New Business Results For 12 Months Ending 31 December 2007
Friday, 1 February 2008
Royal London, the UK's largest mutual life and pensions company, has announced new business results for the 12 months ending 31 December 2007.
Key Points:
Total new life and pensions business (on a like for like* PVNBP basis**) for the Group, down 1% at £1,903 million (£1,919m in 2006).
- Scottish Life new business down 1% at £1,415m (£1,425m in 2006)
- good growth in individual pensions, up 10% to £711 m
- Group pensions down 15% at £489m (due to fall in single premiums and transfer values
- Bright Grey new business up 12% at £173m
- Scottish Life International new business unchanged at £165m
- Royal London-branded new business down 14%, on a like-for-like basis*, at £150m
- Royal London Asset Management (RLAM) gross new business (excluding external cash mandates) up 113% to £2,620m
* Excludes annuity business transferred to Prudential (2006 £74m)
**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 results, Mike Yardley, Group Chief Executive at Royal London, said:
"These are satisfactory results as we continue our strategy of focusing on profitable new business. This is most clearly demonstrated at Scottish Life where we have grown our individual pensions business whilst declining to compete aggressively in the cut throat group pensions market.
"Bright Grey had a very good year, especially when viewed against a background of the downturn in the mortgage market and the continuing tough conditions for sales of protection products across the market. Bright Grey's value based proposition to advisers differentiates them from the competition. During the year Bright Grey ran very successful marketing campaigns for mortgage-related business and for family protection.
"Looking forward, we are confident that Bright Grey can build on this success by further enhancements to its proposition and developing its business, for example by launching into the individual corporate protection market.
"Scottish Life achieved strong growth in the individual pension market following the launch in December 2006 of Pensions Portfolio, which includes SIPP options. In the last quarter of 2007, Scottish Life launched an Income Release facility within Pension Portfolio, and this has been receiving strong interest from advisers. Scottish Life's 'Financial Advisers' Fee' – a form of Customer Agreed Remuneration – continues to be used extensively by IFAs, with around 90% of new individual business now being written on a "fee based" approach.
"The Group Pensions market continues to be characterised by the high initial commissions being paid by some product providers, although there have been increasing signs that this has begun to change. We have made it clear that we will not compete on these terms as we remain focused on writing new business that we believe has good potential for being profitable. Much of the apparent market growth for Group Pensions is, in our view, illusory with existing business being switched among product providers.
"After a slow first half to the year, Scottish Life International saw a significant improvement in the second half and has matched the excellent performance of 2006. Legislative uncertainties in the UK and Germany adversely affected new business especially in the early part of the year. However, with improvements made to the product range, to IT capabilities and expansion into the Middle and Far East, we are confident on the outlook for 2008.
"RLAM had an excellent year securing £2.6bn of new assets across a range of client groups, more than double the gross sales achieved in 2006. The majority of this new business came from institutional clients such as corporate pension funds, local authorities and universities, and a string of industry awards helped confirm our status as a leading fixed interest provider. RLAM strengthened its equity product range during the year, launching two new actively managed funds and delivering some strong performance for investors.
"Royal London's cash management businesses, RLCM and RLAM (CI) also had a very strong year, with a net increase in external funds under management of £498m during 2007."
Appendix - Analysis of New Business Results (2007)
- 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: 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
- RLAM – fund management
- RLAS – life and pensions administration
- Fundsdirect / Ascentric – funds supermarket; Wrap platform
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £33.1 billion. Group businesses serve over three million customers and employ 2,620 people.(Figures quoted are as at 31 December 2007)
2.Key dates
- Financial results
28 March 2008
- Annual General Meeting
Royal London AGM - 20 May 2008
- Subordinated debt interest payment date
Royal London subordinated guaranteed notes - 15 December 2008
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. Royal London branded sales relate primarily to business arising from in-force policies. These were originally sold through the direct sales channel, which was closed in 2004.
5. 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.