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Royal London maintains position among top with profits payouts

Monday, 17 March 2008

Royal London, the UK's largest mutual life and pensions company, has today announced bonuses for 2007 on its with profits policies.  The announcement covers with profits policies written by Royal London, including those written under the Scottish Life brand since 1 July 2001.

Key Points

  • Royal London continues to deliver payouts which are among the best of the major providers
  • Annual bonus rates for Personal Pensions have increased
  • The benchmark 25-year payout on a Royal London £50 per month 25-year with profits endowment maturing on 1 January 2008 is £48,773[1], an annualised return of 8.4%, representing a real2 return of 4.9% p.a.
  • During 2007 the Royal London Fund recorded a return of 3.9%3 (before tax).

Commenting on today's announcement Royal London Group Finance Director Stephen Shone said:

"We have continued our policy of bringing payouts gradually into line with asset share while following the smoothing policies set out in our Principles & Practices of Financial Management (PPFM).  The result of the declaration is that Royal London customers continue to enjoy some excellent payouts."

Comparative Payouts

The following table, taken from the figures contained in other companies' own press releases, supports the assertion that Royal London's payouts are among the best of the major providers in the industry.  It shows comparative payouts on the benchmark 25-year £50 per month endowment savings policy.


Parent Co.

Brand/Original Insurer

2008

Royal London

Royal London

£48,773

Aviva

CGNU including GA

£47,045

Prudential

Prudential

£46,686****

Legal & General

Legal & General

£44,966***

Aviva

Commercial Union

£41,879

Scottish Widows

Scottish Widows

£40,685**

Aviva

Norwich Union

£40,545

Standard Life

Standard Life

£38,970**

Friends Provident

Main Series

£36,425

**maturity value as at 1 February 2008

***maturity value as at 1 March 2008

**** maturity value as at 1 May 2008

all other figures quoted are as at 1 January 2008

(Source: Royal London and companies' own press releases for all companies with over £10bn funds under management.  This list only includes companies which have announced a payout on their 25-year conventional with profits endowment policies.)

Commenting on the prospect for future returns, Stephen Shone continued:

"The investment outlook continues to be dominated by low inflation and interest rates.  I expect that the future headline returns on investments will be comparatively low by the standards of the last 25 or 30 years.

"Nevertheless the arguments for investing in real assets over the long term remain strong.  Over the long term, real assets - such as those backing our with profits fund - have delivered above inflation returns for investors.  Today's results show that the annualised return on a Royal London 25-year with profits endowment is 8.4%.  This represents an annualised real rate of return of 4.9% ie 4.9% over and above inflation."

Details of the bonus rates and payouts are given in the attached sheets.

Appendix: Royal London Tables to 17 March 08


-ENDS –


For further information please contact:

Royal London Group
Alasdair Buchanan
Group Head of Communications
Tel:  0131 456 7133

Polhill Communications
Nicola Pierce
Tel:  020 7655 0530

Editor's Notes:

1.Bonus Terms Explained

Conventional with profits

Premiums secure a guaranteed benefit (for example a guaranteed cash sum called the "sum assured" or a guaranteed pension).  An annual bonus is added each year to the guaranteed benefit and annual bonus already added.  A final bonus may also be added at the date of a claim on the policy.

The guaranteed benefits including annual bonus already added are not payable at face value when a policy is cashed in early.  Final bonus is not normally payable on cashing in although the amount paid may make some allowance for final bonus.

Final bonus is an additional bonus which represents the returns payable on a policy which have not already been provided by the addition of annual bonus.

Asset share is the actuarial term that describes the share of the overall with profit fund attributed to a specimen policy.  The asset share is calculated by accumulating the premiums paid less all applicable expenses and charges with the investment return credited to with profits business over the lifetime of the policy and allowing for any "miscellaneous" sources of profit or loss.

2  Additional information

Past performance is not a guide to the future.  Investment returns may fluctuate and are not guaranteed.  Future payouts can go down as well as up.

The figures quoted are only illustrative. An assessment of an individual's need must be confirmed and Key Features provided, together with a projection which is personal to an individual's circumstances, if a recommendation is made.


3  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
  • 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 around three million customers and employ 2,620 people.  (Figures quoted are as at 31 December 2007).


1.Based on a male aged 29 at the start of the policy.

2.In excess of inflation over the period.

3.Currently unaudited