Interim Management Statement and New Business Results for 9 months ending 30 September 2008
Friday, 31 October 2008
Royal London, the UK's largest mutual life and pensions company, has published its Interim Management Statement and new business results for the nine months ending 30 September 2008.
- Total new life and pensions business for the Group (on a PVNBP* basis and including recent acquisitions) up 14% at £1,710 million (£1,495m in the equivalent period in 2007).
- Total new life and pensions business for the Group (on a like-for-like**, PVNBP* basis) up 7% at £1,592m (£1,495m in the equivalent period in 2007)
- Scottish Life new business up 6% to £1,169m (£1,106m in 2007)
- strong growth in Individual pensions, up 22% to £671m
- Group pensions down 17% at £319m
- Bright Grey new business down 3% to £127m (£130m in 2007)
- Scottish Life International (SLI) new business up 3% at £129m (£125m in 2007)
- Royal London-branded new business up 25% at £168m (£134m in 2007)
- Royal London Asset Management (RLAM) gross new business (excluding external cash mandates) down 42% to £1,349m (£2,319m in 2007)
- Fundsdirect/Ascentric net new assets under administration £145m.
In addition, £142m of new protection business was written through the Scottish Provident business Royal London is acquiring. (See Corporate update below)
*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 are included in the Editor's Notes.
**Excludes new business from Scottish Provident International (acquired 3 June 2008) and Phoenix Life Assurance Limited (acquired 1 August 2008) which provides products for distribution through Abbey's national branch network.
Commenting on the results, Stephen Shone, Group Finance Director at Royal London, said:
"This is a very good set of results in challenging market conditions, and they confirm Royal London's considerable strengths. We continue to attract profitable new business by focussing on a proven business model, backed by the Group's financial strength.
"Our capital position remains strong, with Working Capital (based on the FSA's Realistic Balance Sheet methodology) of £1.35 billion at the end of September. Naturally, given recent market volatility, we regularly test the company's resilience to a range of market conditions.
"Clearly economic conditions will remain difficult for some time. However the recent acquisitions of the Scottish Provident businesses and Phoenix Life Assurance Limited, give us strong positions in both the international and protection markets. Overall, the Group is well placed to continue to grow new business and profits over the long term."
Commenting on the performance of the Group's specialist businesses, Group Chief Executive Mike Yardley said:
"Scottish Life again performed strongly in the Individual pensions market, most notably in the income drawdown sector. A substantial part of the Group pensions market continues to be characterised by the use of high, old-style, commissions. We have consistently made it clear that Royal London will not chase business volume or market share by offering such terms, which we believe will be loss-making in the majority of cases.
"The significant slowdown of the mortgage market has been well publicised, and it has had an inevitable effect on the sales of mortgage-related protection business. Against this background, Bright Grey has performed well, with continuing focus on enhanced technology and service excellence for customers and advisers alike.
"Scottish Life International (SLI) recorded a 3% increase in new business compared with 2007, which is noteworthy given the parallel, significant work during the third quarter to combine SLI with Scottish Provident International.
"Given the very challenging investment conditions since the start of the year, RLAM's gross new business achievement of £1.3bn represents a strong performance from a highly regarded team. The fixed income proposition continues to attract most business, from both existing and new clients.
"The Group's cash management businesses, Royal London Cash Management (RLCM) and Royal London Asset Management, Channel Islands (RLAM C.I.), have seen significant inflows during the recent market volatility, with their 'safety first' approach proving very attractive to a range of institutional clients.
"The main focus for the Ascentric Wrap business has been to strengthen the administration and systems capabilities, with additional resource also secured for sales and marketing. Growth in new assets under administration has inevitably been affected by market volatility, but we are satisfied with the good progress that has been made in establishing the framework for substantial future growth."
Corporate update
During the period, Royal London continued the process of acquiring former Resolution businesses and assets. On 1 August 2008, Royal London completed the acquisition of Phoenix Life Assurance Limited and of Scottish Provident's new business capabilities, in respect of individual life protection business.
The remaining assets to be acquired comprise the majority of the in-force protection business of Scottish Provident and Scottish Mutual Assurance. These assets are to be transferred to Royal London by means of schemes under Part VII of FSMA 2000. It is expected that such schemes will complete by the end of 2008. The value of the assets transferred will include the value of new business written during 2008.
These acquisitions, in addition to the earlier acquisition of Scottish Provident International, will accelerate the Group's progress against a number of strategic objectives. Our presence in the protection sector will be greatly enhanced; we will broaden our delivery to overseas markets, including access to the Hong Kong market; we will create greater operational economies of scale; and we will realise financial synergies from the combination of funds.
As an indication of the potential which Royal London believes can be realised, the new individual life protection business written in the first nine months of 2008 through the Scottish Provident business we are acquiring was £141.7 million on a PVNBP basis (£25.8m on an APE basis).
Appendix: New Business Release Oct 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 quality 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
- RLCM – specialist cash and liquidity management for UK onshore clients
- RLAM C.I. – specialist cash and liquidity management for offshore clients
- 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 £34.5 billion. Group businesses serve around 3.5 million customers and employ 2,900 people. Figures quoted are as at 30 September 2008.