New Business Results for 6 months ending 30 June 2007 Growth in new business continues at Royal London
Tuesday, 31 July 2007
Royal London, the UK's largest mutual life and pensions company, has announced continued growth in profitable new business for the half year to end June 2007.
- Total new life and pensions business (on a PVNBP* basis) for the Group increased by 6% to £1006 million (£949m in the equivalent period in 2006)
- Scottish Life new business* up 7% to £747 million (£695m in 2006)
- Bright Grey new business* up 14% to £91 million (£79m in 2006)
- Scottish Life International (SLI) new business* down 25% to £76 million (£101m in 2006)
- Royal London-branded new business* up 25% to £93 million (£74m in 2006)
- Royal London Asset Management (RLAM) gross new business up 233% to £1,515million (excludes external cash mandates)
*PVNBP figures are the present value of new business premiums. The PVNBP figures are calculated as new single premiums plus the expected present value of new regular premiums. Previous new business announcements have been made using Annual Premium Equivalent (APE) figures which are included in the Editor's Notes for comparison purposes.
Commenting on the new business announcement, Mike Yardley, Group Chief Executive at Royal London, said:
"After a relatively slow start to the year, new business has increased steadily during the 6 months.
"All our specialist businesses are now performing well and have strong positions in their markets, though for SLI the figures reflect the exceptionally strong sales performance in the first half of 2006. We continue to operate successfully in what is a highly competitive environment and we will be looking to carry this positive momentum into the second half of 2007."
The strongest area of growth for Scottish Life was Individual Pensions, up 23% compared with the first half of 2006, following the launch of Pension Portfolio, a new individual pension plan which incorporates SIPP self-investment options.
The Group Pensions market remains difficult although sales of defined contribution business have been improving during the second quarter. Sales of Retirement Solutions, our flagship group DC plan, were 26% down on the comparable period in 2006 at the end of the first quarter. By the end of the second quarter the gap had narrowed to 3%. This is a very creditable performance given that Scottish Life has chosen not to participate in the continuing merry-go-round of high initial commissions that characterise much of this sector, leading to reported -- but in reality largely non-existent -- market growth.
Bright Grey has continued its record of growth in a very competitive market. It has had considerable success in increasing its presence on adviser panels where its added value proposition is proving very attractive. A campaign targeting mortgage brokers achieved good results and there are several campaigns planned for the second half of the year.
One of the main factors behind Bright Grey's success has been the ability to differentiate its proposition to customers. For example, as well as competitive premium rates, Bright Grey offers the "Helping Hand" service at no extra cost. This complements the financial benefits of insurance by providing the policyholder and their family with extra support at times when money alone may not be enough.
Scottish Life International (SLI) had a slower first half compared to the exceptional performance in 2006, when sales in Germany were particularly strong. SLI launched a new product into the German market in May and it is already proving popular.
RLAM has had an outstanding first half-year attracting over £1.5 billion of new external funds (excluding external cash mandates).£1.39 billion of this total came from institutional investors, of which £1.24 billion was from nineteen new mandates and the balance from existing clients. This is testament to RLAM's excellent fixed income track record and also reflects increased investment flows into the specialist equity funds. The launch of the Ethical Bond Trust in January, which attracted £60 million, contributed to this new business result.
- ENDS -
For further information please contact:
Royal London
Alasdair Buchanan
Group Head of Communications
Tel: 0131 456 7133
Mobile: 07919 170413
Polhill Communications
John Coles
Tel:020 7655 0530
Mobile: 07836 273660
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
- Royal London Asset Management (RLAM) – fund management
- Royal London – life and pensions administration
Royal London is one of the stronger life and pension companies in the UK, and has a 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 £32.7 billion. Group businesses serve around three million customers and employ 2,570 people (figures quoted are as at 30 June 2007).
2. New life and pensions business for 6 months to 30 June 2007
Equivalent figures for 2006 in brackets. All figures are in £ million.
(a)Present Value of New Business Premiums (PVNBP)
|
£ million |
Change |
|
|
Scottish Life |
746.8(694.7) |
+7% |
|
Bright Grey |
90.7(79.3) |
+14% |
|
Scottish Life International |
75.7(100.7) |
-25% |
|
Royal London |
93.1(74.2) |
+25% |
|
Group Total |
1,006.3(948.9) |
+6% |
(b)Annual Premium Equivalent (APE)
|
£ million |
Change |
|
|
Scottish Life |
103.9(96.5) |
+8% |
|
Bright Grey |
15.9(12.1) |
+31% |
|
Scottish Life International |
8.1(10.9) |
-26% |
|
Royal London |
9.4(7.6) |
+24% |
|
Group Total |
137.3(127.1) |
+8% |
3. Present Value of New Business Premiums
PVNBP figures are the present value of new business premiums. The PVNBP figures are calculated as new single premiums plus the expected present value of new regular premiums.
Annual Premium Equivalent
APE figures were the previous industry standard measure, calculated as new regular premiums plus one tenth of new single premiums.
4. Asset Management
Gross new business for 6 months to 30 June 2007. Equivalent figures for 2006 in brackets.All figures are in £ million.
|
£ million |
Change |
|
|
RLAM |
1,514.9(455.5) |
+233% |
5. Royal London-branded business
The new business shown above for "Royal London" consists primarily of DWP rebates. These relate to policies sold by Royal London's direct-to-customer salesforce (which was closed in 2004) and to policies transferred to Royal London following the acquisition of the United Assurance Group (Refuge Assurance and United Friendly) in 2001.
Royal London continues to offer a range of products, including several from selected third parties, direct to customers through its contact centre in Wilmslow.
In the Appendix, the analysis of figures includes annuity new business for Royal London. Following a transaction with Prudential Retirement Income Limited (PRIL) in 2006, all new annuity business is now written by PRIL. There is therefore no annuity new business written by Royal London in 2007.
6. Financial Calendar
Half year 2007 unaudited financial results 27 September 2007
Quarter 3 2007 new business 31 October 2007
Subordinated debt interest payment date 15 December 2007
7. 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.
Appendix: Analysis of New Business Results - Life and Pensions