New Business Results for 9 months ending 30 September 2007
Wednesday, 31 October 2007
Royal London, the UK's largest mutual life and pensions company, has announced new business results for the nine months ending 30 September 2007.
- Total new life and pensions business (on a like-for-like*, PVNBP** basis) for the Group, down 1% at £1,494 million (£1,504m in the equivalent period in 2006)
- Scottish Life new business up 1% to £1,106m (£1,091m in 2006)
-- strong growth in individual pensions, up 13% to £548m
-- Group pensions down 14% at £384m
- Bright Grey new business up 2% to £130m (£127m in 2006)
- Scottish Life International (SLI) new business down 8% at £125m (£135m in 2006)
- Royal London-branded new business down 10% on a like-for-like* basis at £134m (£150m in 2006)
- Royal London Asset Management (RLAM) gross new business (excluding external cash mandates) up 214% to £2,319m (£738m in 2006)
*Excludes annuity business transferred to Prudential (2006 £62m)
**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:
"I am pleased that our key operating businesses, Scottish Life and Bright Grey, have maintained their levels of new business despite intense price competition in the markets in which they operate.
"Through the development of its value proposition, Bright Grey continues to grow its reach in the adviser market and was recently appointed to the Thinc Destini multi-tie protection panel.New business performance is set against a background of the downturn in the mortgage market and the ongoing flat market for protection products across the industry.Bright Grey's performance in increasing new business volumes by 23% in APE terms was therefore particularly impressive.PVNBP figures reflect a strengthening of the persistency assumptions for business being written, and changes in economic conditions.
"Scottish Life has achieved considerable success in the individual pensions market following the launch, in December 2006, of Pension Portfolio, which includes SIPP options.It will be further strengthening its proposition in the individual market with the launch, during this quarter, of a new "Income Release" product, which sits within the Pension Portfolio structure.
"As I highlighted when we reported our half year new business results, a feature of the Group pensions market for some time has been the high initial commissions being paid by some product providers.This has resulted in reported – but in reality, largely non-existent -- market growth.We have made it clear that we will not operate on those terms and that we remain focused on writing new business that we believe has good potential for being profitable.
"Scottish Life International had a slow first six months compared to the exceptional performance in 2006.However the third quarter saw a significant improvement in new business, up 43% compared with the same period in 2006 in PVNBP terms (from £34.5m to £49.3m).Following the relaunch of the with profits bond in Germany, we expect new business levels to remain healthy for the remainder of this year.
"RLAM continued its exceptional performance, attracting over three times the volume of new business it achieved in the first nine months of 2006.The majority of the £2.3 billion of new external funds came from new clients, with fixed income products again the main contributor and equity funds making a growing contribution."
-ENDS –
For further information please contact:
Royal London
Alasdair Buchanan
Group Head of Communications
Tel: 0131 456 7133
Polhill Communications
John Coles
Mobile: 07836 273 660
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 Administration Services – 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 £32.9 billion. Group businesses serve around three million customers and employ 2,580 people (figures quoted are as at 30 September 2007).
2.New life and pensions business for 9 months to 30 September 2007
Equivalent figures for 2006 in brackets.All figures are in £ million.
(a)Present Value of New Business Premiums (PVNBP)
|
£ million |
Change |
|
|
Scottish Life |
1,105.5(1,091.4) |
+1% |
|
Bright Grey |
130.4(127.4) |
+2% |
|
Scottish Life International |
125.0(135.2) |
-8% |
|
Royal London* |
134.3(150.0 ) |
-10% |
|
Group Total* |
1,493.5(1,504.0) |
-1% |
(b)Annual Premium Equivalent (APE)
|
£ million |
Change |
|
|
Scottish Life |
152.0(147.0) |
+3% |
|
Bright Grey |
23.3(18.9) |
+23% |
|
Scottish Life International |
13.2(14.6) |
-10% |
|
Royal London* |
13.5(15.9) |
-15% |
|
Group Total* |
202.0(196.4) |
+3% |
* Excludes annuity business transferred to Prudential (2006 £62m)
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 9 months to 30 September 2007.Equivalent figures for the same period in 2006 are in brackets.All figures are in £ million.
|
£ million |
Change |
|
|
RLAM |
2,319.3(737.7) |
+214% |
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.
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
Subordinated debt interest payment date15 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.