Our 2020 AGM

Good morning.  It’s a pleasure to welcome you to, a somewhat different, Annual General Meeting of the Royal London Mutual Insurance Society Limited. 

Like so many people, I am working from home – where this video is recorded by me for you.

Let me start by offering my condolences to the families and friends of our policyholders who have lost their fight against the coronavirus.  Sadly, over 400 (at time of recording) people who we insured have died from the virus.

Many more, have suffered and recovered from this dreadful illness.  It is great to see that the infection rate and the number of deaths in the UK and Ireland are both on the decline.  I hope everyone watching this broadcast will stay in good health. 

These are the most extraordinary of times, and all of us will have faced challenges we have never had to deal with before.  Royal London is no different, but even though Covid-19 caused large scale disruption to the way we do business, I am pleased to report we were as prepared as we possibly could have been.

Today’s AGM is not a normal one.  We are unable to physically meet.  We cannot provide you with an opportunity to ask the Board questions in person.   This is not a situation that any of us would have wanted.   Every year we genuinely enjoy seeing so many of you at our London meeting and having the opportunity to answer your questions.  And, of course, to then chat with you informally over a buffet lunch. 

Circumstances dictate that today we must do things differently.  Royal London is owned by you – the members – and we have tried to make today as inclusive as possible.

So, as well as this video from me, you can also watch a pre-recorded video from Barry O’Dwyer, the Chief Executive.   Today’s presentations will stay up on the Royal London website so you can view it at any time. 

You are also able see our 2019 financial performance and the results of this year’s votes on the resolutions lower down the web page.  Thank you to everyone who voted, be it online or by post.  Your Board appreciates your strong support for all resolutions.   In addition, you can see, on the web page, updates on the issues you raised at last year’s AGM: our social impact agenda and commitments; our approach to responsible investment; and the work we’re doing for our people.

But if we just updated you on last year’s questions, we would be presuming no new questions.  We also wanted to ensure you had a chance to interact with us after you’d seen today’s presentations.  Clearly as this isn’t a live event, we can’t take questions and respond in ‘real-time’.  However, we would welcome them via our email address that you should now be able to see on screen.

Please use this email for questions that are likely to be of interest to members. We will group similar themes, and by next week will provide answers here, on this year’s AGM pages.

For personal questions on policies please use the normal contact methods that you can find on our web site at www.royallondon.com/existing-customers/contact-us.

Barry O’Dwyer’s broadcast will talk you through the good results we delivered in 2019.  But I’m sure it won’t come as a surprise to you that 2020 is likely to be very different.  Covid-19 means that attracting new business will be more challenging as many companies and individuals will be struggling financially.  We anticipate that many existing customers will look to access their savings to provide them with extra support over the difficult months ahead.  Even before the virus struck, we were facing other headwinds, such as the maturing of auto-enrolment.  All in all 2020 is bound to a tougher year financially than 2019. 

These business challenges are against a backdrop of our recent experience.  The impact of the virus has demonstrated the importance of savings as well as having life and critical illness insurance policies.   At Royal London we remain fully open for business and continue to be able to provide competitive cover for you.  If you require further information, please visit our web site or contact your Independent Financial Adviser.  

Also, please don’t hesitate to contact us if you are struggling to meet your premiums or if you have other worries.  We are here to support you in good and bad times and will endeavour to find a solution that works for you.

A key aspect of being a member of Royal London is our ProfitShare which enhances the returns on policies that share in our profits.  It was down 7% on the previous year.  The Board carefully weighed up the 2019 trading and the economic outlook and I was pleased that we could deliver £140m to you, our members.  We are well financed and very much focussed on the future. 

The composition of your Board has changed since last year.  I said at last year’s AGM, that my no.1 priority, as your Chairman, was to recruit a new Chief Executive.  When the Board recruited Barry O’Dwyer, he lost no time in meeting with colleagues from right across the Group and mapping out a new direction for Royal London.  He will tell you about this in his video.

On the screen, you can see who has departed from the Board.  I would like to acknowledge and thank them all for their commitment to Royal London and wish them well in their next endeavours.  Additionally, I would like to thank David Rush who was seconded from Deloitte as our interim Chief Financial Officer.  Whilst not on the Board, David attended all our Board meetings.

Next you can see the all additions to the Board.   Barry succeeded Phil Loney who retired from executive life. 

We have a new Chief Financial Officer, Dan Cazeaux who succeeded Tim Harris who is pursuing his career as CFO of Direct Line.   Dan joins us from KPMG in London where he was a financial services insurance and asset management audit partner. 

Kal Atwal joined us as an additional non-executive director at the start of this year, bringing a wealth of on-line and aggregator experience. 

Finally, Tim Tookey, also a non-executive director, has succeeded Andrew Palmer who had completed nine years of service as Chair of the Audit Committee.   Tim has a wealth of experience in insurance and banking, including at the largest mutual building society, Nationwide.  Overall the Board has more diversity than a year ago and is now compliant with FTSE100 standards on diversity.  

Royal London’s continued success relies on the commitment of its employees.  In normal times I would thank them for this, but today I need to thank each and every one of them for going above and beyond.  Working from home is not without its challenges and doing so without in any way curtailing our services to you, our members, is quite an achievement.  I applaud all our colleagues for stepping up to the plate.  They have kept us open for business throughout lockdown.

It is perhaps too much to hope that by this time next year, life will be back to exactly how it was.  Things will be different.  But I really hope that much will be the same as before and I and my Board colleagues will be able to see many of you in person and that we are able to hold the formal AGM in the normal way and meet you informally before or after the meeting.

Please do send us your AGM questions and remember we are open for business to serve you. 

Thank you. Stay safe and stay well.

Good morning to you all and I hope you and your families are well.  This is my first AGM as Royal London’s Group Chief Executive, and of course I wish I could be talking to you in different circumstances.

As Kevin Parry said, this is your company, and every year we encourage you to join us – in person – so that you can hear how your company has performed over the twelve months and our plans for the future.  It’s also important you have the opportunity to challenge us and ask questions, which we welcome. 

Before I talk you through Royal London’s achievements from the last 12 months let me first update you on how the business has been impacted by COVID-19.  As you’d expect, we are geared up to manage risk.  Royal London is well capitalised, has ready and continuing access to cash and has coped well with the operational challenges posed by the events of the last few months.

I should stress that the way the business was able to react and adapt to the circumstances surrounding COVID-19 did not happen by chance.  We invested and prepared for a situation like this, and it meant that our customers continued to receive the high levels of service they have come to expect from us.

What is really making the difference is the commitment of our colleagues.  I spent my first 100 days visiting our people right across the UK and Ireland.  Their dedication and commitment to serving our customers was clear and impressive.  Over the last few months I’ve seen the difference that this can really make, with them stepping up, being flexible and doing whatever it takes to ensure we continue to deliver.

I should add that’s not just my view.  The feedback from financial advisers and customers has also been very positive. I know many colleagues – as members – will be watching today so I wanted to pause and say thanks to each and every one of you.

So what else did I learn during my first 100 days of meeting colleagues from across the Group?  Well, it was crystal clear how important our mutuality is to us. It really makes a difference to be working solely for customers and not for shareholders.  These aren’t just warm words, I believe being mutual is the best corporate structure for a company of our type.  There are no conflict between customers and shareholders – we’re working for you and for you alone.

Linked to our mutuality is our purpose, and this can be traced all the way back to day one when we were established as a company to help families provide decent funerals for their loved ones.  Now times have changed but this clear sense of purpose is still deeply ingrained at Royal London and we continue to play a role in tackling some of the UK’s biggest challenges, including helping our ageing society prepare for later life.  We’re working on updating our purpose to reflect what is important to our members and customers nowadays but we’ll stay true to our core values. 

Environmental concerns have been growing for many years. I think the recent experience of COVID-19 will add to the debate when we see some of the beneficial impacts of lockdown on carbon emissions, for example. I believe we can play a role in helping our customers invest their money with us in a way that reflects their wider concerns because people want to do more than just make money.  Everyone saving for the future would like to see a future where we avoid some of the catastrophes associated with climate change.  We’re already leaders in responsible and sustainable investment and I’d like to see us build on this.

Diversity of thinking remains important to ensure we run a successful business and play our part in reducing inequalities in society.  As you’ll recall our Women’s Network launched in 2018.  In 2019 it was great to see the launch of two new networks – PRIDE for LGBT+ colleagues, as well as a BAME network.  And we’ve just launched EARL, our newest network aimed at colleagues who are working with a disability.

Let me turn now to the numbers in 2019 and you can find more information on our website in our Annual Report and Accounts.

Our 2019 profit before tax was £416m – a 5% increase year on year.  In addition, Royal London remains well capitalised.

RLAM – that part of the business which manages assets on behalf of our customers - had an outstanding year.  In fact it was a record year with net inflows of £9.9bn, and assets under management reaching of £139bn.  RLAM also continued to receive many external accolades, with a record number of awards.

Our intermediary business performed well in a challenging environment with sales of £10.3bn, and launched a new app which allows our pensions customers to have instant access to their savings information.  You can download it by going to the App Store on your smartphone or tablet and searching for Royal London.  I think you’ll find it’s an excellent way of staying in touch with your pensions and savings.

Our consumer division – which sells a range of products directly to customers – continues to grow with sales up slightly at £422m. A real success was the launch of our direct funeral plan which received a four-star rating from the consumer group Fairer Finance.

In 2019 our Legacy Division – which focuses on customers with long-standing policies – had a busy year including improving customer communications with annual statements which are much clearer allowing them to better understand their options.  They also launched the first phase of a new digital portal which will allow some customers to view their annual statements online.

In Ireland we continue to grow strongly.  Profits increased by 22% to £137m in 2019.  We were authorised to write new life insurance business in Ireland and launched a new critical illness product which takes a radical new approach linking benefits to the impact caused by the condition.

Lastly, we recently announced that we are selling our platform business, Ascentric, to M&G plc.  The decision to sell came on the back of a strategic review.  I am pleased to have found a good home for the business with a buyer committed to its client and customer base.      

As the Chairman said, 2019 was a good year for Royal London and this has meant we could again deliver ProfitShare of £140m to you.  While we expect COVID-19 to make 2020 a more challenging year for us, we’ll stay true to our purpose and our strategy and we will remain focused on delivering for you, our members.

I wish we’d had a chance properly to meet and I’m really looking forward to doing exactly that at our AGM next year.

In the meantime, thank you. Take care and stay safe.