TIDM41BM TIDM60KE
RNS Number : 2979O
Royal London
04 November 2016
4 November 2016
ROYAL LONDON REPORTS STRONG NEW BUSINESS GROWTH AND FUNDS UNDER
MANAGEMENT EXPAND TO OVER GBP100 BILLION
New life and pensions business (on a PVNBP basis - see editor's
notes for details) of GBP6,298m, up by 30% (30 September 2015:
GBP4,861m).
Intermediary new life and pensions business
-- Total Intermediary new life and pensions business up by 28%
to GBP6,071m (30 September 2015: GBP4,745m)
-- Group Pensions up by 50% to GBP2,872m (30 September 2015: GBP1,916m)
-- Individual Pensions and Drawdown up by 11% to GBP2,683m (30 September 2015: GBP2,408m)
-- Intermediary Protection up by 22% to GBP440m (30 September 2015: GBP362m)
The continued focus on excellent customer service and
market-leading propositions has underpinned growth across our
Intermediary business.
In Group Pensions, our personal approach to establishing new
Automatic Enrolment schemes adds real value to employers and their
advisers, and we are continuing to attract a strong share of this
market. In the last quarter we have reduced our implementation
period for Automatic Enrolment schemes to 4 weeks, to meet the
needs of smaller employers approaching staging. We have also
delivered the first quarterly update to our unique Drawdown
Governance service, as well as further enhancements to our Income
Planning Tool, to make it easier for advisers to support their
clients with cost-effective advice.
The quality of our pensions service and proposition was
reflected recently at the 2016 Moneyfacts Investment Life and
Pensions Awards, where we won Best Group Pension Provider and Best
Income Drawdown Provider.
Momentum in our Intermediary Protection business continues, with
further increases in new business volumes. We have made
enhancements to our proposition to customers with improvements to
our underwriting philosophy, our Helping Hand benefit, and our
Critical Illness cover - providing cover where it counts. We have
also enhanced our online service experience for advisers and
created additional tools to help them give advice, such as the new
Income Protection report.
In the Republic of Ireland, we have seen strong sales on the
back of further service excellence initiatives, improvements in our
digital capability and the extension of our product range. This now
includes a flexible Whole of Life product. Developed in response to
customer research, the product offers customers the option to stop
paying premiums without losing all the life cover. This new product
represents another example of our determination to offer better
value and fairer outcomes for customers purchasing Whole of Life
products in all of the markets that we are active in.
Consumer new life and pensions business
-- Consumer up by 96% to GBP227m (30 September 2015: GBP116m)
New business growth in our Consumer business was particularly
strong, driven by sales of pre-paid Funeral plans and Over 50s
insurance plans. Royal London is one of the leading providers of
Over 50s plans, which reflects the quality and value of our
proposition.
The third annual Royal London Funeral Cost report issued on the
19(th) October 2016, finds the cost of funerals increasing well
ahead of inflation and calls for Government legislation to
standardise and control the cost of funerals provided by the Social
Fund.
Wealth
-- The funds managed by the Group have reached the milestone of
GBP100bn for the first time with total Group funds under management
of GBP101bn at 30 September 2016, up 20% (GBP84.5bn at 31 December
2015). This is a particularly good result at a time when many asset
managers are experiencing high net outflows.
-- Royal London Asset Management (RLAM) continued to perform
well, attracting external new year-to-date inflows of GBP4.8bn (30
September 2015: GBP2.5bn). This was largely due to a significant
increase in Institutional new business investing in our Fixed
Income range.
-- The Ascentric wrap platform saw gross sales of GBP1.6bn (30
September 2015: GBP1.9bn). Ascentric continues to maintain market
share. Assets under administration increased by 17% to GBP11.8bn
(GBP10.1bn at 31 December 2015).
Phil Loney, Group Chief Executive of Royal London, said:
"Royal London remains focused on its strategy of continually
improving product and service excellence in key markets. The
additional value for money offered to customers through this
strategy is reflected in our continued new business growth and
strong support from impartial financial advisers.
Royal London is established as one of the leading providers in
the Protection, Personal Pension and Drawdown markets. Increasingly
individual pensions and drawdown should be regarded as a single
sector because, following introduction of Pension Freedoms, the
line between pension accumulation and the drawdown phase has
blurred. Advisers are recommending a range of retirement income
strategies for their clients and this has consistently generated
rising levels of new business for Royal London.
We continue to build a strong presence in the workplace pensions
market and have always maintained the importance of diversification
in investment approach including holding property as an asset
class. Rules designed to cap the charges on pensions threatened to
exclude property from default pension funds. Just outside the
reporting period we achieved an important clarification from the
Department of Work and Pensions (DWP), which confirmed that
property can remain a key asset class in our default pension
portfolios.(3)
The third quarter saw record sales for our Intermediary
Protection business and the response from the market for our
products and service remains extremely positive. The newly
rebranded Whole of Life product has been very well received.
In the Irish protection market, Royal London now has its highest
ever market share, as we continue to bring our innovative products
to market.
As a relatively new market entrant, our Consumer business has
been quick to establish itself. We are now one the leading
providers in the market for Over 50s insurance plans where we seek
to differentiate ourselves by offering customers fairer products
and better value for money than has traditionally been the case. We
are also leading providers of pre-paid Funeral plans and continue
to provide thought leadership in the area of rising funeral costs
with the third edition of the National Funeral Cost Index issued on
the 19th October 2016. It found that an increasing number of
families are taking on significant debts to pay for the funeral of
a loved one due to high levels of inflation in funeral care in
recent years. We are calling for the funeral industry to offer
simple direct funerals and for Government action to reform the
Social Fund payments system.
The combination of new businesses inflows in our asset
management and pensions business and rising asset values, means
that Royal London for the first time has more than GBP100bn in
funds under management. Institutional sales have been particularly
strong and wholesale business has held up well through the
volatility stemming from the UK referendum on EU membership.
Reaching this significant funds under management milestone
reflects growth by acquisition(4) and organically, as well as the
expanded fund range developed by our asset management arm over the
past five years. At the end of December 2011 funds under management
were GBP46.2bn. The impressive growth demonstrates the commitment
to growing institutional and wholesale assets through innovation in
the credit and multi asset capabilities as well as the success of
our award-winning pensions range for individual and workplace
pensions."
-S -
Appendix - Analysis of Royal London new business results
Intermediary
PVNBP - 30 Sep PVNBP - 30 Sep % Change
2016 2015
------------ ------------------------- ------------------------- -------------------------
Regular Single Total Regular Single Total Regular Single Total
------------ -------- ------- ------ -------- ------- ------ -------- ------- ------
GBPm GBPm GBPm GBPm GBPm GBPm % % %
------------ -------- ------- ------ -------- ------- ------ -------- ------- ------
Pensions 2,752 2,879 5,631 1,908 2,475 4,383 44 16 28
------------ -------- ------- ------ -------- ------- ------ -------- ------- ------
Protection 440 - 440 362 - 362 22 - 22
------------ -------- ------- ------ -------- ------- ------ -------- ------- ------
Total 3,192 2,879 6,071 2,270 2,475 4,745 41 16 28
------------ -------- ------- ------ -------- ------- ------ -------- ------- ------
Consumer
PVNBP - 30 Sep PVNBP - 30 Sep % Change
2016 2015
---------- ------------------------- ------------------------- -------------------------
Regular Single Total Regular Single Total Regular Single Total
---------- -------- ------- ------ -------- ------- ------ -------- ------- ------
GBPm GBPm GBPm GBPm GBPm GBPm % % %
---------- -------- ------- ------ -------- ------- ------ -------- ------- ------
Consumer 75 152 227 21 95 116 257 60 96
---------- -------- ------- ------ -------- ------- ------ -------- ------- ------
Wealth
30 Sep 30 Sep Change
2016 2015 %
GBPm GBPm %%
----------------- ------------ ------------ -------------
RLAM
Net new business, excluding external cash mandates:
------------------------------------------------------------
Inflows 4,770 2,533 88
----------------- ------------ ------------ -------------
Outflows (2,824) (1,981) 43
----------------- ------------ ------------ -------------
Net 1,946 552 253
----------------- ------------ ------------ -------------
30 Sep 30 Sep Change
Ascentric 2016 2015 %
----------------- ------------ ------------ -------------
Gross sales GBP1.6bn GBP1.9bn -16%
----------------- ------------ ------------ -------------
For further information please contact:
Gareth Evans
Head of Corporate Affairs 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
GBP101 billion. Group businesses provide around 9.1 million
policies and employ 3,179 people. (Figures quoted are as at 30
September 2016).
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. The rate used to discount the cash flows in the reported
2016 results has been derived from the swap curve, whereas the rate
used in the 2015 reported results was derived from the gilt
curve.
3) With effect from April 2015 DWP imposed a cap of 0.75% of
annual management charges on all default funds used as automatic
enrolment schemes. The charge cap excludes transaction costs for
buying and selling assets but appeared to include the holding and
management costs of property. This appeared to make investment in
property prohibitively expensive for a default fund meaning an
important source of investment growth and diversification would be
excluded from pension funds. Indeed some workplace pension
providers do not offer exposure to property investment in their
default funds. In October 2016, following a campaign led by Royal
London, DWP issued further guidance on the costs that could be
excluded from the charge cap. It explicitly excluded "the costs
incurred as a result of holding or maintaining property". This
means that workplace pension providers can continue to offer their
customers the investment growth and diversification benefits of
property as part of a diversified investment strategy and Royal
London will continue to do so within its award-winning "Governed
Portfolios" range of default funds.
4) During 2013 Royal London acquired the life, pensions and
asset management business of The Co-operative Group. This
contributed to an increase of funds under management of GBP20bn at
the time of acquisition.
5) Financial Calendar
13 November 2016 RL Finance Bonds No 3 plc subordinated debt interest payment date
30 November 2016 RL Finance Bonds No 2 plc subordinated debt interest payment date
23 February 2017 Fourth quarter new business figures
30 March 2017 Financial results for 2016 and investor conference call
6) 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.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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