New Business Results – 3 months ending 31 March 2008
Friday, 2 May 2008
Royal London, the UK's largest mutual life and pensions company, has announced new business figures for the first quarter of 2008.
- Total new life and pensions business (on a PVNBP* basis) up 5% to £417 million (£398m in the equivalent period in 2007)
- Scottish Life new business up 9% to £337m (£310m in 2007)
- Bright Grey new business down 19% to £38m (£47m in 2007)
- Scottish Life International new business up 20% to £36m (£30m in 2007)
- RLAM (excluding cash mandates) gross new business level at £620m (£620m in 2007)
- Fundsdirect and Ascentric new assets under administration £60m (£42m in 2007)
- Group funds under management £32.6 billion as at 31 March 2008.
* See Editor's notes for explanation of PVNBP basis.
Commenting on the new business announcement, Mike Yardley, Group Chief Executive at Royal London, said:
"Considering the economic environment and the increasingly competitive markets in which we operate, these are very satisfactory results. I am particularly pleased that Scottish Life has achieved increased levels of business in both individual and group pensions. Our international business has also delivered healthy growth, with 20% overall increase in business and UK operations performing particularly well.
"In line with other major product providers our protection business has been impacted by the slowdown in the mortgage market. However the potential market for protection is huge and we are working with IFAs to help them develop and grow their protection businesses.
"We report our new business on a "Present Value" basis as we believe these are the relevant ones on which to focus. Unlike APE, which is used by some companies but which is simply a formula to show total new business, the "Present Value" approach makes allowance for expected persistency and is therefore a much better reflection of the real value of the new business to the Group.
"Scottish Life total sales are up by 9% which is a very good result in a challenging market, where several competitors continue to pay high initial commissions. We will not operate on those terms and we remain focused on writing new business that we believe has good potential for being profitable.
"Scottish Life launched the new Income Release facility at the end of last year and it has been well received by the market. Initial sales are excellent with volumes up by over 30% compared to income drawdown sales for the same period in 2007. Overall sales for individual business are up 6%.
"Corporate pension sales are up 10%, demonstrating that our policy of seeking profitable business, in a market dominated by the traditional commission model, can be successful.
"The effect of the credit crunch on the mortgage market has inevitably impacted on the sale of protection products and, along with the rest of the market, Bright Grey has reported a decline in new business. Despite tough trading conditions Bright Grey has continued to invest heavily in its sales and marketing activities. It has significantly improved the protection proposition, through the addition of business protection and expert underwriting, and have also expanded its sales team.
"For Scottish Life International, as expected, the German market presents some challenges after new legislation was introduced at the beginning of this year. However SLI's overall international business continues to grow.
"RLAM has enjoyed another good start to the year, with impressive gross new business figures of £620 million for the quarter. RLAM's highly rated fixed income team continues to attract significant levels of new business from institutional and wholesale clients and we have also been pleased to see some very strong performance coming through in a number of RLAM's equity funds.
"The Group's newest business, Fundsdirect, which operates the Ascentric wrap platform, enjoyed a good first full quarter with an increase in new business of 43%. The main focus since acquisition has been on business planning for enhanced IT functionality and proposition development. The operations, marketing and sales teams have also been strengthened. The wrap market continues to grow at a rapid rate, confirming the potential we believe exists in the Fundsdirect and Ascentric businesses."
Mike Yardley added:
"Looking forward, there is no doubt that economic uncertainty will persist for the rest of the year and perhaps into next year. We will not change our approach to new business and will continue to focus on profitable business. This may mean that in the short term we will lose market share as others, who are under greater pressure to increase sales every quarter, continue to write business of, at best, questionable profitability."
Appendix: New Business Results Q1 2008
-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:
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 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 £32.6 billion. Group businesses serve around three million customers and employ 2,630 people (figures quoted are as at 31 March 2008).
2.Key Dates
Financial Results
- Quarter 2 2008 new business, 7 August 2008
- Half year 2008 interim financial results, 30 September 2008
- Quarter 3 2008 new business and Interim Management Statement, 20 November 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. 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: New Business Results Q1 2008