TIDM32RM TIDM41BM
RNS Number : 0970E
Royal London
02 November 2015
Press Release
2 November 2015
RECORD NEW BUSINESS PERFORMANCE AT ROYAL
LONDON
Royal London, the UK's largest mutual life, pensions and
investment company, presents its new business results for the nine
months ending 30 September 2015.
Financial highlights (figures in brackets show movement compared
to Q3 2014)
-- New life and pensions business (on a PVNBP basis - see
editor's notes for details) GBP4,861 million (+35%) reflecting
excellent sales in pensions (due to pension freedoms and auto
enrolment) and in protection products.
- Main product line performance includes:
o Group Pensions GBP1,916m (+11%)
o Individual Pensions GBP1,442m (+52%)
o Drawdown GBP966m (+67%)
o Protection Intermediary GBP362m (+51%)
o Consumer GBP116m (+330%)
-- Total Group funds under management of GBP83.1bn at 30
September 2015, up 1% (GBP82.3bn at December 2014).
-- Year-to-date all seven of the large mixed asset funds managed
by Royal London Asset Management have outperformed their
benchmarks. Over three years six of the seven have
outperformed.
-- The most popular model portfolio in our Pensions Governed
Portfolio range has delivered 2% above benchmark over the last
three years. Over one year return has been in line with
benchmark.
Business highlights
Royal London has delivered strong growth in new business volumes
year on year.
By business, the key highlights were:
-- Workplace Pensions remain buoyant on the back of strong
demand from advisers and employers for our service-led proposition
and popular governed investment solution.
-- Individual Pensions are thriving on back of the general
enthusiasm for pensions following the pension freedoms and the
increased flexibility customers have in how they access their
pension. Income Release continues to be the market-leading
simplified drawdown proposition for advised clients with new
business up 67% on the same period in 2014.
-- Protection Intermediary new business volumes were up 51%
(GBP362m) on the same period last year. Protection continues to
build momentum as we move towards bringing Bright Grey and Scottish
Provident together under a single Royal London brand. September saw
the launch of a new underwriting comparison service pilot with
UnderwriteMe and further improvements to the Bright Grey critical
illness product.
-- Consumer new business volumes more than quadrupled (up 330%)
from GBP27m on 30 September 2014 to GBP116m on 30 September 2015,
reflecting strong growth in the direct to consumer and funeral plan
business lines. The flagship term assurance products received a 5
star rating from Defaqto during the quarter under review. Both term
assurance and Over 50s products now have 5 star ratings and provide
market-leading value and ease of purchase. The growth in new
business in the Consumer channel reflects investment in direct
marketing capabilities and a full online presence.
-- Royal London Asset Management (RLAM) continued to perform
well, attracting new business with gross inflows of GBP2.5bn
(GBP2.9bn in the equivalent period in 2014). Wholesale net inflows
of GBP545m were predominantly into UK Equity and Fixed Income
Credit funds.
-- The Ascentric wrap platform saw gross sales of GBP1.9bn at 30
September 2015 (GBP1.6bn on 30 September 2014) a 19% improvement.
Converting platform assets into a retirement income has become a
major feature of the market. Strong sales performance resulted from
IFAs utilizing the Ascentric offering, whilst our white label
business expanded through the creation of an Enhanced Retirement
Account product in conjunction with Partnership.
Phil Loney, Group Chief Executive of Royal London, said:
"This is another strong set of results with all life and
pensions businesses putting in excellent new business performance.
Sales from our popular life assurance and pension range have more
than doubled over the last four years and total group assets under
management are up 120% over the same period.
Royal London Asset Management and Ascentric had a good quarter
following excellent performance in the equivalent period of 2014.
RLAM continues to attract new business with gross inflows of
GBP2.5bn (GBP2.9bn in 2014).
We have now come through the initial period of pension freedoms
and we have seen new trends emerging in the market. Clearly a lot
more advisers are recommending income drawdown for their clients
and we have seen advisers choosing to transfer their clients into
our flexible personal pension arrangement in anticipation of
exercising freedoms at some point in the future.
Our workplace pension offering remains one of the most popular
in the market. As the focus now moves to smaller employers we
remain committed to supporting an even larger number of employers
and their IFAs to provide high quality workplace pension solutions
whilst recognizing the lower workplace pensions PVNBP that will
result over the next 2 years from this smaller scheme profile.
We believe that all pension providers have a duty to think
through how to encourage customers to engage further with their
pension arrangements and to save more in the future in order to
improve their retirement income. Just outside the review period, we
announced the extension of Royal London's Profit Share
arrangements. From 2016 all eligible Royal London pension
customers, whether they enrolled through the workplace, a personal
pension or a drawdown arrangement will share in the profits of
Royal London. This is over and above the investment return on their
pension fund. Consumer research by Harris indicates that nine in
ten of the UK population find the idea of profit sharing either
"extremely appealing" (27%), "very appealing" (33%) or "appealing"
(30%). Almost half (47%) of those currently in a defined
contribution workplace pension would "definitely" or "very likely"
increase their contributions if profit sharing was introduced.
Creating a healthy savings habit amongst the UK public must be
the ultimate goal of all who really care about preserving decent
living standards in later life. This is the rationale for Royal
London's strong opposition to the proposal that income saved into
pensions should be taxed like an ISA. Nobody should be asked to
save for 30+ years without absolute certainty that savings made
from their income will not be taxed twice. The public will not
trust future cash strapped governments to honour any current
promise of a tax free ISA style income in retirement. We urge the
Treasury to focus its review of Pension Tax Incentives on reforming
the current " up front " tax relief system to make it simpler to
understand and fairer for all, considering proposals such as a
single rate of tax relief on a " 2 for 1 " basis.
Although automatic enrolment has been running for 3 years the
process is far from complete as the majority of smaller firms have
yet to establish a workplace pension. Treating pensions like an ISA
risks undermining public confidence in long term savings and
derailing all of the achievements to date.
-ENDS-
For further information please contact:
Gareth Evans 0207 506 6715
Gareth.evans@royallondon.com 07919 170069
Editor's notes:
1) Royal London is the largest mutual life, pensions and
investment company in the UK, with Group funds under management of
GBP83.1 billion. Group businesses serve around 5.3 million
policyholders and employ 2,965 people. (Figures quoted are as at 30
September 2015).
The Group is currently moving all of its UK and Ireland life,
pension and investment businesses under a new version of the Royal
London brand. The Group's independent wrap platform will remain
branded Ascentric.
2) Present value of new business premiums (PVNBP) is the total
of new single premium sales received in the year plus the
discounted value, at the point of sale, of the regular premiums the
Group expects to receive over the term of the new contracts sold in
the year.
3) Independent online research conducted for Royal London by
Harris Interactive Ltd, of a UK nationally representative sample of
1,003 adults by age, gender and region, aged 18 or over, from
16(th) and 21(st) September 2015, showed that:
-- Over half, 51% were familiar with the concept of a mutual company.
-- 91% found the concept of ProfitShare extremely /very or appealing.
-- 3 in 10 (29%) UK adults currently working stated a preference
for their workplace pension provider to be a mutual compared with
only 18% for a large financial provider.
-- Over a third (37%) of those not currently in a workplace
pension scheme said that they would definitely or very likely join
a company pension scheme if the pension provider shared some of its
profits with customers.
4) Financial Calendar
30 November 2015 RL Finance Bonds No 2 plc Subordinated debt interest payment date
15 December 2015 RL Finance Bonds plc Subordinated debt interest payment date
10 February 2016 Interim management statement and fourth quarter new business figures
30 March 2016 Financial results for 2015
31 March 2016 Conference call on Financial results for 2015
5) Forward looking statement
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.
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