New Business Results for 12 months ending 31 December 2009
Wednesday, 3 February 2010
Impressive new business performance in difficult market conditions
Royal London, the UK's largest mutual life and pensions company, today announces its new business results for the 12 months ending 31 December 2009. Despite the poor economic backdrop in 2009, operating businesses have performed well.
Total new life and pensions business (on a PVNBP* basis) £2,461 million (2008 £2,237m) an increase of 10%, including the effect of businesses acquired in 2008.
- Scottish Life new business up 4% to £1,578m (2008 £1,522m)
- Bright Grey new business down 8% to £167m (2008 £181m)
- Scottish Provident new business £203m (see note 1 below)
- Royal London 360° new business £237m (see note 2 below)
- Royal London (retail) new business £105m (see note 3 below)
- RLAS new business up 2% at £171m (2008 £168m)
- Asset Management/Administration
- RLAM (excl cash mandates) net new business down 20% to £589m (2008 £734m)
- Ascentric new assets under administration up 111% to £421m (2008 £199m)
Commenting on the results, Mike Yardley, Group Chief Executive at Royal London, said:
"These are excellent results overall, in what has been a very difficult year for the life and pensions industry. Our expectation is that the majority of companies will be reporting a marked decline in new business levels.
"Part of the overall increase relates to the former Resolution businesses we acquired in 2008. However, the 'like-for-like' comparisons which can be made show an increase of 2%, which is also an excellent relative performance, given the prevailing market conditions. In particular, to increase pensions new business in such a difficult year is an outstanding result. The performance of the businesses acquired during 2008 is also very encouraging."
The Group's estimated IGD surplus at 31 December 2009 was £1,032 million (2008 £773m), representing an increase of 34%.
Business Unit Review
Scottish Life - pensions
Scottish Life has had considerable success in the individual pensions market, increasing new business 18% over 2008 levels. The focus has been on delivering excellent service and quality investment solutions, allowing advisers to provide tailored solutions to clients at a cost effective price. There has been a strong uptake of Scottish Life's new investment proposition, the Governed Range, which was launched in January 2009.
The group pensions market continues to be difficult and there are still serious issues with unsustainable commission rates being paid by some companies, which distort the current market. However the FSA's Retail Distribution Review has made it clear that these practices must change, and we expect the group market in 2010 will focus more on the quality of the provider's overall proposition than on the levels of commission they are prepared to pay.
Bright Grey and Scottish Provident – protection
Both brands exceeded our expectations for new business, which is a great result in a recessionary environment and reflects their success in securing increasing volumes of non-mortgage-related business. Each business focussed on supporting advisers with targeted marketing material to support advisers and help them retain and grow their business. There was considerable interest generated by the 'High Wire Britain' and 'Reality Gap' reports, which highlighted consumer need for protection.
Royal London 360° - international markets
2009 was a difficult year for the offshore market generally, with sales down in most markets by around 40% at the half year, with single premium investments particularly badly hit. Despite this, the launch of the 360° brand at the beginning of 2009 has been successful. New business was attracted from key distributors of the regular savings product and a new protection product was also launched. In 2010,partnerships will be a key to the business strategy.
Royal London (retail)
Customer confidence in the Santander brand, and the extension of Royal London's involvement to include the Alliance & Leicester and Bradford & Bingley businesses, were catalysts for a strong end to the year. In 2010 we will continue to work with Santander to develop the propositions that are offered to customers through their enlarged UK branch network.
RLAM – asset management
2009 was 'a year of two halves' in investment markets. Extreme pessimism in the first few months gave way to renewed optimism thereafter. RLAM's investment performance was strong in 2009, helping to attract £589m of net new assets during the year. Fixed income continued to dominate new business flows, though sales of active and passive equity unit trusts and OEICs have been gaining momentum.
The cash management businesses performed well, though the strong growth of new business is hidden to an extent by a flow of funds back to clients allocating to other asset classes. With £6.2 billion of cash funds under management, Royal London continues to be the largest manager of segregated cash portfolios in the UK.
Ascentric – Wrap platform
Ascentric enjoyed a very strong year, driving total assets under administration to £1.15bn, up 94% on the 2008 result. The number of new financial advisers joining the platform rose 156% on 2008 levels, highlighting not only the attractiveness of the Ascentric proposition, but also the growing need among financial advisers to find a technology that meets the requirements of the Retail Distribution Review. The company also secured some notable white label deals in 2009, and these will support the growth of new assets in 2010.
Notes
1. The Scottish Provident protection business was acquired on 29 December 2008.
2. Royal London 360° is the international business formed in January 2009 by combining Scottish Life International and Scottish Provident International (the latter having been acquired on 3 June 2008). As a result it is not possible to provide an overall prior year "like-for-like" comparison.
3. Royal London (retail) is the renamed Phoenix Life Assurance business (previously known as Abbey National Life) which was acquired on 1 August 2008.
* See Editor's Notes for an explanation of the PVNBP basis.
Appendix 1: New Business: End Dec 2009
-- 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
Mobile: 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
- Royal London 360° – offshore investment markets
- RLAM – fund management
- RLCM – specialist cash and liquidity management for UK onshore clients
- RLAM (CI) – specialist cash and liquidity management for offshore clients
- RLAS – life and pensions administration
- Fundsdirect / Ascentric – funds supermarket; Wrap platform
Royal London also distributes life and pensions products through Santander's UK branch networks.
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £35.9 billion. Group businesses serve around 3.4 million customers and employ 2,800 people. Figures quoted are as at 31 December 2009.