(Reuters) - Phoenix Group Holdings (L:PHNX), Britain's largest owner of life assurance funds closed to new customers, raised its long-term cash generation target due to benefits of acquisitions made last year. The insurer, which makes money by buying European life insurers that are closed to new customers and running them more efficiently, said it now expected to generate 2.8 billion pounds ($3.5 billion) of cash from operating companies between 2016 and 2020.
This is higher than an earlier target of 2.0 billion pounds as Phoenix benefits from its acquisitions of British assets from French insurer AXA (PA:AXAF) and Deutsche Bank AG (DE:DBKGn) last year.
Phoenix said 1 billion to 1.2 billion pounds of this cash would be generated between 2017 and 2018.
In 2016, Phoenix bagged AXA's UK investment and pensions business as the French firm completed an exit from a mature life assurance market, and Deutsche Bank's British insurance business Abbey Life as the German firm shed non-core assets.
However, the British insurer lost out last year on buying Guardian Financial Services, which was bought by reinsurer Swiss Re AG (VX:SRENH) for about 1.6 billion pounds.
Phoenix was scouting for acquisitions to help gain scale in a challenging, low interest rate environment after Britain voted to leave the European Union, its Chief Executive Clive Bannister told Reuters in August last year.
"We believe there will be further consolidation in the UK life industry. We continue to explore opportunities as they arise," Bannister said in a statement on Monday.
Phoenix's operating profit rose about 8 percent to 351 million pounds in the year ended Dec. 31, from 324 million pounds a year ago.
The firm generated 486 million pounds in cash last year from operating companies, exceeding its target of 350-450 million pounds.