Royal London announces strong results for the year ended 31 December 2006
Monday, 2 April 2007
Royal London, the UK's largest mutual life and pensions company, has announced its results for 2006.
Highlights
- Profit before tax £431 million (EEV1 basis), an increase of 33% over 2005
- Operating profit before tax £116m, up 16%
- New business contribution £36m, an increase of 16%
- Embedded value £2.0bn, an increase of 25%
- Transfer to the UDS2 £429m (IFRS3 basis) up 33%
- Funds under management up £1.9bn to £30.8bn
Commenting on the results, Mike Yardley, Group Chief Executive of Royal London, said:
"I am pleased to report that Royal London had another successful year in 2006, with the profit before tax increasing by £108m to £431m. We delivered new business profits from each of our brands, with the total contribution from new business increasing by 16% to £36m. Our embedded value increased by 25% to £2.0bn at 31 December 2006, a record figure for the Group.
"As well as growing new business in line with our plans and delivering healthy investment returns, we have once again produced a strong set of financial results. Markets were intensely price-competitive, but we are committed to our strategy of writing profitable business and remain determined to avoid loss-making areas of the market. We are encouraged by the continued improvement in new business margins we have been achieving for pensions business as a result of our focus on product pricing and persistency. We have strengthened the persistency assumptions used to value our protection business, which reduced new business margins for Bright Grey."
"Looking forward, our strategy is unchanged. We recognise that the short-term consequence is that our pensions business volumes and market share may fall, given the pricing strategies still being followed by some providers, especially in the group pensions market. We will not adopt similar pricing practices, which we believe are designed to suit short-term purposes. In this respect, we have been encouraged by the increasing number of providers who have recognised the importance of this issue, with several starting to follow a similar pricing approach to our own."
"The market continues to value companies which offer strong propositions for product, investment and overall service, backed-up by specialist expertise. Royal London is such a business and we intend to build for the long-term on our strengths".
"I am confident that the Group can continue to grow successfully and profitably, building value for the benefit of our members."
For further information please see attached notes.
1 EEV is European Embedded Value
- ENDS -
For further information please contact:
Royal London
Alasdair Buchanan
Group Head of Communications
Tel: 0131 456 7133
Polhill Communications
John Coles
Tel: 020 7655 0530
Editor's Notes:
1. Royal London Group, is a specialist financial service provider. Its businesses focus on those sectors of the market which value premium propositions, operating through a number of brands:
- Scottish Life – UK pensions market
- Bright Grey – UK protection market
- Scottish Life International – offshore investment markets
- RLAM – fund management
- RLAS – life and pensions administration
Royal London is one of the stronger life and pension companies in the UK, and has a particularly strong track record for with-profits performance.
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £30.8 billion. Group businesses serve over three million customers and employ 2,640 people (figures quoted are as at 31 December 2006).
2. Key Financial dates in 2007
- Quarter 1 2007 new business26 April 2007
- Quarter 2 2007 new business31 July 2007
- Half year 2007 interim financial results27 September 2007
- Quarter 3 2007 new business31 October 2007
Annual General Meeting
Royal London AGM22 May 2007
Subordinated debt interest payment date
Royal London subordinated guaranteed notes15 December 2007
3. The results in this announcement are prepared on two bases: the International Financial Reporting Standards (IFRS) basis and the European Embedded Value (EEV) basis. The IFRS results form the basis of the Group's financial statements. The Group's directors continue to believe that the supplementary information prepared on the EEV basis provides a more meaningful reflection of the Group's long-term operations and their value to members.
4. Forward-looking statements
This document may contain forward-looking statements with respect to certain of Royal London's plans, its current goals and expectations relating to its future financial position.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Royal London's control, including, among others, UK economic and business conditions, market related risks such as fluctuations in interest rates, the policies and actions of governmental and regulatory authorities, the impact of competition, the timing, impact and other uncertainties of future mergers or combinations within relevant industries.
As a result, Royal London's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Royal London's forward-looking statements. Royal London undertakes no obligation to update the forward-looking statements contained in this document or any other forward-looking statement it may make.