New Business Results for 6 months ending 30 June 2008
Thursday, 7 August 2008
Royal London, the UK's largest mutual life and pensions company, has announced continued growth in new business for the half year to end June 2008.
Total new life and pensions business (on a PVNBP* basis) for the Group increased by 6% to £1,063 million (£1,006m in the equivalent period in 2007)
- Scottish Life new business* up 4% to £779 million (£747m in 2007)
- Bright Grey new business* down 12% to £80 million (£91m in 2007)
- Scottish Life International (SLI) new business* up 4% to £79 million (£76m in 2007)
- Royal London-branded new business* up 23% to £115 million (£93m in 2007)
- Royal London Asset Management (RLAM) gross new business down 32% to £1,025million (excludes external cash mandates)
- Fundsdirect/Ascentric net new funds under administration £113 million.
* 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.
Group total new business figure includes Scottish Provident International Life Assurance new business from the date of transfer to Royal London Group (3 June 2008)
Commenting on the new business announcement, Mike Yardley, Group Chief Executive at Royal London, said:
"I am very pleased that we have increased profitable new business levels at a time when the economic environment is continuing to deteriorate.
"Despite the difficulties faced by UK consumers, Scottish Life has achieved increased business levels. This is due to the quality of our products and service and has been achieved despite our decision not to follow some of our competitors who are continuing to offer high, old style, commissions.
"The recent economic volatility, and the impact this has had on the property market, has graphically highlighted one of the main dangers in relying on residential property to fund retirement income. We expect that greater awareness of the benefits of pension plans will help sustain sales in the medium term.
"At the end of last year, Scottish Life launched a new Income Release product which has proved very popular. Income drawdown sales volumes are up 80% in APE terms compared to the same period in 2007. The momentum this has generated has helped Scottish Life become one of the leading providers in this sector of the market.
"As anticipated, our protection business has been affected by the dramatic slowdown in the mortgage market. However we continue to be confident about the potential for this market and are working with IFAs to develop new channels to maximise the opportunities to sell protection.
"Earlier this year Bright Grey launched its own expert underwriting system which has resulted in reduced evidence costs, reduced workload and a higher proportion of applications completing. Having expert underwriting means Bright Grey now has a versatile platform which allows it to develop and strengthen its proposition in existing and new markets.
"Scottish Life International (SLI) has delivered new business ahead of 2007 levels, despite current market difficulties. Performance has been driven by an encouraging level of international portfolio bond sales and a steady flow of business into SLI's offshore bond through the Nucleus wrap platform, where it is the exclusive provider. We completed the acquisition of Scottish Provident International on 3 June and the integration of that business is on track. Although cautious about the short term outlook, we believe that the combined business is well placed to continue to grow profitably.
"Despite market turbulence, RLAM continues to attract strong new business flows, building on the success of the last few years and the reputation of its highly experienced team. Sales volumes continue to be weighted strongly to fixed income business from both existing and new clients. However, we are also seeing positive interest in RLAM's equity offering, which has excellent performance in a number of specialist funds. Four of RLAM's fund managers have been awarded Citywire ratings, which is recognition of the quality of the team.
"The main focus for the Ascentric Wrap business has been to strengthen the administration and systems capabilities. Further recruitment is planned in H2, along with increased resource in sales and marketing. There will also be further developments in the 'white label' market."
Mike Yardley added:
"Looking forward, we anticipate that economic conditions will remain difficult for the rest of the year and well into 2009. However we remain focused on writing profitable new business, and will not sacrifice profit for market share. The recent acquisitions, of the Scottish Provident businesses and Phoenix Life Assurance, give us strong positions in both the international and protection markets, and Scottish Life is competing successfully in the pensions market.
"I believe the Group is well placed to continue to grow new business and profits over the long term."
Appendix: Analysis of New Business Results – Life and Pensions
- 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: 020 7655 0530
Mobile: 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 Provident -- UK protection market
- Phoenix Life Assurance Limited – provides life, investment and pensions products to Abbey's national branch network
- Scottish Life International – offshore investment markets
- Scottish Provident 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 £32.4 billion. Group businesses serve around three million customers and employ 2,750 people. Figures quoted are as at 30 June 2008, prior to the acquisition of Scottish Provident's new business capabilities (in respect of individual life protection business)and of Phoenix Life Assurance Limited.
2. New life and pensions business for 6 months to 30 June 2008
Equivalent figures for 2007 in brackets. All figures are in £ million.
(a) Present Value of New Business Premiums (PVNBP)
|
|
£ Million |
Change |
|---|---|---|
| Scottish Life | 778.6 (746.8) | +4% |
| Bright Grey | 79.5 (90.7) | -12% |
| Scottish Life International | 79.0 (75.7) | +4% |
| SPILA* | 11.3 | n/a |
| Royal London | 114.6 (93.1) | +23% |
| Group Total | 1,063.0 (1,006.3) | +6% |
(b) Annual Premium Equivalent (APE)
£ Million |
Change |
|
|---|---|---|
| Scottish Life | 107.0 (103.9) | +3% |
| Bright Grey | 14.6 (15.9) | -8% |
| Scottish Life International | 8.6 (8.1) | +4% |
| SPILA* | 1.1 | n/a |
| Royal London | 11.9 (9.4) | +27% |
| Group Total | 143.0 (137.3) | +4% |
* Scottish Provident International Life Assurance (SPILA) – new business from the date of transfer to Royal London Group (3 June 2008)
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 / Wrap
Gross new business for 6 months to 30 June 2008.Equivalent figures for 2007 in brackets. All figures are in £ million.
£ Million |
Change |
|
|---|---|---|
| RLAM | 1,024.6 (1,514.9) | -32% |
| Fundsdirect / Ascentric | 113.2 (n/a) | n/a |
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.
6. Financial Calendar
Half year 2008 unaudited financial results 30 September 2008
Quarter 3 2008 new business 31 October 2008
Subordinated debt interest payment date 15 December 2008
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.
Appendix: Analysis of New Business Results – Life and Pensions