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Royal London Financial Results for the 12 months ended 31 December 2007

Friday, 28 March 2008

Royal London, the UK's largest mutual life and pensions company, has announced its financial results for 2007.

  • Operating profit before tax £147 million, up from £116m in 2006 -- figures on a European Embedded Value (EEV) basis
  • EEV profit before tax £181m, down from £431m in 2006.  This reduction reflects, to a considerable extent, adverse investment market conditions, particularly in the second half of 2007
  • New business contribution £61m, up from £47m in 2006 -- figures grossed up at 30% tax for comparability with proprietary companies
  • Embedded value £2,164m at 31 December 2007 (£1,991m at end 2006)
  • Transfer to the Unallocated Divisible Surplus £130m, down from £429m in 2006, again reflecting adverse investment conditions during 2007
  • Funds under management £33.1 billion at 31 December 2007 (£30.8bn at end 2006)

Commenting on the results, Mike Yardley, Group Chief Executive of Royal London, said:

"These results reflect the financial strength of Royal London and our focus on profitability.  The best indicator of the underlying performance of the business is the EEV operating profit, which shows a healthy increase of 27% over 2006.  I am also delighted with the 30% increase in new business contribution to profits.  It is clear that some of our competitors are willing to write unprofitable business.  We will not follow them and are proving that we are able to continue to increase new business in many market sectors whilst remaining focussed on profitability."

Business developments

  • Group continues to be well capitalised; excess over regulatory capital £1.9bn
  • New asset management mandates more than doubled to £2.6bn
  • Completion of acquisition of Fundsdirect and the Ascentric Wrap platform
  • Planned acquisition of certain Resolution businesses and assets well underway

Mike Yardley commented:

"The Resolution transaction will strengthen Royal London's position in the protection market in the UK and also our international operations.  This once again demonstrates that, as a well run and financially strong mutual company, we can make strategic acquisitions as and when good opportunities arise, so as to grow value for the benefit of members and other policyholders.

"Looking forward, our strategy remains unchanged.  We will continue to focus on our core markets -- pensions, protection, international and asset management – and on writing new business we believe will be profitable.

"Although there will undoubtedly be challenges to be overcome from turbulent economic conditions, Royal London is well placed to continue to grow profitably."

Appendix: Further Information

- ENDS -

For further information please contact:

Royal London
Alasdair Buchanan
Group Head of Communications
Tel:  0131 456 7133
Mobile: 07919 170 413

Polhill Communications
John Coles
Tel:  07836 273 660

Editor's Notes:

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
  • Royal London Asset Management – fund management
  • Royal London Administration Services – 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).

Appendix: Further Information