New Business Results for 6 months ending 30 June 2010
28 July 2010
Strong overall new business performance as markets remain difficult
Royal London, the UK’s largest mutual life and pensions company, today announces its new business results for the 6 months ending 30 June 2010.
Total new life and pensions business (on a PVNBP* basis) increased by 35% to £1,615 million (2009 £1,194m) mainly driven by continuing very strong performance from Scottish Life as well as a healthy increase at Royal London 360°.
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Scottish Life new business up 62% to £1,127m (2009 £694m) - Royal London 360° new business up 20% to £153m (2009 £127m)
- Bright Grey new business down 21% to £75m (2009 £96m)
- Scottish Provident new business down 17% to £95m (2009 £114m)
- Royal London (retail) new business down 6% to £50m (2009 £53m)
Asset Management / Administration
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RLAM (excl cash mandates) net new business up 178% to £700m (2009 £252m) - Ascentric new assets under administration up more than fourfold to £552m (2009 £120m)
* See Editor’s Notes for an explanation of the PVNBP basis.
Commenting on the results, Mike Yardley, Group Chief Executive at Royal London, said:
“In the face of difficult markets the overall level of new business achieved is very good. I am particularly pleased that Scottish Life is continuing to attract record levels of business and that our international business, Royal London 360°, is performing well.
“Both RLAM and Ascentric continue to attract new funds at a high rate; a reflection of excellent performance and quality of service.
“Protection new business continues to be hard hit by the downturn in the property market and the harsh economic environment. Life assurance is, unfortunately, viewed by many as a cost item that can be dispensed with. Both our protection brands have been successful in developing new business in other areas of the protection market and I remain confident that the long-term prospects remain positive.”
Business Unit Reviews
Scottish Life – pensions
Scottish Life followed an outstanding first quarter with another set of excellent new business figures. Individual pension new business was 92% higher than in the first half of 2009. While some of this growth reflects the first quarter ‘spike’ caused by the change in the minimum pension age, second quarter new business was 53% up on the equivalent 2009 figure. This demonstrates the considerable momentum that Scottish Life has built with a market-leading proposition.
In the group pensions market, there are further signs that the FSA’s stance against the use of the traditional commission model may be having the desired effect, although there is still evidence of market distortion from the use of provider-driven commission. In these circumstances, Scottish Life’s growth in new business of 26% for the half year (and 30% for the second quarter) is very satisfactory.
Bright Grey and Scottish Provident – protection
Traditional trigger points for people buying protection have been getting married, buying a house and having a child. With the housing market continuing to be slow, and many families financially constrained, protection new business continues to suffer.
A notable success story for Bright Grey, which helped offset some of the downturn of traditional protection sales, is the growth of business protection sales on the back of its competitive ‘relevant life’ policy.
Scottish Provident has promoted its position as the pioneer of the menu plan and the advantages of a ‘multi benefit’ approach. It has also used this opportunity to carry out an extensive re-price, underlining the strength of its overall proposition.
Royal London 360° – international markets
Royal London 360° had an encouraging 6 months with stronger sales than anticipated of higher-margin regular premium business. Sales of the international portfolio bond (PIMS) have continued to grow as has distribution via Wrap platforms in the UK.
During the second quarter two new products were launched. Quantum is a regular premium savings plan for international markets. The Select Discounted Gift Trust, used in conjunction with the Select Investment Bond, assists with UK Inheritance Tax planning.
Royal London (retail) – bancassurance distribution
The continuing depressed mortgage market has been reflected in lower sales volumes of traditional mortgage-related protection. However the introduction of two new products, an online non-advised protection plan and a Whole of Life product (Guaranteed Lifetime Plan), is expected to improve new business in the second half of the year.
In particular, the recent launch of the Guaranteed Lifetime Plan, with guaranteed acceptance exclusively for Bank Santander customers, is already proving to be a popular addition to the range of protection products available through Santander and Alliance & Leicester branches.
RLAM – asset management
Our asset management business has achieved a significant increase in new business across the full range of funds. Corporate bond performance has been particularly strong.
Our equity team continues to be recognised by external data providers, with three of our managers earning AAA Citywire ratings for their risk-adjusted three year performance to the end of June. We are one of only a handful of asset management businesses to have three AAA rated managers.
In May we converted our Exempt Property Unit Trust to the new PAIF (Property Authorised Investment Fund) structure. This was the first such fund conversion in the UK since this fund type was established by HMRC and the FSA. Property is an asset class in which we excel and we will be looking to attract new business into this more tax-efficient fund, now known as the Royal London Property Fund, in the months ahead.
Ascentric – Wrap platform
Ascentric had a record first half performance and total assets under administration at 30 June were £1.67 billion, up 129% on the same time last year. The results were driven by more than 100 new adviser firms registering on the platform during the period, contributing to the inflow of 5,000 new customers.
With economic uncertainties remaining, we are cautious about the rest of the year. However, with large numbers of adviser firms looking to incorporate a transparent platform as part of their client proposition, the business is in a good position to continue to grow.
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For further information please contact:
Royal London
Alasdair Buchanan, Group Head of Communications 07919 170 413
Polhill Communications
John Coles 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
- RLAS – life and pensions administration
- Fundsdirect / Ascentric – fund 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 £39.1 billion. Group businesses serve around 3.4 million customers and employ 2,890 people. Figures quoted are as at 30 June 2010.