RNS Number:6264T
Royal London
02 May 2008
Date : 2 May 2008
New Business Results - 3 months ending 31 March 2008
Royal London, the UK's largest mutual life and pensions company, has announced
new business figures for the first quarter of 2008.
* Total new life and pensions business (on a PVNBP(1) basis) up 5% to #417
million (#398m in the equivalent period in 2007)
* Scottish Life new business up 9% to #337m (#310m in 2007)
* Bright Grey new business down 19% to #38m (#47m in 2007)
* Scottish Life International new business up 20% to #36m (#30m in 2007)
* RLAM (excluding cash mandates) gross new business level at #620m (#620m
in 2007)
* Fundsdirect and Ascentric new assets under administration #60m (#42m in
2007)
* Group funds under management #32.6 billion as at 31 March 2008.
Commenting on the new business announcement, Mike Yardley, Group Chief Executive
at Royal London, said:
"Considering the economic environment and the increasingly competitive markets
in which we operate, these are very satisfactory results. I am particularly
pleased that Scottish Life has achieved increased levels of business in both
individual and group pensions. Our international business has also delivered
healthy growth, with 20% overall increase in business and UK operations
performing particularly well.
(1) See Editor's notes for explanation of PVNBP basis.
"In line with other major product providers our protection business has been
impacted by the slowdown in the mortgage market. However the potential market
for protection is huge and we are working with IFAs to help them develop and
grow their protection businesses.
"We report our new business on a "Present Value" basis as we believe these are
the relevant ones on which to focus. Unlike APE, which is used by some companies
but which is simply a formula to show total new business, the "Present Value"
approach makes allowance for expected persistency and is therefore a much better
reflection of the real value of the new business to the Group.
"Scottish Life total sales are up by 9% which is a very good result in a
challenging market, where several competitors continue to pay high initial
commissions. We will not operate on those terms and we remain focused on
writing new business that we believe has good potential for being profitable.
"Scottish Life launched the new Income Release facility at the end of last year
and it has been well received by the market. Initial sales are excellent with
volumes up by over 30% compared to income drawdown sales for the same period in
2007. Overall sales for individual business are up 6%.
"Corporate pension sales are up 10%, demonstrating that our policy of seeking
profitable business, in a market dominated by the traditional commission model,
can be successful.
"The effect of the credit crunch on the mortgage market has inevitably impacted
on the sale of protection products and, along with the rest of the market,
Bright Grey has reported a decline in new business. Despite tough trading
conditions Bright Grey has continued to invest heavily in its sales and
marketing activities. It has significantly improved the protection proposition,
through the addition of business protection and expert underwriting, and have
also expanded its sales team.
"For Scottish Life International, as expected, the German market presents some
challenges after new legislation was introduced at the beginning of this year.
However SLI's overall international business continues to grow.
"RLAM has enjoyed another good start to the year, with impressive gross new
business figures of #620 million for the quarter. RLAM's highly rated fixed
income team continues to attract significant levels of new business from
institutional and wholesale clients and we have also been pleased to see some
very strong performance coming through in a number of RLAM's equity funds.
"The Group's newest business, Fundsdirect, which operates the Ascentric wrap
platform, enjoyed a good first full quarter with an increase in new business of
43%. The main focus since acquisition has been on business planning for enhanced
IT functionality and proposition development. The operations, marketing and
sales teams have also been strengthened. The wrap market continues to grow at a
rapid rate, confirming the potential we believe exists in the Fundsdirect and
Ascentric businesses."
Mike Yardley added:
"Looking forward, there is no doubt that economic uncertainty will persist for
the rest of the year and perhaps into next year. We will not change our approach
to new business and will continue to focus on profitable business. This may mean
that in the short term we will lose market share as others, who are under
greater pressure to increase sales every quarter, continue to write business of,
at best, questionable profitability."
- 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. Royal London Group, is a specialist financial service provider. Its
businesses focus on those sectors of the market which value premium
propositions, operating through a number of brands:
* Scottish Life - UK pensions market
* Bright Grey - UK protection market
* Scottish Life International - offshore investment markets
* RLAM - fund management
* RLAS - life and pensions administration
* Fundsdirect / Ascentric - funds supermarket; Wrap Platform
Royal London is one of the stronger life and pension companies in the UK, and
has a strong track record for with-profits performance.
Royal London is the largest mutual life and pensions company in the UK with
Group funds under management of #32.6 billion. Group businesses serve around
three million customers and employ 2,630 people (figures quoted are as at 31
March 2008).
2. Key Dates
Financial Results
Quarter 2 2008 new business 7 August 2008
Half year 2008 interim financial results 30 September 2008
Quarter 3 2008 new business 20 November 2008
and Interim Management Statement
Annual General Meeting
Royal London AGM 20 May 2008
Subordinated debt interest payment date
Royal London subordinated guaranteed notes 15 December 2008
3. New business is reported on a Present Value of New Business Premiums (PVNBP)
basis. The PVNBP figures are calculated as new single premiums plus the expected
present value of new regular premiums evaluated at a risk free discount rate
allowing for expected persistency.
4. Forward looking statements
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.
As a result, Royal London's actual future financial condition, performance and
results may differ materially from the plans, goals and expectations set forth
in Royal London's forward-looking statements. Royal London undertakes no
obligation to update the forward-looking statements contained in this document
or any other forward-looking statement it may make.
Appendix: New Business Results
Analysis of New Business Results - Life and Pensions
3 months to 31 March 2008 v 3 months to 31 March 2007 - PVNBP basis
2008 2007 % Change
Regular Single PVNBP Regular Single PVNBP Regular Single PVNBP
Prems Prems Prems Prems Prems Prems
#m #m #m #m #m #m % % %
Scottish Life:
Pensions & Other 110.0 225.0 335.0 112.4 193.5 305.9 -2% 16% 10%
DWP rebates 2.3 2.3 4.5 4.5 -49% -49%
110.0 227.3 337.3 112.4 198.0 310.4 -2% 15% 9%
Bright Grey 38.0 38.0 46.7 46.7 -19% -19%
Scottish Life
International 4.5 31.3 35.8 2.9 26.9 29.8 55% 16% 20%
Royal London:
DWP rebates 5.7 5.7 10.8 10.8 - -47% -47%
Total 152.5 264.3 416.8 162.0 235.7 397.7 -6% 12% 5%
3 months to 31 March 2008 v 3 months to 31 March 2007 - APE basis
APE APE Change
2008 2007 %
#m #m
Scottish Life: 46.6 42.8 9%
Pensions & Other DWP rebates 0.2 0.5 -60%
46.8 43.3 8%
Bright Grey 6.8 8.1 -16%
Scottish Life International 3.8 3.3 15%
Royal London 0.6 1.1 -45%
DWP rebates
0.6 1.1 -45%
Total 58.0 55.8 4%
Annual Premium Equivalent (APE) represents annual new regular premiums plus 10%
of new single premiums.
Analysis of New Business - RLAM
3 months to 31 March 2008 v 3 months to 31 March 2007
New Business New New %
Funds Funds Change
2008 2007
#m #m
Non cash 620.0 620.3 0%
Mandates
This information is provided by RNS
The company news service from the London Stock Exchange
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