Royal London Interim Financial Results
31 August 2010
Operating profit increases as markets remain challenging
Royal London, the UK’s largest mutual life and pensions company, has announced its financial results for the 6 months ended 30 June 2010.
Key Points
• European Embedded Value (EEV) operating profit up 3% at £111 million (H1 2009 £108m)
• Contribution from new life and pensions business up 24% to £51m* (H1 2009 £41m*)
• Total present value of new life and pensions business premiums up 35% to £1,615m (H1 2009 £1,195m)
• IFRS loss before tax of £2m (H1 2009 profit £18m)
• Insurance Groups Directive (IGD) capital surplus up 13% at £1,164m** (end 2009 £1,026m**)
* grossed up at 28% for current rate corporation tax, to aid comparability with proprietary companies
** IGD capital surplus cover 163% (end 2009 160%)
Commenting on the results, Mike Yardley, Group Chief Executive of Royal London, said:
“Increasing our EEV operating profit to £111m is a good result given the current economic environment. We continue to focus on our core markets – pensions, protection and asset management – and on writing profitable new business.
“The success of this strategy is demonstrated by the continuing significant improvements in the contribution from new business. Compared with the first 6 months of 2009, overall margins for new life and pensions business were fairly stable at 3.2%.
“The overall financial results reflect an improved operating profit; increased contribution from new business; and an underlying fund performance that was ahead of benchmark.
“Having a diversified portfolio of brands and products has served us well during the period. Protection new business continues to be hard hit by the downturn in the property market but this has been offset by our life and pensions business which delivered significant growth in the period.
“Overall, the Group’s business performance in the third quarter has been satisfactory, though any outlook must be tempered with some caution given the current economic environment.”
Download - Appendix (PDF, 288kb, A4, 22 pages)
-- ENDS –
For further information please contact:
Royal London
Alasdair Buchanan, Group Head of Communications
0131 456 7133
07919 170 413
Polhill Communications
John Coles
07836 273 660
Editor’s Notes:
1. IFRS basis of preparation
Being a mutual, Royal London’s IFRS results are similar to the result of a large with-profits fund. This structure is fundamentally different to that of proprietary companies where, typically, one ninth of the bonuses allocated to with-profits contracts is transferred to the shareholder result. It is this difference in structure that can give rise to greater volatility in the P&L results of a mutual company.
2. Royal London Group
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.
Our Purpose
Throughout our history ‘financial sense’ has been key to the products and services we have offered. It has been inherent in our approach to investment and we believe it will serve us, our members and our customers well in the years to come. We consider financial sense to be at the heart of all we do.
Our Brands
As part of our vision we're totally committed to a multi-brand strategy. The businesses that make up the Royal London Group are each expert in their own specialist market, yet they all share the same guiding principle - their unwavering commitment to financial sense.
Ascentric and Fundsdirect
Ascentric, and Fundsdirect, joined the Royal London Group in November 2007. Ascentric provides investment administration and consolidation services to financial advisers and their clients through their online service, the Ascentric Wrap, and to large distributors and product providers seeking a bespoke white label solution through Investment Fundsdirect Limited (IFDL).
Bright Grey
Bright Grey was launched in 2003 as a modern, forward-thinking protection specialist that offers flexible protection solutions that can be tailored to suit the customer’s budget and lifestyle.
Royal London 360°
Royal London 360° was established in 2009 through the coming together of Scottish Life International Insurance Company Limited and Scottish Provident International Life Assurance Company Limited. Royal London 360°, based on the Isle of Man, is the international division of the Royal London Group.
Royal London Administration Services
Royal London Administration Services look after 4million policies for 2million customers, including the majority of Royal London members and customers of Refuge Assurance and United Friendly which became part of the Group in 2000.
RLAM
Royal London Asset Management (RLAM) was set up in 1988 as the dedicated fund management arm of the Royal London Group. RLAM provides investment solutions for a wide range of external clients including pension schemes, fund of fund managers and private investors.
Royal London Retail
Royal London provides a simple range of protection and pension products through its Retail proposition for distribution through Santander UK.
Scottish Life
Scottish Life was founded in 1881 and acquired by Royal London Group in 2001. It is a pensions specialist with a reputation for innovation in products and services and only offers its products through independent financial advisers.
Scottish Provident
Scottish Provident has provided market-leading, award-winning products since 1837. Royal London acquired Scottish Provident in 2008. Scottish Provident is one of the leading providers of life, critical illness, income protection and unemployment cover.