New Business Results – 3 months ending 31 March 2007
Thursday, 26 April 2007
Royal London, the UK's largest mutual life and pensions company, has announced new business figures for the first quarter of 2007.
• Total new life and pensions business (on a PVNBP1 basis) reduced by 16% to £398 million (£471m in the equivalent period in 2006).
• Scottish Life new business down 9% to £310 million (£343m in 2006)
• Bright Grey new business up 22% to £47 million (£38m in 2006)
• Scottish Life International new business down 52% to £30 million (£62m in 2006)
• RLAM (excluding cash mandates) gross new business up 128% to £620 million (£273m in 2006).
• Funds under management increased to £31.5 billion as at 31 March 2007.
Commenting on the new business announcement, Mike Yardley, Group Chief Executive at Royal London, said:
"As has been evident from the results announced so far by other companies, the pensions market, particularly group pensions, has been less buoyant than over the past year or so. This is reflected in our overall results; however we are not just a pension company and the results for both Bright Grey and RLAM are outstanding.
"We have found the environment for individual pension new business in the first quarter more satisfactory than for the group pensions market. This reflects a positive reaction from IFAs to the launch of Scottish Life's new Pension Portfolio (SIPP) plan in December 2006. We are also seeing increased use of the innovative Financial Adviser's Fee commission option, which we believe improves the quality of the business written.
"Scottish Life's regular premium pension business increased by 2% compared with the same period in 2006. Single premium business reduced by 15%, partly as a result of the 2006 figure containing a large one-off transfer payment and possibly reflecting higher volumes of scheme reconstructions in the period ahead of A-Day last year.
"Our continued focus has been on profitability, rather than writing new business on terms we believe would ultimately be unprofitable. This has been particularly important in the group defined contribution pensions market, where some companies are continuing to price on a basis which we do not believe is sustainable.
"Bright Grey's protection proposition remains very attractive and the business continues to grow strongly in a very competitive market. Sales increased by 22% to £46.7m, with an increase in numbers in Bright Grey's sales team, and the widening in reach of the distribution and marketing strategies, contributing to this particularly good performance.
"In Germany, Scottish Life International (SLI) has had a steady flow of business, though not at the exceptional levels of early 2006. We expect new business volumes to pick up with the launch next month of a new with profits product. The general outlook for SLI over the remainder of 2007 is positive.
"After an excellent year in 2006, the increase in RLAM's new business of well over 100% is a terrific performance. This reflects their continued success in gaining new mandates in both the institutional and wholesale markets, on the back of some strong investment performance. A series of new fund launches over the past 12 months, including the Ethical Bond Trust, the Strategic Bond Trust and UK Strategic Growth Trust (mid cap UK equities), also contributed to the impressive growth in new business.
"Royal London's cash management businesses – RLCM and RLAM (CI) – also started the year strongly with a combined £179 million of net new business in the first quarter."
Mike Yardley added
"Looking forward, we expect the market to remain competitive and we remain committed to our target markets. We are aiming to build momentum behind our drive to grow profitable new business and to deliver quality products and service to our policyholders and their advisers."
1 See Editor's notes for explanation of PVNBP basis.
-ENDS-
For further information please contact:
Royal London
Alasdair Buchanan, Group Head of Communications
0131 456 7133 or 07919 170 413
Polhill Communications
John Coles
020 7655 0530
Editor's Notes:
1 Royal London was founded in 1861, initially as a friendly society, and became a mutual life insurance company in 1908.
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 £31.5 billion (as at 31 March 2007). Group businesses serve over three million customers and employ 2,640 people (as at 31 December 2006.)
2 Key Dates
Financial Results
Quarter 2 2007 new business 31 July 2007
Half year 2007 interim financial results 27 September 2007
Quarter 3 2007 new business 31 October 2007
Annual General Meeting
Royal London AGM 22 May 2007
Subordinated debt interest payment date
Royal London subordinated guaranteed notes 15 December 2007
3. New business is reported on a Present Value of New Business Premiums (PVNBP) basis. The PVNBP figures are calculated as new single premiums plus the expected present value of new regular premiums evaluated at a risk free discount rate allowing for expected persistency.
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. These include, 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.
For further information please see the appendix.