to the estimated recoverable amount of the loan. During the year funding of £16 million (2023: £12 million) was provided to the EBT and

£11 million of the loan was impaired (2023: £12 million).

For the purposes of the additional fair value disclosures for assets recognised at amortised cost, all loans and deposits are categorised as Level 3

financial instruments. The fair value of loans and deposits with no external market is determined by internally developed discounted cash flow

models using a risk adjusted discount rate corroborated with external market data where possible.

Details of the factors considered in determination of fair value are included in note E2 to the consolidated financial statements.

13. Financial assets

2024

£m

2023

£m

Financial assets at fair value through profit or loss

Derivatives 112 119

Debt securities 1 1

Collective investment schemes 1,095 1,017

1,208 1,137

Amounts due after 12 months 1 1

Determination of fair value and fair value hierarchy of financial assets

Details of the factors considered in determination of the fair value are included in note E2 to the consolidated financial statements.

2024

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Financial assets at fair value through profit or loss

Derivatives – 112 – 112

Debt securities – – 1 1

Collective investment schemes 1,095 – – 1,095

1,095 112 1 1,208

322 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Notes to the parent company financial statements continued

2023

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Financial assets at fair value through profit or loss

Derivatives – 119 – 119

Debt securities – – 1 1

Collective investment schemes 1,017 – – 1,017

1,017 119 1 1,137

There were no transfers between levels in either 2024 or 2023.

Level 3 financial instrument sensitivities

The investment in debt securities is in respect of debt holdings in a property investment structure which was originally transferred to the Company

via an in-specie dividend received from Old PGH during 2019. The holding was disposed of during the year ended 31 December 2020, but a

balance of £1 million remains in respect of a potential repayment of cash reserves that may be due to the Company. The amount recognised has

taken account of both the uncertain nature of the value of the proceeds and when they will be received.

14. Deferred tax

The accounting policy for tax assets and liabilities is included in note G8 to the consolidated financial statements.

Movement in deferred tax balances

1 January 2024

restated

£m

Recognised in

comprehensive

income

£m

31 December 2024

£m

Provisions and other temporary differences 25 (8) 17

Trading losses 160 132 292

185 124 309

1 January 2023

£m

Recognised in

comprehensive

income

£m

31 December 2023

£m

Provisions and other temporary differences (restated

) 25 – 25

Trading losses (restated

) 130 30 160

155 30 185

1 See note 1(d) for details of the prior year restatements.

The standard rate of UK corporation tax for the accounting period is 25% (2023: 23.5%). This rate was effective from April 2023, therefore deferred

tax assets and liabilities are provided at the rate of 25%.

15. Cash and cash equivalents

The accounting policy for cash and cash equivalents is included in note G6 to the consolidated financial statements.

2024

£m

2023

£m

Bank and cash balances 1 1

16. Cash flows from operating activities

2024

£m

2023

£m

Profit/(loss) for the year before tax 59 (89)

Non-cash movements in profit/(loss) for the year before tax:

Impairment of loan due from subsidiary 11 12

Impairment of investments in Group entities 1,289 –

Investment income (2,306) (965)

Finance costs 373 399

Fair value losses on financial assets 10 117

Foreign exchange movement on borrowings at amortised cost (10) (63)

Share-based payment charge 26 22

Depreciation 2 2

Decrease/(increase) in investment assets (77) (242)

Net (increase)/decrease in working capital 311 218

Cash utilised by operations (312) (589)

13. Financial assets continued

Financials

323Phoenix Group Holdings plc Annual Report and Accounts 2024

17. Capital and risk management

The Company’s capital comprises share capital, the Tier 1 Notes and all reserves as calculated in accordance with International Financial Reporting

Standards (’IFRS’), as set out in the statement of changes in equity. Under English company law, dividends must be paid from distributable profits. As

the ultimate parent undertaking of the Group, the Company manages its capital to ensure that it has sufficient distributable profits to pay dividends

in accordance with its dividend policy. The distributable reserves of the Company as at 31 December 2024 were £5,571 million (2023 restated:

£4,632 million).

At 31 December 2024, total capital was £6,687 million (2023 restated: £6,974 million). The movement in capital in the year comprises the total

comprehensive income for the year attributable to owners of £249 million (2023 restated: £80 million), dividends paid of £533 million (2023:

£520 million), coupon paid on Tier 1 Notes of £29 million (2023: £22 million) and credit to equity for equity-settled share-based payments of

£26 million (2023: £22 million).

In addition, the Group also manages its capital on a regulatory basis as described in note I3 to the consolidated financial statements.

The principal risks and uncertainties facing the Company are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Company

hedges its currency risk exposure arising on foreign currency hybrid debt.

Details of the Group’s financial risk management policies are outlined in note E6 to the consolidated financial statements.

Credit risk management practices

The Company’s current credit risk grading framework comprises the following categories:

Category Description Basis for recognising ECL

Performing The counterparty has a low risk of default and does not have any past-due amounts 12 month ECL

Doubtful There has been a significant increase in credit risk since initial recognition Lifetime ECL – not credit impaired

In default There is evidence indicating the asset is credit-impaired Lifetime ECL – credit impaired

Write-off There is evidence indicating that the counterparty is in severe financial

difficulty and the Company has no realistic prospect of recovery

Amount is written off

The table below details the credit quality of the Company’s financial assets, as well as the Company’s maximum exposure to credit risk by credit risk

rating grades:

2024

External credit

rating

Internal credit

rating

12 month or lifetime

ECL

Gross carrying

amount

£m

Loss allowance

£m

Net carrying

amount

£m

Loans and deposits (note 12) N/A Performing 12 month ECL 1,398 – 1,398

Other amounts due from Group entities (note 20) N/A Performing 12 month ECL 105 – 105

Cash and cash equivalents (note 15) A N/A 12 month ECL 1 – 1

2023

External credit

rating Internal credit rating

12 month or lifetime

ECL

Gross carrying

amount

£m

Loss allowance

£m

Net carrying amount

£m

Loans and deposits (note 12) N/A Performing 12 month ECL 1,302 – 1,302

Other amounts due from Group entities (note 20) N/A Performing 12 month ECL 25 – 25

Cash and cash equivalents (note 15) A N/A 12 month ECL 1 – 1

The Company considers reasonable and supportable information that is relevant and available without undue cost or effort to assess whether there

has been a significant increase in risk since initial recognition. This includes quantitative and qualitative information and forward-looking analysis.

Loans and deposits – The Company is exposed to credit risk relating to loans and deposits from other Group companies, which are considered to

be of low risk. Given their low risk, the loss allowance has been set at less than £1 million. The Company assesses whether there has been a significant

increase in credit risk since initial recognition by assessing whether there have been any historic defaults, by reviewing the going concern

assessment of the borrower and the ability of the Group to prevent a default by providing a capital or cash injection. Specific considerations for the

loan to the Employee Benefit Trust are discussed in note 12.

Amounts due from other Group entities – The credit risk from activities undertaken in the normal course of business is considered to be extremely

low. Given their low risk, the loss allowance has been set at less than £1 million. The Company assesses whether there has been a significant increase

in credit risk since initial recognition by assessing past credit impairments, history of defaults and the long-term stability of the Group.

Cash and cash equivalents – The Company’s cash and cash equivalents are held with bank and financial institution counterparties which have

investment grade ’A’ credit ratings. The Company considers the associated credit risk is low based on the external credit ratings of the counterparties

and, there being no history of default, the impact to the net carrying amount stated in the table above is therefore considered not to be material.

The Company writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no

realistic prospect of recovery, e.g. when the counterparty has been placed into liquidation or has entered into bankruptcy proceedings. Financial

assets written off may still be subject to enforcement activities under the Company’s recovery procedures, taking into account legal advice where

appropriate. Any recoveries made are recognised in profit or loss.

18. Share-based payments

Detailed information on the Long-term incentive plans, Sharesave schemes and Deferred bonus share schemes is contained in note I1 in the

consolidated financial statements.

19. Directors’ remuneration

Details of the remuneration of the Directors of Phoenix Group Holdings plc is included in the Directors’ Remuneration Report on pages 134 to 160

of the Annual Report and Accounts.

324 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Notes to the parent company financial statements continued

20. Related party transactions

The Company has related party transactions with Group entities and its key management personnel. Details of the total compensation of key

management personnel, being those having authority and responsibility for planning, directing and controlling the activities of the Group, including

the Executive and Non-Executive Directors and members of the Group’s Executive Committee, are included in note I4 to the consolidated

financial statements.

During the year ended 31 December 2024, the Company entered into the following transactions with related parties.

2024

£m

2023

£m

Dividend income from other Group entities 2,070 655

Interest income from other Group entities 124 210

2,194 865

Expense to other Group entities 589 561

Interest expense to other Group entities 162 196

751 757

Amounts due from related parties at the end of the year:

2024

£m

2023

£m

Loans due from Group entities 1,398 1,302

Interest accrued on loans due from Group entities 24 28

Other amounts due from Group entities 105 25

1,527 1,355

Amount due for settlement after 12 months 915 1,297

Amounts due to related parties at the end of the year:

2024

£m

2023

restated

£m

Loans due to Group entities 1,460 2,098

Interest accrued on loans due to Group entities 11 15

Other amounts due to Group entities 341 77

1,812 2,190

Amount due for settlement after 12 months 188 700

1 See note 1(d) for details of the prior year restatements.

21. Auditor’s remuneration

Details of auditor’s remuneration for Phoenix Group Holdings plc and its subsidiaries is included in note C6 to the consolidated financial statements.

22. Events after the reporting period

Details of events after the reporting date are included in note I7 to the consolidated financial statements.

Sir Nicholas Lyons

Andy Briggs

Nicolaos Nicandrou

Eleanor Bucks

Karen Green

Mark Gregory

Hiroyuki Iioka

Katie Murray

Belinda Richards

David Scott

Margaret Semple, OBE

Nicholas Shott

16 March 2025

Financials

325Phoenix Group Holdings plc Annual Report and Accounts 2024

The analysis of the asset portfolio provided below comprises the assets held by the Group’s Life Companies, and it is stated net of derivative

liabilities. It excludes other Group assets such as cash held in the holding and management service companies and the assets held by the non-

controlling interests in consolidated collective investment schemes. The information is presented on a look-through basis into the underlying funds.

The following table provides an overview of the exposure by asset category of the Group’s Life Companies’ shareholder and policyholder funds:

31 December 2024

Carrying value

Shareholder and

non-profit funds

£m

Participating

supported

£m

Participating

non-supported

£m

Unit-linked

£m

Total

£m

Cash and cash equivalents 4,286 875 4,390 7,934 17,485

Debt securities – gilts and foreign government bonds 8,260 227 14,233 14,891 37,611

Debt securities – other government and supranationals 2,484 139 1,798 4,811 9,232

Debt securities – infrastructure loans - project finance

1,025 – – – 1,025

Debt securities – infrastructure loans - corporate

1,619 – 1 – 1,620

Debt securities – local authority loans

879 – 2 2 883

Debt securities – loans guaranteed by export credit agencies

and supranationals

688 – – – 688

Debt securities – private corporate credit

3,071 – 99 8 3,178

Debt securities – loans to housing association

1,218 – 7 2 1,227

Debt securities – commercial real estate loans

1,170 – – – 1,170

Debt securities – equity release mortgages

4,795 – – – 4,795

Debt securities – other debt securities 13,207 1,107 11,786 26,930 53,030

38,416 1,473 27,926 46,644 114,459

Equity securities 116 51 16,901 122,304 139,372

Property investments 35 11 1,541 4,195 5,782

Income strips

– – – 555 555

Other investments

(726) (678) 629 10,299 9,524

Total Life Company assets 42,127 1,732 51,387 191,931 287,177

Less assets held by disposal groups

– – – (3,175) (3,175)

At 31 December 2024 42,127 1,732 51,387 188,756 284,002

Cash and cash equivalents in Group holding companies 1,117

Cash and financial assets in other Group companies 748

Financial assets held by the non-controlling interest in

consolidated collective investment schemes 3,335

Financial assets in consolidated funds held by disposal groups

Total Group consolidated assets excluding amounts classified as held for sale 289,277

Comprised of:

Investment property 4,370

Financial assets 279,539

Cash and cash equivalents 9,453

Derivative liabilities (4,085)

289,277

1 Includes assets where shareholders of the life companies bear the investment risk.

2 Includes assets where policyholders bear most of the investment risk.

3 Total infrastructure loans - project finance of £1,025 million include £1,011 million classified as Level 3 debt securities in the fair value hierarchy.

4 Total infrastructure loans - corporate of £1,620 million include £1,613 million classified as Level 3 debt securities in the fair value hierarchy.

5 Total local authority loans of £883 million include £823 million classified as Level 3 debt securities in the fair value hierarchy.

6 Total loans guaranteed by export credit agencies and supranationals of £688 million include £461 million classified as Level 3 debt securities in the fair value hierarchy.

7 Total private corporate credit of £3,178 million include £3,046 million classified as Level 3 debt securities in the fair value hierarchy.

8 Total loans to housing associations of £1,227 million include £1,172 million classified as Level 3 debt securities in the fair value hierarchy.

9 All commercial real estate loans, equity release mortgages and income strips are classified as Level 3 debt securities in the fair value hierarchy.

10 Includes other loans of £133 million, net derivative liabilities of £(866) million, reinsurers’ share of investment contracts of £9,297 million and other investments of £960 million.

11 See note H3 to the consolidated financial statements for further details.

Additional Life Company Asset Disclosures

326 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

31 December 2023

Carrying value

Shareholder and

non-profit funds

£m

Participating

supported

£m

Participating

non-supported

£m

Unit-linked

£m

Total

£m

Cash and cash equivalents 4,129 1,085 5,309 8,002 18,525

Debt securities – gilts and foreign government bonds 7,753 286 15,039 12,312 35,390

Debt securities – other government and supranational 2,021 230 2,175 3,253 7,679

Debt securities – infrastructure loans - project finance

1,137 – – – 1,137

Debt securities – infrastructure loans - corporate

1,523 – 1 – 1,524

Debt securities – local authority loans

1,032 1 2 4 1,039

Debt securities – loans guaranteed by export credit agencies

and supranationals

733 – – – 733

Debt securities – private corporate credit

2,271 – 106 8 2,385

Debt securities – loans to housing associations

1,243 – 8 2 1,253

Debt securities – commercial real estate loans

1,147 – – – 1,147

Debt securities – equity release mortgages

4,486 – – – 4,486

Debt securities – other debt securities 15,097 1,152 12,397 27,688 56,334

38,443 1,669 29,728 43,267 113,107

Equity securities 117 50 17,227 112,122 129,516

Property investments 47 16 1,677 5,062 6,802

Income strips

– – – 674 674

Other investments

(371) (529) 822 10,800 10,722

Total Life Company assets 42,365 2,291 54,763 179,927 279,346

Less assets held by disposal groups

– – – (4,780) (4,780)

At 31 December 2023 42,365 2,291 54,763 175,147 274,566

Cash and cash equivalents in Group holding companies 1,012

Cash and financial assets in other Group companies 686

Financial assets held by the non-controlling interest in

consolidated collective investment schemes 4,018

Financial assets in consolidated funds held by disposal groups

188

Total Group consolidated assets excluding amounts classified

as held for sale 280,470

Comprised of:

Investment property 3,698

Financial assets 272,946

Cash and cash equivalents 7,168

Derivative liabilities (3,342)

280,470

1 Includes assets where shareholders of the life companies bear the investment risk.

2 Includes assets where policyholders bear most of the investment risk.

3 Total infrastructure loans - project finance of £1,137 million include £1,097 million classified as Level 3 debt securities in the fair value hierarchy.

4 Total infrastructure loans - corporate of £1,524 million include £1,493 million classified as Level 3 debt securities in the fair value hierarchy.

5 Total local authority loans of £1,039 million include £932 million classified as Level 3 debt securities in the fair value hierarchy.

6 Total loans guaranteed by export credit agencies and supranationals of £733 million include £486 million classified as Level 3 debt securities in the fair value hierarchy.

7 Total private corporate credit of £2,385 million include £1,829 million classified as Level 3 debt securities in the fair value hierarchy.

8 Total loans to housing associations of £1,253 million include £1,186 million classified as Level 3 debt securities in the fair value hierarchy.

9 All commercial real estate loans, equity release mortgages and income strips are classified as Level 3 debt securities in the fair value hierarchy.

10 Includes other loans of £189 million, net derivative assets of £(770) million, reinsurers’ share of investment contracts of £9,700 million and other investments of £1,602 million.

11 See note H3 to the consolidated financial statements for further details.

Additional Life Company Asset Disclosures continued

Financials

327Phoenix Group Holdings plc Annual Report and Accounts 2024

The following table provides a reconciliation of the total Life Company assets to the Assets under Administration (’AUA’) as at 31 December 2024

detailed in the Business review on page 40.

2024

£bn

2023

£bn

Total Life Company assets excluding amounts classified as held for sale 284.0 274.6

Off-balance sheet AUA

10.3 10.3

Less: Wrap SIPP and Onshore Bond assets

(2.3) (2.4)

Assets under Administration 292.0 282.5

1 Off-balance sheet AUA represents assets held in respect of certain Group Self-Invested Personal Pension products where the beneficial ownership interest resides with the customer (and which are

therefore not recognised in the consolidated statement of financial position) but on which the Group earns fee revenue.

2 Assets held in Wrap Self-Invested Personal Pension (’Wrap SIPP’) and Onshore Bond products the associated profits of which accrue to Aberdeen Group plc under a profit transfer arrangement have

been excluded from AUA.

All of the Life Companies’ debt securities are held at fair value through profit or loss under IFRS 9 Financial Instruments, and therefore already

reflect any reduction in value between the date of purchase and the reporting date.

The Life Companies have in place a comprehensive database that consolidates credit exposures across counterparties, geographies and business

lines. This database is used for credit monitoring, stress testing and scenario planning. The Life Companies continue to manage their balance sheets

prudently and have taken extra measures to ensure their market exposures remain within risk appetite.

For each of the Life Companies’ significant financial institution counterparties, industry and other data has been used to assess the exposure of

the individual counterparties. As part of the Group’s risk appetite framework and analysis of shareholder exposure to a potential worsening of the

economic situation, this assessment has been used to identify counterparties considered to be most at risk from defaults. The financial impact on

these counterparties, and the contagion impact on the rest of the shareholder portfolio, is assessed under various scenarios and assumptions. This

analysis is regularly reviewed to reflect the latest economic outlook, economic data and changes to asset portfolios. The results are used to inform

the Group’s views on whether any management actions are required.

The table below shows the Group’s market exposure analysed by credit rating for the shareholder debt portfolio, which comprises of debt securities

held in the shareholder and non-profit funds.

Sector analysis of shareholder and non-profit fund bond portfolio

2024

AAA

£m

BBB

£m

BB & below

£m

Total

£m

Industrials – 251 177 713 18 1,159

Basic materials – – 104 10 – 114

Consumer, cyclical – 235 264 79 59 637

Technology and telecoms 31 115 297 421 1 865

Consumer, non-cyclical 103 357 548 150 7 1,165

Structured finance – – 36 – – 36

Banks

263 423 2,132 500 – 3,318

Financial services 50 278 239 140 19 726

Diversified – 3 19 – – 22

Utilities – 268 1,265 1,620 67 3,220

Sovereign, sub-sovereign and

supranational

1,341 10,387 701 115 – 12,544

Real estate 29 481 4,092 1,352 107 6,061

Investment companies 1 94 82 – – 177

Insurance 57 382 218 117 – 774

Oil and gas – 297 306 62 – 665

Collateralised debt obligations – 6 – – – 6

Private equity loans – – 15 107 – 122

Equity release mortgages

2,675 948 1,172 – – 4,795

Infrastructure – 375 207 1,370 58 2,010

At 31 December 2024 4,550 14,900 11,874 6,756 336 38,416

1 Includes unrated holdings of £13 million.

2 The £3,318 million total shareholder exposure to bank debt comprised £2,624 million senior debt and £694 million subordinated debt.

3 Includes £879 million reported as local authority loans, £688 million reported as loans guaranteed by export credit agencies and supranationals and £233 million reported as private corporate credit in

the summary table on page 325.

4 The credit ratings attributed to equity release mortgages are based on the ratings assigned to the internal securitised loan notes.

Financials

328 Phoenix Group Holdings plc Annual Report and Accounts 2024

Sector analysis of shareholder and non-profit fund bond portfolio

AAA AA A BBB BB & below

Total

2023 £m £m £m £m £m £m

Industrials – 127 216 520 10 873

Basic materials – 1 126 55 – 182

Consumer, cyclical 10 227 344 82 70 733

Technology and telecoms 118 142 644 706 1 1,611

Consumer, non-cyclical 197 334 677 240 – 1,448

Structured finance – – 37 – – 37

Banks

314 749 2,915 682 13 4,673

Financial services 65 558 197 69 14 903

Diversified – 4 17 6 – 27

Utilities 14 515 979 1,208 10 2,726

Sovereign, sub-sovereign and

supranational

1,348 8,932 658 152 – 11,090

Real estate 132 588 3,334 1,259 92 5,405

Investment companies – 91 48 8 – 147

Insurance 18 325 176 106 – 625

Oil and gas – 218 330 149 – 697

Collateralised debt obligations – 7 2 – – 9

Private equity loans – – 18 105 – 123

Equity release mortgages

2,504 991 864 127 – 4,486

Infrastructure – 467 243 1,881 57 2,648

At 31 December 2023 4,720 14,276 11,825 7,355 267 38,443

1 Includes unrated holdings of £17 million.

2 The £4,673 million total shareholder exposure to bank debt comprised £3,730 million senior debt and £943 million subordinated debt.

3 Includes £762 million reported as local authority loans, £467 million reported as loans guaranteed by export credit agencies and supranationals and £87 million reported as private corporate credit in the

summary table on page 326.

4 The credit ratings attributed to equity release mortgages are based on the ratings assigned to the internal securitised loan notes.

The following table sets out the debt security exposure by country of the shareholder and non-profit funds of the Life Companies:

Analysis of shareholder debt security exposure by country

Sovereign,

sub-sovereign and

supranational

2024

£m

Corporate and

other

2024

£m

Total

2024

£m

Sovereign,

sub-sovereign and

supranational

2023

£m

Corporate and

other

2023

£m

Total

2023

£m

UK 10,438 15,807 26,245 9,046 16,169 25,215

Supranationals 729 – 729 704 – 704

USA 293 3,949 4,242 274 4,764 5,038

Germany 156 1,010 1,166 133 811 944

France 195 1,769 1,964 169 1,724 1,893

Netherlands 83 273 356 79 457 536

Italy – 335 335 – 304 304

Ireland 39 48 87 35 88 123

Spain 7 232 239 12 253 265

Luxembourg – 31 31 55 133 188

Belgium 113 53 166 89 134 223

Australia 1 532 533 1 477 478

Canada 49 177 226 45 410 455

Japan – 221 221 – 285 285

Mexico 1 150 151 2 157 159

Other – non-Eurozone

329 953 1,282 356 840 1,196

Other – Eurozone 111 332 443 90 347 437

Total shareholder debt securities 12,544 25,872 38,416 11,090 27,353 38,443

1 There was no shareholder exposure to Russia, Ukraine and Belarus at 31 December 2024 and 31 December 2023.

Additional Life Company Asset Disclosures continued

Financials

329Phoenix Group Holdings plc Annual Report and Accounts 2024

PGH Plc Solvency II Surplus

The estimated PGH plc surplus at 31 December 2024 is £3.5 billion (2023: £3.9 billion).

31 December 2024

Estimated

£bn

31 December 2023

£bn

Own Funds 10.3 11.1

SCR (6.8) ( 7.2)

Surplus 3.5 3.9

Composition of own funds

Own Funds items are classified into different Tiers based on the features of the specific items and the extent to which they possess the following

characteristics, with Tier 1 being the highest quality:

• availability to be called up on demand to fully absorb losses on a going-concern basis, as well as in the case of winding-up (’permanent

availability’); and

• in the case of winding-up, the total amount that is available to absorb losses before repayment to the holder until all obligations to policyholders

and other beneficiaries have been met (’subordination’).

PGH plc’s total Own Funds are analysed by Tier as follows:

31 December

2024

Estimated

£bn

31 December

2023

£bn

Tier 1 - Unrestricted 6.2 6.7

Tier 1 - Restricted 1.1 1.1

Tier 2 2.4 2.7

Tier 3 0.6 0.6

Total Own Funds 10.3 11.1

PGH plc’s unrestricted Tier 1 capital accounts for 59% (2023: 60%) of total Own Funds and comprises ordinary share capital, surplus funds of the

unsupported with-profits funds which are recognised only to a maximum of the notional SCR of the fund, and the accumulated profits of the

remaining business.

Restricted Tier 1 and Tier 2 capital comprises subordinated notes the terms of which enable them to qualify as capital in their respective Tiers for

regulatory reporting purposes.

Tier 3 items include the Tier 3 subordinated notes of £0.2 billion (2023: £0.2 billion) and the deferred tax asset of £0.4 billion (2023: £0.4 billion).

Breakdown of SCR

The Group operates one single PRA approved Internal Model covering all Group entities, with the exception of the Irish entities, Standard Life

International Designated Activity Company and Phoenix Life Assurance Europe DAC and the acquired ReAssure and Phoenix Life CA Holdings

Limited (formerly known as SLF Canada UK Limited) businesses. These entities calculate their capital requirements in accordance with the Standard

Formula. An analysis of the prediversified SCR of PGH plc is presented below:

31 December 2024 Estimated 31 December 2023

Internal Model Standard Formula Internal Model Standard Formula

% % % %

Longevity 13 11 17 10

Credit 20 16 19 19

Persistency 21 31 19 33

Interest rates 7 4 5 3

Operational 6 4 8 4

Swap spreads 1 – 2 –

Property 7 1 6 1

Other market risks 11 20 10 18

Other non-market risks 14 13 14 12

Total pre-diversified SCR 100 100 100 100

The above table includes within each risk driver category the sum of each individual risk with no diversification between the individual risks within

arisk driver category.

Additional capital and segmental disclosures

330 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

The following table sets out the estimated Solvency II shareholder SCR by risk category. In this table diversification is included between the

individual risks within each risk driver. Therefore the diversification benefit shown is that between risk drivers.

31 December

2024

Estimated

£bn

31 December

2023

£bn

Unrewarded market risks (hedged)

Interest rates 0.6 0.5

Equities 0.8 0.6

Currency 0.6 0.5

Inflation 0.2 0.2

Rewarded market risks

Credit 2.2 2.4

Property 0.7 0.6

Other market risks 0.2 0.3

Non-market risks

Longevity 1.4 1.7

Persistency 2.4 2.4

Operational 0.8 1.0

Other non-market risks 2.2 2.0

Loss absorbing capacity of deferred tax (1.1) (1.1)

Adjustments 0.4 0.4

Total undiversified shareholder SCR 11.4 11.5

Diversification benefit (6.5) (6.4)

Diversified shareholder SCR 4.9 5.1

Where market risks are considered unrewarded the Group enters into hedging arrangements to minimise exposure.

Rewarded market risks primarily includes credit risk in the shareholder credit portfolio, and property risk from equity release mortgages.

For non-market risks, longevity risk primarily arises from the annuity book and is managed through reinsurance. We retain approximately half

ofthisrisk across our current in-force book, and reinsurance most of this risk on new business. Persistency risk is managed through our

customer proposition.

Minimum capital requirements

Under the Solvency II regulations, the Minimum Capital Requirement (’MCR’) is the minimum amount of capital an insurer is required to hold below

which policyholders and beneficiaries would become exposed to an unacceptable level of risk if an insurer was allowed to continue its operations.

For Groups this is referred to as the Minimum Consolidated Group SCR (’MGSCR’).

The MCR is calculated according to a formula prescribed by the Solvency II regulations and is subject to a floor of 25% of the SCR or £3.5 million,

whichever is higher, and a cap of 45% of the SCR. The MCR formula is based on factors applied to technical provisions and capital at risk. The

MGSCR represents the sum of the MCRs of the underlying insurance companies.

The Eligible Own Funds to cover the MGSCR is subject to quantitative limits as shown below:

• the Eligible amounts of Tier 1 items should be at least 80% of the MGSCR; and

• the Eligible amounts of Tier 2 items shall not exceed 20% of the MGSCR.

PGH plc’s estimated MGSCR at 31 December 2024 is £2.3 billion (2023: £2.2 billion).

PGH plc’s estimated Eligible Own Funds to cover MGSCR is £7.5 billion (2023: £8 billion) leaving an excess of Eligible Own Funds over MGSCR

of£5.2 billion (2023: £5.8 billion), which transfers to an MGSCR coverage ratio of 325% (2023: 362%).

Additional capital and segmental disclosures continued

331Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Reconciliation of IFRS shareholder equity to estimated shareholder Solvency II surplus

The following table provides a reconciliation of the Total equity attributable to owners of the parent as presented on the IFRS balance sheet to the

estimated shareholder Solvency II surplus at 31 December 2024. The shareholder view of estimated Solvency II surplus excludes the Solvency II

Own Funds and Solvency Capital Requirements (‘SCR’) of unsupported with-profits funds and unsupported pension schemes. The resulting

estimated Solvency II surplus aligns with the regulatory view.

31 December

2024

Estimated

£bn

Total equity attributable to owners of the parent 1.2

CSM (net of tax) 2.5

IFRS Adjusted Shareholders Equity 3.7

Deduct Acquired in-force business intangible (net of tax) (1.3)

Add Investment contract value of In-Force (‘VIF’) (Solvency II basis)

3.6

Other valuation differences

(1.4)

Solvency II Own Funds (excluding Qualifying Debt) 4.6

Add Qualifying debt 3.8

Solvency II Own Funds (shareholder basis) 8.4

SCR (shareholder basis) (4.9)

Solvency II surplus 3.5

1 Investment contract VIF is estimated from the Solvency II VIF for unit-linked contracts.

2 Other valuation differences include removal of other intangibles such as goodwill, brands and deferred acquisition costs from IFRS (£0.2 billion decrease), differences in technical provision measurement

including discount rate and allowance for risk (totalling a £1.1 billion decrease), valuation of debt (£0.2 billion increase), pension scheme availability restrictions (£0.3 billion decrease) and the inclusion of

the foreseeable dividend on a Solvency II basis (£0.3 billion decrease) and other items including tax on the valuation differences (£0.3 billion increase).

Additional segmental analysis

The table below provides an analysis IFRS adjusted operating profit by segment and by driver:

Release of CSM

£m

Release of risk

adjustment

£m

Expected

investment margin

£m

Operating profit

on investment

contacts

£m

Non-financial

experience

variances

£m

Other

£m

31 December 2024

£m

Retirement Solutions 150 24 366 – (11) (55) 474

Pensions & Savings 33 12 – 349 9 (87) 316

With-Profits 19 1 9 (9) 29 (8) 41

Europe & Other 44 8 64 8 (11) (17) 96

Corporate Centre

– – – – – (102)

(102)

Total 246 45 439 348 16 (269) 825

332 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

A detailed analysis of our most significant segments, Retirement Solutions and Pensions & Savings is provided below.

Retirement Solutions

31 December

2024

£m

31 December

2023

£m

CSM release (Note 1) 150 129

Risk adjustment release 24 19

Expected investment margin (Note 2) 212 157

Trading profit 154 135

Other insurance items (11) (9)

Insurance result 529 431

Non-attributable expenses (60) (52)

Other items 5 (1)

IFRS adjusted operating profit (Note 3) 474 378

Note 1

The CSM release reflects the recognition of service provided in the period. This can be expressed at a rate of CSM release with reference to the

closing CSM immediately before amortisation as follows:

31 December

2024

31 December

2023

CSM before amortisation (£m) 2,456 2,274

CSM release (%) 6.1% 5.7%

The CSM release has increased by £23 million to £151 million (2023: £128 million) primarily driven by new business and management actions.

Note 2

Expected investment return comprises:

31 December

2024

£m

31 December

2023

£m

Long-term returns on Shareholder funds 149 100

Impact of mismatch in returns on matched assets & liabilities 63 57

212 157

Long-term returns on Shareholder funds is determined as surplus assets multiplied by the long-term returns set out in Note B2.1 to the Consolidated

financial statements.

31 December

2024

31 December

2023

Surplus assets (£bn) 3.0 2.3

Average long-term return on Shareholder funds 5.0% 4.3%

Expected investment return has increased to £212 million (2023: £157 million) driven by a higher level of surplus assets and higher yields. Returns

from assets backing liabilities of £63 million (2023: £57 million) include £84 million (2023: £72 million) arising from differences where the CSM

ongeneral model business unwinds at locked in rates whereas the investment return on the backing assets is earned at current rates of and the

unwind of credit default assumptions of £25 million (2023: £18 million). This is offset by the temporary new business strain resulting from assets

received not yet having been deployed at their end state pricing asset allocation amounting to £46 million (2023: £33 million). Trading profits

of£154 million (2023: £135 million) have benefited from the higher level of management actions undertaken.

Note 3:

IFRS adjusted operating profits for the Retirement Solutions segment are equivalent to 122bps (2023: 99bps) on average assets under

administration (‘AUA’).

31 December

2024

31 December

2023

Average Assets under Administration (£bn) 39.0 38.0

Adjusted operating profit margin (bps) 122 99

Additional capital and segmental disclosures continued

333Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

Pensions & Savings

31 December

2024

£m

31 December

2023

£m

CSM & Risk adjustment release 45 33

Other insurance items 9 (28)

Insurance result (Note 1) 54 5

Investment contract charges 868 781

Investment contract expenses (519) (519)

Investment result (Note 2) 349 262

Non-attributable expenses (88) (96)

Other items 1 19

IFRS adjusted operating profit (Note 3) 316 190

Note 1

The CSM and risk adjustment release has benefited from positive investment performance in the period increasing the value of the CSM as these

contracts are primarily measured using the Variable Fee Approach. Other insurance items in 2024 include a non-recurring £21 million benefit

(2023: £15 million adverse) from modelling refinements.

Note 2

Positive investment performance has also resulted in increased average AUA as it has more than offset the net fund outflows over 2024 to give

growth of 11%, driving an increase in investment contract charges. Investment contract charges in 2023 did not include £30 million in relation to

ablock of business which was recognised outside of the investment result. These charges are correctly classified in 2024.

Investment contract expenses are flat, reflecting the Group’s cost efficiency drive and fee rate savings for investment management services which

offset higher investment management expenses driven by the increase in AUA.

Note 3

Overall IFRS adjusted operating margin for 2024 was 17bps (2023: 12bps) driven by positive investment returns and reduction in costs.

31 December

2024

31 December

2023

IFRS adjusted operating profit (£m) 316 190

Average AUA (£bn) 182.3 164.4

IFRS adjusted operating profit margin (bps) 17 12

334 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

The Group assesses its financial performance based on a number of measures. Some measures are management derived measures of historic

orfuture financial performance, position or cash flows of the Group, which are not defined or specified in accordance with relevant financial

reporting frameworks such as International Financial Reporting Standards (’IFRS’) or Solvency UK.

These measures are known as Alternative Performance Measures (’APMs’).

APMs are disclosed to provide stakeholders with further helpful information on the performance of the Group and should be viewed as

complementary to, rather than a substitute for, the measures determined according to IFRS and Solvency UK requirements. Accordingly, these

APMs may not be comparable with similarly titled measures and disclosures by other companies.

A list of the APMs used in our Annual Report and Accounts as well as their definitions, why they are used and, if applicable, how they can be

reconciled to the nearest equivalent GAAP measure is provided below. Further discussion of these measures can be found in the business review

from page 36.

APMs marked as ‘AMENDED’ have been amended from the ‘Bulk Purchase Annuity (‘BPA’) premiums written’ and ‘BPA Capital Strain’ APMs,

disclosed in the 2023 Annual Report and Accounts. As part of the Group’s growth strategy, the Group now actively participates in the individual

annuity market. To reflect this the APMs noted have been amended to be ‘Annuity premiums written’ and ‘Annuity Capital Strain’, respectively,

reflecting the inclusion of individual annuities in these metrics.

‘Run-rate cost savings’, ’Holding companies’ cash and cash equivalents’ and ‘IFRS adjusted operating profit margin’, marked as ‘NEW’, have been

added in the period.

A number of APMs disclosed in the 2023 Annual Report and Accounts have been removed. ‘New business net fund flows’ has been removed as an

APM as it is considered less relevant following the change in segments in 2023, with greater focus being placed by management on Net fund flows

which reflects both new business growth and the retention of existing business. ‘Incremental new business long-term free cash’ and ‘Group inforce

long-term free cash’ have been removed as they are not considered key measures of the strategy announced in early 2024. ‘New business

contribution’ and ‘Return on Capital’ have also been removed, these are now relevant only for 2024 Remuneration schemes and definitions of these

metrics can be found in the Glossary.

APM Definition Why this measure is used Reconciliation to financial statements

APMs derived from IFRS

Annuity

premiums

written

AMENDED

Represents the aggregate, gross

of reinsurance, new business

premium volume for annuity

business, written in the period and

measured at the risk transfer date.

Annuity premiums written provides

a measure of the Group’s ability to

deliver new business growth.

Annuity premiums written is not directly

reconcilable to the financial statements

as premiums are no longer reported in

the IFRS consolidated income statement.

Under IFRS 17, vesting annuities are

generally not recognised as new

contracts; where they arise from a

pre-existing deferred annuity or

pension contracts, they are typically

treated as a continuation of the original

contract. Therefore, the “Premiums

received” reported within insurance

contract liabilities in Note F2 will not

reconcile to Annuity premiums written.

Assets under

administration

The Group’s Assets under

Administration (’AUA’) represents

assets administered by or on

behalf of the Group, covering

both policyholder fund and

shareholder assets. It includes

assets recognised in the Group’s

IFRS statement of consolidated

financial position together with

certain assets administered by

the Group for which beneficial

ownership resides with customers.

AUA indicates the potential earnings

capability of the Group arising

from its insurance and investment

business. AUAflows provide a

measure of the Group’s ability to

deliver new business growth.

A reconciliation from the Group’s IFRS

statement of consolidated financial

position to the Group’s AUA is provided

on page 327 for FY24 and FY23.

Alternative Performance Measures

335Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

APM Definition Why this measure is used Reconciliation to financial statements

Fitch Leverage ratio The Fitch Leverage ratio is calculated

by Phoenix (using Fitch Ratings’

stated methodology) as debt as

a percentage of the sum of debt

and equity. Debt is defined as the

IFRS carrying value of shareholder

borrowings. Equity is defined as the

sum of equity attributable to the

owners of the parent, non-controlling

interests, contractual service margin

(’CSM’) (net of tax), policyholders’

share of the with-profits estate and

the Tier 1 Notes. Values for debt

are adjusted to allow for the impact

of currency hedges in place over

foreign currency denominated debt.

The Group seeks to manage the level of

debt on its balance sheet by monitoring

its financial leverage position. One of the

output metrics used in this regard is the

Fitch leverage ratio. This is to ensure the

Group maintains its investment grade

credit rating as issued by FitchRatings.

The adjusted equity component of the

Fitch Leverage ratio is as set out below

for the IFRS adjusted shareholders’

equity metric.

Fitch Leverage ratio

FY24

£bn

FY23

restated

£bn

Total equity

attributable to

owners of the parent 1.2 2.7

CSM (net of tax) 2.5 2.2

IFRS adjusted

shareholders’ equity 3.7 4.9

Non controlling

interests 0.5 0.5

Policyholder surplus

inwith-profits funds 4.1 4.2

Tier 1 notes

1.1 1.0

Total Shareholders’

Equity A

– Fitch basis 9.4 10.6

Total Shareholder

debt B 2.8 3.1

Fitch Leverage

ratio (B/A + B) 23% 23%

1. See note A3 for further details of the prior year

restatements.

Non-controlling interests is directly

sourced from the Group’s IFRS statement

of consolidated financial position and

Tier 1 notes from the borrowings note E5

on page 228. Policyholder surplus in

with-profits funds is a subset of ‘Estimates

of present value of future cash flows’

within insurance contract liabilities in

Note F1 on page 246.

Holding companies’

cash and cash

equivalents.

NEW

Represents the liquid assets held

within the Group holding companies.

The glossary on page 344 lists

the entities that make up the

Group holding companies.

The amount reflects the available

liquidity within the holding companies

for recurring and strategic use. This

includes cash remittances paid by

the operating companies to the

Group holding companies which is

used to fund the Group’s operating

costs, debt interest and repayments,

planned investment across our strategic

priorities and shareholder dividends.

FY24

£m

FY23

£m

Parent company

cash and collective

investment

schemes 1,096 1,018

Add: cash and

collective

investment schemes

held within other

Group holding

companies 21 19

Less: ringfenced

cash for regulatory

requirements – (25)

Holding companies'

cash and

cash equivalents 1,117 1,012

336 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

APM Definition Why this measure is used Reconciliation to financial statements

IFRS adjusted

operating profit

IFRS adjusted operating profit is

a financial performance measure

basedon expected long-term

investment returns in respect of

insurance business. It is stated before

tax and excludes the impacts of

economic volatility, amortisation and

impairments of intangibles, finance

costs attributable to owners and

other non-operating items which

in the Director’s view should be

excluded by their nature or incidence

to enable a full understanding

of financial performance.

Further details of the components

of this measure and the assumptions

inherent in the calculation of the long-

term investment return are included in

note B2 to the financial statements.

This measure provides a more

representative view of the Group’s

performance than the IFRS result after

tax as it provides long-term performance

information unaffected by short-term

economic volatility, one-off items

and other items, and is stated net of

policyholder finance charges and tax.

IFRS adjusted operating profit is a

key performance indicator used by

management for planning, reporting

and executive remuneration.

It helps give stakeholders a better

understanding of the underlying

performance of the Group by identifying

and analysing non-operating items.

A reconciliation of IFRS adjusted

operating profit to the IFRS result before

tax attributable to owners is included

in the business review on page 40.

IFRS adjusted

operating profit

margin

NEW

This is reported for the Pensions and

Savings and Retirement Solutions

segments and represents the IFRS

adjusted operating profit for that

segment divided by the average

Assets under Administration.

This measure reflects the underlying

profitability of the segments in relation to

the size of the portfolio being managed.

Pensions and Savings FY24 FY23

IFRS adjusted

operating profit

(£m) 316 190

Average Assets

under

Administration (£bn) 182.3 164.4

IFRS adjusted

operating profit

margin (bps) 17 12

Retirement Solutions FY24 FY23

IFRS adjusted

operating profit

(£m) 474 378

Average Assets

under

Administration (£bn) 39.0 38.0

IFRS adjusted

operating profit

margin (bps) 122 99

IFRS adjusted

shareholders’ equity

IFRS adjusted shareholders’ equity

is calculated as IFRS Total equity

attributable to owners of the

parent plus the CSM, net of tax.

IFRS adjusted shareholders’ equity

provides a more meaningful measure

of the value generated by the

Group, including the value held in

the CSM for IFRS 17 contracts.

IFRS adjusted shareholders’ equity

reconciles to the IFRS statement

ofconsolidated financial position

asfollows:

FY24

£m

FY23

restated

£m

Total equity

attributable to

owners of the parent 1,213 2,742

Add: CSM 3,257 2,853

Less: Tax on CSM

(814) (713)

IFRS adjusted

shareholders’

equity 3,656 4,882

1. See note A3 for further details of the prior year

restatements.

Total equity attributable to owners

of the parent is directly sourced

from the Group’s IFRS statement of

consolidated financial position on

pages 192 and 193. CSM is set out in

note F1. Tax is reflected at the deferred

tax rate which is currently 25%.

Alternative Performance Measures continued

337Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

APM Definition Why this measure is used Reconciliation to financial statements

Net fund flows Represents the aggregate net

position of gross AUA inflows

less gross outflows. It is an in-year

movement in the Group’s AUA.

Net fund flows provide a measure

of the Group’s ability to deliver

new business growth.

Net fund flows are not directly

reconcilable to the financial statements

as it includes movements in AUA

which do not flow directly to the

Group’s IFRS consolidated income

statement. However, a reconciliation

from the Group’s IFRS statement of

consolidated financial position to the

Group’s AUA is provided on page 327.

Run-rate cost savings

NEW

Represents an annualised

estimate of the impact of cost

savings actions delivered in

the year that are expected to

materialise in the following year.

Our focus is on driving cost efficiencies

by moving to a more efficient Group-

wide operating model, which in turn

supports better customer outcomes.

The Group has set a target of

delivering c.£250 million of run-rate

cost savings by the end of 2026.

Run-rate cost savings is not directly

reconcilable to the financial statements

as it represents an annualised view of

future savings expected to materialise

in the following year, whereas the

Group’s IFRS consolidated income

statement will only include achieved

cost savings in the period.

In 2024, the Group’s cost savings

programme delivered £63 million

of run-rate savings, with in-year

savings of £28 million achieved.

Total cash generation Cash remitted by the Group’s

operating companies to the

Group’s holding companies.

The statement of consolidated cash

flows prepared in accordance with

IFRS combines cash flows relating to

shareholders with cash flows relating

to policyholders, but the practical

management of cash within the Group

maintains a distinction between the

two. The Group therefore focuses

on the cash flows of the holding

companies which relate only to

shareholders. Such cash flows are

considered more representative of the

cash generation that could potentially

be distributed as dividends or used

for debt repayment and servicing,

and Group operating expences.

Total cash generation is a key

performance indicator used by

management for planning, reporting

and executive remuneration.

Total cash generation is not directly

reconcilable to the IFRS statement of

consolidated cash flows as it includes

amounts that eliminate on consolidation.

Further details of holding companies’

cash flows are included within the

business review on page 38, and

a breakdown of the Group’s cash

position by type of entity is provided

in the additional life company asset

disclosures section on page 325.

APMs derived from Solvency II

Annuity Capital

Strain

AMENDED

Represents the capital deployment

on annuities measured on a

Solvency II basis, expressed as a

proportion of the annuity premium.

It is calculated as the capital deployed

(being the Solvency II Technical

Provisions plus SCR plus acquisition

costs plus reinsurance premium less

annuity premium, net of tax) as a

proportion of the annuity premium.

Annuity Capital Strain reflects how

efficiently capital is deployed on

annuities to deliver new business growth.

The capital deployed in writing annuity

business is included within the holding

companies’ cash flows on page 38 within

the business review.

338 Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

APM Definition Why this measure is used Reconciliation to financial statements

Life Company

FreeSurplus

The Solvency II surplus of the Life

Companies that is in excess of their

Board approved capital according to

their capital management policies.

This figure provides a view of the level

of surplus capital in the Life Companies

that is available for distribution to the

holding companies, and the generation

of Free Surplus underpins future

Operating Cash Generation (’OCG’).

Life Company Free Surplus is a subset of

the change in Solvency II surplus over the

period set out in the table on page 39.

It can be reconciled as follows:

FY24

£bn

FY23

£bn

Group Solvency II

surplus 3.5 3.9

Less: Non-life

components and

consolidation

adjustments 0.1 0.7

Less: Capital

Management Policy (1.7) (2.4)

Life Company

FreeSurplus 1.9 2.2

Operating Cash

Generation (’OCG’)

And

Operating Surplus

Generation (’OSG’)

Operating Cash Generation (’OCG’)

is the emergence of cash on a

Solvency II basis as surplus emerges

(being the in-force business run off

over time and capital unwind, plus

day one surplus from writing new

business (net of day 1 strain for fee

based business) plus group tax relief,

plus the recurring management

actions, plus the capitalised benefit

from delivery of our cost savings

programme. As a cash measure it

will be reported in line with Life

Company Free Surplus view and

therefore is the excess of their Board

approved capital according to their

capital management policies.

OCG before adjustment to reflect

the release of capital management

policy is referred to as Operating

Surplus Generation (’OSG’).

The measure represents the sustainable

level of ongoing cash generation

from our underlying business

operations that is remitted from our

Life Companies to the Group.

The components of the OCG are:

FY24

£bn

FY23

£bn

Surplus generation 0.8 0.8

Recurring

management

actions 0.5 0.3

OSG 1.3 1.1

Release of capital

management policy 0.1 –

OCG 1.4 1.1

OSG forms a component of the change

in Solvency II surplus in the period

as set out in the table on page 39.

Recurring

management actions

Recurring management actions are

measured on a Solvency II basis

and represent the Day 1 impact

on Own Funds and SCR. They are

management actions that are either

genuinely repeatable, repeatable

in nature but subject to diminishing

returns, or are not repeatable but

benefits are expected from similar

types of actions in the future.

The measure is a key component of

OCG and one of the sources which can

be used to support sustainable cash

remittances from the Life Companies.

Recurring management actions

are a subset of the Solvency II

surplus generated in the period as

shown in the table on page 39.

Shareholder Capital

Coverage Ratio

(‘SCCR’)

Represents total Eligible Own Funds

divided by the Solvency Capital

Requirements (’SCR’), adjusted to

a shareholder view through the

exclusion of amounts relating to

those ring-fenced with-profits funds

and Group pension schemes whose

Own Funds exceed their SCR.

The unsupported with-profits funds

and Group pension funds do not

contribute to the Group Solvency

II surplus. However, the inclusion of

related Own Funds and SCR amounts

dampens the implied Solvency II capital

ratio. TheGroup therefore focuses

on a shareholder view of the capital

coverage ratio which is considered

to give a more accurate reflection of

the capital strength of the Group.

Further details of the Shareholder

Capital Coverage Ratio and its

calculation are included in the

business review on page 39.

Alternative Performance Measures continued

339Phoenix Group Holdings plc Annual Report and Accounts 2024

Financials

APM Definition Why this measure is used Reconciliation to financial statements

Solvency II

Leverageratio

The Solvency II Leverage is

calculated as the Solvency II value

of debt divided by the value of

Solvency II Regulatory Own Funds.

Values for debt are adjusted to

allow for the impact of currency

hedges in place over foreign

currency denominateddebt.

The Group is committed to reducing its

leverage and has set a SII leverage ratio

target of c.30% by the end of 2026.

FY24

£bn

FY23

£bn

Solvency II

Leverage ratio

Regulatory Eligible

Own Funds 10.2 11.0

Total Debt 3.7 3.9

Solvency II

Leverageratio 36% 36%

1. Solvency II Leverage ratio allows for currency hedges

over foreign current denominated debt.

Regulatory Eligible Own Funds is

a component of the calculation of

the Group’s regulatory Solvency II

surplus as set out on page 329.

There are valuation differences between

IFRS (as reported on page 228) and

SII due to IFRS measuring the debt

on an amortised cost basis, with SII

reflecting the fair value which would

include movements in interest rates.

Both amounts are adjusted for the

value of the foreign currency hedges

used to hedge foreign currency

exposure on the Group’s borrowings

as described on page 230.

Policy for making pro forma adjustments in the financial statements

Pro forma adjustments will be used in the financial statements where management considers that they allow the users to better understand the

financial performance, financial position, cash flows or outlook of the Group.

Examples of where pro forma adjustments may be used are in relation to acquisitions or disposals which are material to the Group, changes to the

Group’s capital structure or changes in reporting frameworks the Group applies such as Solvency II or IFRS. Where pro forma adjustments are

considered necessary for the understanding of the financial performance, financial position, cash flows or outlook of the Group these will be clearly

labelled as pro forma with a clear explanation provided as to the reason for the adjustments and the Key Performance Indicators, Alternative

Performance Metrics and other performance metrics impacted.

Shareholder information

Annual General Meeting (‘AGM’)

Our AGM will be held on 13 May 2025 at 10:30am at Floor 9,

20 Old Bailey, London, EC4M 7AN.

Full details of the business to be considered at the meeting will be

included in the Notice of Meeting which, along with all other details

relating to the AGM, will be available at: www.thephoenixgroup.com.

We encourage shareholders to submit any questions to the Company in

advance of the AGM by email to Investor.Relations@thephoenixgroup.com.

Please note that questions must be received no later than 10:30am

on9 May 2025.

Following the meeting, the voting results for our 2025 AGM, including

proxy votes and votes withheld will be available on our website at:

www.thephoenixgroup.com.

Shareholder services

Managing your shareholding

Our registrar, Computershare PLC (‘Computershare’), maintains

Phoenix Group’s register of members. Shareholders may request a hard

copy of this Annual Report and Accounts from our registrar and should

you have any queries in respect of your shareholding, please contact

Computershare directly using the contact details set out under the

‘Useful contact information’ section on page 341.

Investor Centre

The Investor Centre is an online enquiry service, provided by

Computershare, which allows you to manage your shareholding

with ease. Visit the Investor Centre at www-uk.computershare.com/

Investor/#Home. Once logged in, you can:

• view details of your Phoenix Group shareholding;

• view your recent dividend payments;

• update your address details;

• change your payment method; and

• register for electronic communications.

You can also use Computershare’s web-based enquiry service at

www-uk.computershare.com/Investor/#Home to download forms such

as a dividend mandate form or submit dividend mandate details online.

Alternatively, contact Computershare using the details found under

the ‘Useful contact information’ section on page 341.

Electronic communications

Phoenix Group is committed to communicating to shareholders in

the most efficient and sustainable way. We encourage shareholders to

opt to receive electronic communications including the Annual Report,

Notice of Meeting and dividend information. Shareholders can update

their communication preferences by logging in to the Investor Centre at

www-uk.computershare.com/Investor/#Home

Shareholders are also able to access a wide range of information

and documentation on the Investor section of the Group’s website

at www.thephoenixgroup.com.

You can access electronic copies of Phoenix Group’s financial reports

and presentations on the website at: www.thephoenixgroup.com.

Online news

Phoenix Group has a dedicated ‘News and Views’ section on its

website, www.thephoenixgroup.com, to keep shareholders, investors,

journalists and employees up to date and informed on news.

Dividend information

Typically, Phoenix Group pays dividends twice a year. The Interim

dividend is usually paid in October and the Final dividend is paid

in May following approval by shareholders at the AGM.

Information about the 2024 Final dividend has been included in

the 2024 Full Year Results Announcement.

Payment method

Shareholders may find it convenient to have their dividends paid

directly to their bank or building society account.

You can use Computershare’s web-based enquiry service at

www-uk.computershare.com/Investor/#Home to download a

dividend mandate form or submit dividend mandate details online.

Alternatively, contact Computershare using the details found under

the ‘Useful contact information’ section on page 341.

Scrip dividend alternative

The Company does not currently offer a scrip dividend alternative.

Dividend reinvestment plan

The Company does not currently offer a dividend reinvestment plan.

340

Additional information

Phoenix Group Holdings plc Annual Report and Accounts 2024

2025 Financial calendar

Ordinary shares – 2024 Final dividend

Ex-dividend date 3 April 2025

Record date 4 April 2025

Payment date for the recommended Final dividend 21 May 2025

Group Financial calendar for 2025

Annual General Meeting 13 May 2025

Announcement of unaudited Interim Results Sept 2025

1 See website for announcement dates.

Share price

For a more detailed look at the share price of Phoenix Group

Holdings plc, including current share price and the share price over

time, please see the ‘Share Monitor’ section of the Group’s website

at www.thephoenixgroup.com.

Please be mindful that the share price data on the website is delayed

by 15 minutes.

Share fraud warning to shareholders

Over recent years, many companies have been informed that their

shareholders have received unsolicited phone calls or correspondence

concerning investment matters. These are typically from overseas-

based ‘brokers’ who target UK shareholders, offering to sell them

what often turns out to be worthless or high-risk shares in US or UK

investments. These operations are commonly known as ‘boiler rooms’.

We continue to receive reports of share scams. Shareholders are

advised to be wary of any unsolicited advice, offers to buy shares

at a discount or offers of free reports about Phoenix Group:

• make sure you get the correct name of the person and organisation;

• check that they are properly authorised by the Financial Conduct

Authority (‘FCA’) before getting involved by visiting www.fca.org.uk/

firms/financial-services-register;

• report the matter to the FCA by using the contact us form

at www.fca.org.uk/register or call the FCA consumer helpline

on +44 (0)800 111 6768; and

• if the calls persist, hang up.

If you deal with an unauthorised firm, you will not be eligible

to receive payment under the Financial Services Compensation

Scheme. If you have lost money to investment fraud, you should

report it to Action Fraud at www.actionfraud.police.uk or call them

on +44 (0) 300 123 2040. Details of any share dealing facilities that

Phoenix Group endorses will be included in our shareholder mailings.

More detailed information on this or similar activity can be found on the

FCA website available at www.fca.org.uk/consumers.

Useful contact information

Computershare

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

United Kingdom

Shareholder helpline number: +44 (0) 370 702 0181

Lines open from 8.30am to 5.30pm Monday to Friday,

excluding public holidays in England and Wales.

Phoenix Group Holdings plc

For Company Secretariat or Investor enquiries:

Kulbinder Dosanjh

Group Company Secretary

Telephone: +44 (0)20 4559 4513

Email: kulbinder.dosanjh@thephoenixgroup.com

Claire Hawkins

Director of Corporate Affairs and Investor Relations

Telephone: +44 (0)20 4559 3161

Email: claire.hawkins@thephoenixgroup.com

341

Additional information

Phoenix Group Holdings plc Annual Report and Accounts 2024

Glossary

Acquired value in force (‘AVIF’)

The present value of future profits on a portfolio of long-term insurance

and investment contracts, acquired either directly or through the

purchase of, or investment in, a business.

Alternative Performance Measure (‘APM’)

A financial measure of historic or future financial performance,

financial position or cash flows, other than a financial measure defined

under IFRS or under Solvency UK rules. The Group uses a range

of these metrics to provide a better understanding of the underlying

performance of the Group. All APMs are defined within this glossary

and the APM section on pages 334 to 339.

Annuity policy

A policy that pays out regular benefit amounts, either immediately

and for the remainder of a policyholder’s lifetime (immediate annuity),

or deferred to commence at some future date (deferred annuity).

Asset Backed Securities (‘ABS’)

A collateralised security whose value and income payments

are derived from a specified pool of underlying assets.

Asset Liability Management (‘ALM’)

The management of mismatches between assets and liabilities

within risk appetite.

Asset management

The management of assets using a structured approach to guide

the act of acquiring and disposing of assets, with the objective

of meeting defined investment goals and maximising value for

investors, includingpolicyholders.

Assets under administration (‘AUA’)

Assets administered by or on behalf of the Group, covering both

policyholder funds and shareholder assets. This includes assets

recognised in the Group’s IFRS consolidated statement of financial

position together with certain assets administered by the Group

but for which beneficial ownership resides with customers.

Association of British Insurers (‘ABI’)

A trade association made up of insurance companies in the

UnitedKingdom.

Auto-enrolment

Under the Pensions Act 2008, every employer in the UK must put

certain staff into a workplace pensions scheme and contribute

towards it. This is called auto-enrolment.

Bulk Purchase Annuities (‘BPA’)

A bulk annuity is an insurance policy that is purchased by pension

scheme trustees to better secure members’ benefits by removing

investment, inflation and longevity risk associated with defined

benefit pension schemes.

Carbon footprint

A carbon footprint is the total greenhouse gas (‘GHG’) emissions

caused by an individual, event, organisation, service, place or

product, expressed as carbon dioxide equivalent (CO2e).

Carbon offsets

A reduction or removal of emissions of carbon dioxide or other

greenhouse gases made in order to compensate for emissions

created else where.

Climate scenario

A plausible representation of future climate that has been constructed

for explicit use in investigating the potential impacts of anthropogenic

climate change.

Climate-related opportunities

The potential positive impacts of climate change on an organisation.

Efforts to adapt to climate change can produce opportunities for

organisations, such as through resource efficiency and cost savings

and the development of new products and services.

Climate-related risks

The potential negative impacts of climate change on an organisation.

The risk consists of physical risks and transition risk.

Climate solutions

Economic activities that contribute substantially to climate change

mitigation or adaptation. The products or services are either produced

sustainably or allow others to do so.

Closed life fund

A fund that no longer accepts new business. The fund continues

to be managed for the existing policyholders.

Compound annual growth rate (‘CAGR’)

The mean annual growth rate of an investment over a specified period

of time longer than one year.

Confederation of British Insurers (‘CBI’)

The CBI is a not-for-profit organisation that represents 190,000

businesses. It provides a voice for firms at a regional, national and

international level to policymakers.

Contractual Service Margin (‘CSM’)

Under IFRS 17, revenue and profit recognition of day 1 gains on annuity

contracts is deferred into recognition at a point in the future, by being

added to the CSM. The CSM therefore represents a stock of future

profits that will unwind into the P&L in future years.

342

Additional information

Phoenix Group Holdings plc Annual Report and Accounts 2024

Customer

A customer could be a lead policyholder on more than one policy

and some policies could have more than one customer, therefore

the customer number is approximate. The number of customers

is measured as number of lead policyholders.

Customised decarbonisation benchmarks

Climate aware and climate aligned benchmarks that aim to deliver net

zero by 2050 while meeting our customer requirements. These are

investment benchmarks, that aim to deliver a representative return for

the asset class (as measured by the existing market cap benchmarks),

but with Group exclusions and built in systematic decarbonisation

pathway, consistent with achieving net zero by 2050.

Defined benefit pension scheme

A pension scheme that defines the benefits payable to members

irrespective of any contributions paid or investment gains made.

Defined contribution pension scheme

A pension scheme where the benefits depend on the amount and

frequency of contributions paid into the scheme, the investment gain

on those contributions, and annuity rates at the time of retirement. The

exact pension valuation will not be known until the point of retirement.

Definition of assets within our control and influence

(i) product componentry which are not external fund links (i.e. we have

an Investment Management Agreement with an Asset Management

Partner, so can control the terms of the investment strategy), or (ii)

where we have a default, managed or blended vehicle which has

external fund link componentry and / or directly held securities,

and we have the ability to substitute investments without the need

to secure explicit client approval when they do not meet our needs.

Department for Business & Trade

The Department for Business & Trade (formerly the Department

for Business, Energy & Industrial Strategy (‘BEIS’) is a ministerial

department in the UK.

Economic assumptions

Assumptions related to future interest rates, inflation, market value

movements and tax.

Employee Benefit Trust (‘EBT’)

A trust set up to enable its Trustee to purchase and hold shares to

satisfy employee share-based incentive plan awards. The Company’s

EBT is the Phoenix Group Holdings plc Employee Benefit Trust.

Equity release mortgage (‘ERM’)

An ERM product enables a home owner aged over 55 to draw

a lump sum or regular smaller sums from the value of the home,

while remaining in their home.

ESG

Environmental criteria consider how a company performs as a steward

of nature and the climate. Social criteria examine how it manages

relationships with employees, suppliers, customers, and the communities

where it operates. Governance deals with a company’s leadership,

executive pay, audits, internal controls and shareholder rights.

Experience variances

Current period differences between the actual experience incurred

and the assumptions used in the calculation of IFRS insurance liabilities.

Financed emissions

Greenhouse gas (‘GHG’) emissions that occur as a result of financing,

including lending and investment activity. These activities fall within

Scope 3, category 15 of the GHG protocol.

Financial Conduct Authority (‘FCA’)

The body responsible for supervising the conduct of all financial services

firms and for the prudential regulation of those financial services firms not

supervised by the Prudential Regulation Authority (’PRA’), such as asset

managers and independent financial advisers.

Financial Ombudsman Service (‘FOS’)

An ombudsman established in 2000, and given statutory powers in

2001 by the Financial Services and Markets Act 2000, to help settle

disputes between consumers and UK-based businesses providing

financial services.

Financial Reporting Council (‘FRC’)

The UK’s independent regulator responsible for promoting high-quality

corporate governance and reporting to foster investment.

Fitch leverage ratio

The Fitch leverage ratio is calculated by Phoenix (using Fitch Ratings’

stated methodology) as debt as a percentage of the sum of debt and

equity. Debt is defined as the IFRS carrying value of shareholder

borrowings excluding subordinated liabilities qualifying as Tier 1 Own

Funds under Solvency UK rules. Equity is defined as the sum of equity

attributable to the owners of the parent, non-controlling interests,

contractual service margin (‘CSM’) (net of tax), policyholders’ share

of the estate and subordinated liabilities qualifying as Tier 1 Notes.

Values for debt and equity are adjusted to allow for the impact of

currency hedges in place over foreign currency denominated debt.

FTSE Women Leaders review

An independent, business-led framework supported by the Government,

which sets recommendations for Britain’s largest companies to improve

the representation of Women on Boards and in Leadership positions.

It continues the work of the Hampton-Alexander and Davies Reviews.

Full-time equivalent (‘FTE’)

A measure that allows the Group to calculate the equivalent number

of full-time employees for all types of employees.

Greenhouse Gas (‘GHG’) emissions

GHGs are atmospheric gases that absorb and emit radiation within the

thermal infrared range and that contribute to the greenhouse effect and

global climate change. They include water vapour, carbon dioxide (CO

methane (CH

), nitrous oxide (N

O), hydro chlorofluorocarbons (HCFCs),

ozone (O

), hydrofluorocarbons (HFCs),and perfluorocarbons (PFCs).

Greenhouse Gas Protocol

Global standard for companies and organisations to measure and

manage their GHG emissions.

Group in-force Long-term Free Cash (‘Group in-force LTFC’)

Group in-force LTFC is the cash available to shareholders. It is defined

as the estimated lifetime cash generation from our in-force business,

plus Group cash held in the Holding Company, less outstanding

shareholder debt, committed M&A and transition costs, and interest

on debt until maturity. The calculation for the 2023 LTIP performance

metric excludes any future shareholder dividends and is before interest

on debt until maturity.

Guaranteed Annuity Rate

A rate available to certain pension policyholders to acquire annuity

at a contractually guaranteed conversion rate.

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Glossary continued

HMRC

His Majesty’s Revenue and Customs.

Holding companies

Refers to Phoenix Group Holdings plc, Phoenix Life Holdings Limited,

Pearl Group Holdings (No. 2) Limited, Impala Holdings Limited, Pearl Life

Holdings Limited, ReAssure Group plc and ReAssure MidCo Limited.

IASB

International Accounting Standards Board.

IFRS adjusted operating profit

A non-Generally Accepted Accounting Principles (‘GAAP’) measure

that is considered a more representative measurement of performance

than IFRS profit or loss after tax as it is based on expected long-term

investment returns. This measure is included in the 2025 AIP scheme.

Cumulative operating profit, being operating profit over the 3 year LTIP

performance period is included in the 2025 LTIP grant.

In-force

Long-term business written before the period end and which has not

terminated before the period end.

Inter-governmental Panel on Climate Change (‘IPCC’)

The United Nations body created to provide policymakers with regular

scientific assessments on climate change, its implications and potential

future risks, as well as to put forward adaptation and mitigation options.

Internal Model

The Internal Model is a risk measurement system developed by an insurer

to analyse its overall risk position, to quantify risks and to determine the

economic capital required to meet those individual risks.

Internal rate of return (‘IRR’)

A metric used in financial analysis to estimate the profitability of

potential investments. IRR is a discount rate that makes the net present

value of all cashflows equal to zero in a discounted cashflow analysis.

International Financial Reporting Standards (‘IFRS’)

Accounting standards, interpretations and the framework adopted

by the International Accounting Standards Board.

Life Company

A subsidiary providing life and pension products.

Life Company Free Surplus

The amount of capital held in Life Companies in excess of that needed

to support their regulatory Solvency Capital Requirement (‘SCR’), plus

the capital required under the Board approved Capital Management

Policy (‘CMP’).

Longer Lives Index

The Longer Lives Index is the first piece of research by Phoenix Insights,

the Group’s think-tank, and was launched in 2022. The research provides

a rich picture of people’s financial readiness for longer lives across the UK.

Long-Term Incentive Plan (‘LTIP’)

The part of an executive’s remuneration designed to incentivise

long-term value for shareholders through an award of shares with

vesting contingent on employment and the satisfaction of stretching

performance conditions linked to Group strategy.

M&A Advisory Committee

An ad hoc advisory PGH plc Board committee which meets to consider

proposed mergers and acquisitions, including due diligence activities

undertaken by management.

Management actions

Management actions are used to define the financial impacts of

programmes of activity instigated and undertaken by the Group to

enhance shareholder outcomes. Such actions will be undertaken to

either increase Shareholder Own funds (and therefore increase future

organic cash generation) or to reduce SCR (therefore accelerating

expected cash generation). Examples of management action activities

include investment into higher yielding asset types, optimisation of

asset and liabilities matching positions, and cost reduction initiatives.

Certain management actions are classified as recurring and form part

of Operating Cash Generation (‘OCG’) – these are actions which

are either genuinely repeatable, repeatable in nature but subject to

diminishing returns or not repeatable but benefits are expected from

similar types of actions.

Master Trust

A defined contribution workplace pension scheme that is established

under a trust. A master trust seeks to provide a workplace pension

that can be used by several non-associated employers, as opposed

to traditional schemes that are set up to provide a workplace pension

for a single employer. Master trusts are supervised and authorised

by the Pensions Regulator.

Material suppliers

These are Suppliers who are Strategic or Critical to Phoenix

Group’s operations.

Strategic (also known as a tier 1 supplier): Of significant importance

to Phoenix Group where the services the supplier provides support

Phoenix’s strategic objectives and are crucial in providing ongoing and

future services to Phoenix customers, policyholders and shareholders.

These suppliers are highly likely to be integrated into Phoenix Group’s

operating model and will be deemed as a Critical/Material

Arrangement for Solvency UK purposes.

Critical (also known as a tier 2 supplier): Deemed as a Critical/Material

Arrangements, however, are not viewed as a Strategic partner to Group.

These suppliers will perform a Critical function and/or activity on

behalf of Phoenix Group, they could be crucial in providing current

services to Phoenix customers, policyholders, and shareholders.

Minimum Capital Requirements (‘MCR’)

The minimum amount of capital that the Group needs to hold to cover

its risks under the Solvency UK regulatory framework.

Net flows

Represents the difference between the inflows (premiums) and outflows

and excludes market movements. Net flows may be reported for the

Group as a whole, for a specific part of the Group or for different time

periods. Cumulative net flows, being net flows over the 3 year LTIP

performance period, are included in the 2024 LTIP grant.

Net operating cash receipts

This is a LTIP performance metric in the 2022, 2023 and 2024

grants which represents cash generation after allowing for corporate

expenses and pension contributions.

Net zero

A state where no incremental greenhouse gases are added to the

atmosphere. Emissions output is balanced with the removal of carbon

from the atmosphere.

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Network for Greening the Financial System (‘NGFS’)

A group of central banks, supervisors and observers committed to

sharing best practices, contributing to the development of climate

and environment-related risk management in the financial sector

and mobilising mainstream finance to support the transition towards

a sustainable economy.

New business contribution (‘NBC’)

Represents the increase in Solvency II Shareholder Own funds arising

from new business written in the year, assuming assets have been fully

transitioned in to the pricing portfolio, and provides an assessment of

the day one value (excluding a cost of capital) arising on the writing

of new business on a discounted basis. It is adjusted to exclude

(i) prudence in the Fundamental Spread, (ii) the associated risk margin

and (iii) any restrictions in respect of contract boundaries. Is stated on

a net of tax basis, is after acquisition costs and includes future year

cash flows in which long term maintenance costs are deducted and

therefore it excludes any short term cost overruns. This measure is

included in the 2024 AIP scheme.

Non-economic assumptions

Assumptions related to future levels of mortality, morbidity, persistency

and expenses.

Non-profit fund

The portion of a life fund which is not a With-Profit fund, where risks

and rewards of the fund fall wholly to shareholders.

Operating Cash Generation (‘OCG’)

OCG is the emergence of cash as in-force business runs off over time

and capital unwinds, plus day one surplus from writing new business

(net of day 1 strain for fee-based business) plus group tax relief, plus

recurring management actions. As a cash measure it is reported on

an Excess over CMP view. Cumulative OCG , being OCG over the

3 year LTIP performance period, is included in the 2025 LTIP grant.

Operating companies

Refers to the trading companies within Phoenix Group.

Operations intensity metrics

Metrics based on Scopes 1 and 2 emissions within the Group’s

occupied premises.

Origo

An electronic pensions transfer system.

Over-the-Counter (‘OTC’)

OTC financial instruments are traded directly between two parties

without a broker or exchange market.

Own Funds

Under Solvency UK rules, Own Funds refers to the regulatory capital

available to cover capital requirements. Basic Own Funds comprise the

excess of assets over liabilities valued in accordance with the Solvency

UK rules and subordinated liabilities which qualify to be included in

Own Funds under the Solvency UK rules. Eligible Own Funds are the

amount of Own Funds that are available to cover the Solvency Capital

Requirements after applying prescribed tiering limits and transferability

restrictions to Basic Own Funds.

Own Risk and Solvency Assessment (‘ORSA’)

The processes undertaken to provide a forward looking assessment of

the Group’s risk and capital profile, under normal and stress scenarios,

as a result of its proposed business strategy and Annual Operating Plan.

Parker review and guidance

An independent review which considered how to improve the ethnic and

cultural diversity of UK boards to better reflect their employee base and

the communities they serve. The Parker guidance sets out objectives and

timescales to encourage greater diversity, and provides practical tools to

help business leaders to address the issue. Each FTSE 100 Board should

have at least one “director of colour” by 2021.

Partial internal model

The model used to calculate the Group Solvency Capital Requirement

where permission is granted by the PRA under Solvency UK. It aggregates

outputs from the harmonised internal model and the standard formula

with no diversification between the two.

Part VII transfer

The transfer of insurance policies under Part VII of Financial Services

and Markets Act 2000. The insurers involved can be in the same corporate

group or in different groups. Transfers require the consent of the High

Court, which will consider the views of the PRA and FCA and of an

Independent Expert.

Participating business

See With-Profit fund below.

Partnership for Carbon Accounting Financials (‘PCAF’)

PCAF is a global partnership of financial institutions that work together

to develop and implement a harmonised approach to assess and

disclose the greenhouse gas (GHG) emissions associated with their

loans andinvestments.

Persistency

This LTIP performance metric is set for the specific Pensions and Savings

products only and based on a principle of protecting value, with a target

based on the best estimate assumption of persistency at the start of the

performance period. This is measured on a product-by-product basis

with the average value of each product then used to create a single

weighted average persistency rate. Further details of persistency insurance

risks are covered in section F11 of the consolidated financial statements.

This is a LTIP performance metric for the 2022 and 2023 grants.

Physical risks

Risks related to the physical impacts of climate change which can either

be acute or chronic. Acute physical risks refer to those that are event-driven,

including increased severity of extreme weather events, such as cyclones,

hurricanes or floods. Chronic physical risks refer to longer-term shifts in

climate patterns (e.g. sustained higher temperatures) that may cause sea

level rise or chronic heatwaves.

Protection policy

A policy which provides benefits payable on certain events. The benefits

may be a single lump sum or a series of payments and may be payable on

death, serious illness or sickness.

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Glossary continued

Prudential Regulation Authority (‘PRA’)

The body responsible for the prudential regulation and supervision of

banks, building societies, credit unions, insurers and major investment

firms. The PRA and FCA use a Memorandum of Understanding to

co-ordinate and carry out their respective responsibilities.

ReAssure

The companies comprising ReAssure Limited, ReAssure Life Limited

and Ark Life Assurance Company dac businesses which were acquired

on 22 July 2020.

Representative Concentration Pathway (‘RCP’)

A GHG concentration trajectory adopted by the IPCC. The pathways

(RCP2.6, RCP4.5, RCP6, and RCP8.5) describe different climate

futures, all of which are considered possible depending on the volume

of GHGs emitted in the years to come. RCP 2.6 is a very stringent

pathway. According to the IPCC, RCP 2.6 requires that carbon dioxide

emissions start declining by 2020 and go to zero by 2100. In RCP 8.5,

emissions continue to rise throughout the 21st century. It is generally

taken as the basis for worst-case climate change scenario.

Return on Capital (‘RoC’)

Reflects the Own Funds component of the Operating Cash Generation

(i.e. the in-force and new business surplus generation and group tax

relief), less financing costs plus recurring management actions divided

by Opening Unrestricted Core Tier 1 Shareholder Capital (UT1) +

Deferred tax assets. At a high level, this could be more simply described

as the operating growth in Own Funds less financing costs/opening

Own Funds excluding debt. This is a LTIP performance metric for the

2024 grant.

Return on shareholder value

Shareholder value reflects the group’s Eligible Own Funds adjusted to

remove amounts pertaining to unsupported With-Profit funds. Group

pension schemes, the value of Shareholder debt and adjusted to remove

the short-term impact economic movements in the performance period.

The return on shareholder value reflects excess return above risk free.

This is a LTIP performance metric for the 2022 grant.

Science Based Targets

An emissions reduction target is defined as ‘science-based’ if it

is developed in line with the scale of reductions required to keep

global warming below 2C from pre-industrial levels.

Scope 1, 2 and 3 emissions

Greenhouse gas emissions are categorised into three groups or ‘Scopes’.

Scope 1 covers direct emissions e.g. use of natural gas, company car

vehicle emissions. Scope 2 covers indirect emissions from the generation

of purchased electricity, steam and heating. Scope 3 includes 15 other

categories of indirect emissions in a company’s value chain e.g. business

travel and investments.

Shareholder Capital Coverage Ratio (‘SCCR’)

Represents total Eligible Own Funds divided by the Solvency Capital

Requirements (‘SCR’), adjusted to a shareholder view through the

exclusion of amounts relating to those ring-fenced With-Profit funds

and Group pension schemes whose Own Funds exceed their SCR.

Shareholder value

The Group’s Eligible Own Funds adjusted to remove amounts pertaining

to unsupported With-Profit funds, Group pension schemes, the value of

shareholder debt and adjusted to remove the short-term impact economic

movements in the performance period.

Solvency II leverage ratio

Calculated as the Solvency II value of debt divided by the value of

Solvency II Regulatory Own Funds. Values for debt are adjusted to

allow for the impact of currency hedges in place over foreign currency

denominated debt.

Solvency II Shareholder Own Funds Unrestricted Tier 1

Under Solvency UK rules, SII Shareholder Own Funds Unrestricted

Tier 1 refers to the highest quality tier of regulatory capital available to

cover capital requirements. It comprises the excess of assets (excluding

deferred tax assets) over liabilities valued in accordance with the

Solvency UK rules. This measure is included in the 2025 AIP scheme.

Solvency II surplus

The excess of Eligible Own Funds over the Solvency Capital Requirement.

This is a performance metric in the 2025 LTIP grant.

Solvency Capital Requirements (’SCR’)

Relates to the risks and obligations to which the Group is exposed,

and is calibrated so that the likelihood of a loss exceeding the SCR

is less than 0.5% over one year. This ensures that capital is sufficient

to withstand a broadly ’1-in-200-year event’.

Standard formula

A set of calculations prescribed by the Solvency UK rules for

generating the SCR.

Standard Life Assurance businesses

Standard Life Assurance Limited, Standard Life Pensions Fund Limited,

Standard Life International Designated Activity Company, Vebnet

(Holdings) Limited, Vebnet Limited, Standard Life Lifetime Mortgages

Limited, Standard Life Assets and Employee Services Limited and

Standard Life Investment Funds Limited (together known as the

Standard Life Assurance businesses) acquired by the Group on

31 August 2018.

Sterling overnight interest average (‘SONIA’)

The average of the interest rates that banks pay to borrow sterling

overnight from other financial institutions and other institutional

investors, administered by the Bank of England.

Stewardship

Stewardship is the use of the rights and position of ownership to

influence the activity or behaviour of investee companies. For listed

equities it includes both engagement and (proxy) voting (including

filing shareholder resolutions). For other asset classes, engagement is

still relevant while voting is not. Engagement is a two-way interaction

between the investor and investees in relation to corporate business

and ESG strategies with the goal of influencing issuers’ practices when

needed to unlock value.

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Streamlined Energy and Carbon Reporting (‘SECR’)

Reporting of emissions sources required under the Companies

(Directors’ Report) and Limited Liability Partnerships (Energy and

Carbon Report) Regulations 2018.

Task Force on Climate-related financial disclosures

(‘TCFD’)

The TCFD was created in 2015 by the Financial Stability Board (‘FSB’),

now incorporated into the International Sustainability Standards Board

(‘ISSB’), to develop consistent climate-related financial risk disclosures

for use by companies in providing information to stakeholders.

Task Force on Nature related financial disclosures (‘TNFD’)

A market-led, science-based and government-backed initiative

providing organisations with the tools to act on evolving nature-related

issues including a disclosure.

TCS BaNCS

TCS BaNCS is a state of the art Life and Pensions administration

platform operated by Tate Consultancy Services (‘TCS’).

The Pensions Regulator (‘TPR’)

A non-departmental public body which regulates work-based pension

schemes in the United Kingdom.

Tier 1 Notes

The £500 million fixed rate reset perpetual restricted Tier 1 write down

Notes issued by Phoenix.

Total cash generation (‘TCG’)

Cash remitted by the Group’s operating companies to the Group’s

holding companies. This metrics was formerly referred to as operating

companies’ total cash generation. This measure is included in the 2024

and 2025 AIP scheme.

Total shareholder return (‘TSR’)

TSR is the total return, over a fixed period, to an investor in terms of

share price growth and dividends (assuming that dividends paid are

re-invested, on the ex-dividend date, in acquiring further shares).

This is a LTIP performance metric.

Transition risks

Climate-related risks associated with the transition to a low-carbon

economy. They include risks related to policy and legal actions,

market and economic responses, technology changes and

reputational considerations.

Transitional Measures on Technical Provisions (‘TMTP’)

This is an allowance, subject to the PRA’s approval, to apply a

transitional deduction to technical provisions. The transitional

deduction corresponds to the difference between net technical

provisions calculated in accordance with Solvency UK rules and

net technical provisions calculated in accordance with the previous

regime and is expected to decrease linearly over a period of 16 years

starting from 1 January 2016 to 1 January 2032. TMTP is subject to

a mandatory recalculation every two years or on the occurrence

of certain defined events.

UK Endorsement Board (‘UKEB’)

The UKEB was established following the UK’s exit from the EU. The board’s

purpose is to endorse and adopt new and amended international

accounting standards issued by the IASB for use by UK Companies and

has responsibility for influencing the development of those standards.

Unit-linked policy

A policy where the benefits are determined by the investment

performance of the underlying assets in the unit-linked fund.

Windfall gains

A windfall gain may arise if the Company has experienced a significant

fall in its share price at the point of granting LTIP awards so the recipient

received significantly more share than in previous years, and this is

followed by a subsequent increase in share price at the point of vesting.

With-Profit fund

A fund where policyholders are entitled to a share of the profits of the

fund. Normally, policyholders receive their share of the profits through

bonuses. Also known as a participating fund as policyholders have a

participating interest in the With-Profit fund and any declared bonuses.

Generally, policyholder and shareholder participations in the With-Profit

fund in the UK are split 90:10.

2018 UK Corporate Governance Code

The current version of the UK Corporate Governance Code published

by the Financial Reporting Council setting out guidance on standards of

good corporate governance practice in the UK relating to issues such as

board composition and development, remuneration, accountability, audit

and relations with shareholders.

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Forward looking statements

The 2024 Annual Report and Accounts contains, and the Group

may make other statements (verbal or otherwise) containing, forward

looking statements and other financial and/or statistical data about

the Group’s current plans, goals, ambitions, outlook, guidance and

expectations relating to future financial condition, performance,

results, strategy and/or objectives. Statements containing the words:

‘believes’, ‘intends’, ‘will’, ’may’, ‘should’, ‘expects’, ‘plans’, ‘aims’, ‘seeks’,

‘targets’, ’continues’ and ‘anticipates’ or other words of similar meaning

are forward looking. Such forward-looking statements and other

financial and/or statistical data involve known and unknown risks and

uncertainty because they relate to future events and circumstances

that are beyond the Group’s control. For example, certain insurance risk

disclosures are dependent on the Group’s choices about assumptions

and models, which by their nature are estimates. As such, actual future

gains and losses could differ materially from those that the Group has

estimated. Other factors which could cause actual results to differ

materially from those estimated by forward-looking statements include,

but are not limited to:

• domestic and global economic, political, social,

environmental and business conditions;

• asset prices;

• market-related risks such as fluctuations in investment yields,

interest rates and exchange rates, the potential for a sustained

low-interest rate or high interest rate environment, and the

performance of financial or credit markets generally;

• the policies and actions of governmental and/or regulatory

authorities including, for example, climate change and the

effect of the UK’s version of the ‘Solvency II’ regulations

on the Group’s capital maintenance requirements;

• developments in the UK’s relationship with the European Union;

• the direct and indirect consequences of the conflicts in Ukraine

and the Middle East for European and global macroeconomic

conditions and related or other geopolitical conflicts;

• political uncertainty and instability including the rise in

protectionist measures;

• the impact of changing inflation rates (including high inflation)

and/or deflation;

• information technology (including developments in Artificial

Intelligence) or data security breaches (including the Group

being subject to cyber-attacks);

• the development of standards and interpretations including

evolving practices in sustainability and climate reporting with

regard to the interpretation and application of accounting;

• the limitation of climate scenario analysis and the models

that analyse them;

• lack of transparency and comparability of climate-related

forward-looking methodologies;

• climate change and a transition to a low-carbon economy

(including the risk that the Group may not achieve its targets);

• the Group’s ability along with governments and other

stakeholders to measure, manage and mitigate the impacts

of climate change effectively;

• market competition;

• changes in assumptions in pricing and reserving for insurance

business (particularly with regard to mortality and morbidity

trends, gender pricing and lapse rates);

• the timing, impact and other uncertainties of any acquisitions,

disposals or other strategic transactions;

• risks associated with arrangements with third parties;

• inability of reinsurers to meet obligations or unavailability

of reinsurance coverage; and

• the impact of changes in capital, and implementing changes

in IFRS17 or any other regulatory, solvency and/or accounting

standards, and tax and other legislation and regulations in the

jurisdictions in which members of the Group operate.

As a result, the Group’s actual future financial condition, performance

and results may differ materially from the plans, goals, targets, ambitions,

outlook, guidance and expectations set out in the forward-looking

statements and other financial and/or statistical data within the 2024

Annual Report and Accounts. No representation is made that any of

these statements will come to pass or that any future results will be

achieved. As a result, you are cautioned not to place undue reliance

on such forward-looking statements contained in this 2024 Annual

Report and Accounts.

The Group undertakes no obligation to update any of the forward-

looking statements or data contained within the 2024 Annual Report

and Accounts or any other forward-looking statements or data it may

make or publish. The information in this report does not constitute

an offer to sell or an invitation to buy securities in Phoenix Group

Holdings plc or an invitation or inducement to engage in any other

investment activities.

The 2024 Annual Report and Accounts has been prepared for the

members of the Company and no one else. The Company, its Directors

or agents do not accept or assume responsibility to any other person in

connection with this document and any such responsibility or liability is

expressly disclaimed. Nothing in the 2024 Annual Report and Accounts

is or should be construed as a profit forecast or estimate.

Caution about climate and sustainability related disclosures

Climate and sustainability disclosures in the 2024 Annual Report and

Accounts use a greater number and level of judgements, assumptions

and estimates, including with respect to the classification of climate-

related activities, than the Group’s reporting of historical financial

information. These judgements, assumptions and estimates are highly

likely to change over time, and, when coupled with the longer time

frames used in these disclosures, make any assessment of materiality

inherently uncertain. In addition, the Group’s climate risk analysis

and net zero transition planning will continue to evolve and the data

underlying the Group’s analysis and strategy remain subject to change

over time. As a result, the Group expects that certain climate and

sustainability disclosures made in the 2024 Annual Report and

Accounts are likely to be amended, updated, recalculated or restated

in the future. Please also refer to the 2024 Sustainability Report and

the cautionary statements contained therein.

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thephoenixgroup.com

Registered address

Phoenix Group Holdings plc

20 Old Bailey

London

England EC4M 7AN

Registered Number 11606773

Annual Report and Accounts 2024 Phoenix Group Holdings plc