Investor relations

Investing in our business

As a mutual, you might think that Royal London doesn’t have any investors and while it’s true that we don’t have any shareholders, we do have external investors, who provide us with an important part of our capital base.

External investors support our business and enable us to meet the needs of our customers by investing in our subordinated debt.

It’s a form of borrowing used by many financial institutions, and means that in the unlikely event of Royal London falling into liquidation, we would only have to pay the debt back after meeting our obligations to our policyholders. We also raise debt in order to support our general business and commercial activities.

The regulators allow this kind of debt to be treated as capital in meeting our regulatory solvency requirements, and our Board reviews and approves our debt funding strategy while our Finance department maintains our debt programme.

Debt investors can read about our credit ratings and our debt issuances below, and you'll also find some recent financial results too.

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^{1 Subsequent to the approval of the financial statements, a minor factual inaccuracy was noted and updated to correct the amount of assets which back unit-linked and non-linked business on page 55.}

Credit ratings and financial strength assessment

Royal London has good financial strength and a stable outlook, meaning members and policyholders can be confident that they are dealing with a secure company.

Global ratings agencies Standard and Poor’s (S&P), Moody’s and AKG Financial Analytics Ltd (AKG) have issued ratings on Royal London based on a number of factors, including our financial strength.

The Royal London Mutual Insurance Society Limited receives:

• a counterparty credit rating (CCR) from Standard and Poor’s
• an insurance financial strength rating (IFSR) from Moody’s
• a financial strength rating from AKG.

Standard & Poor's provides two types of rating: a counterparty credit rating (CCR) and a financial strength rating (FSR). A CCR is an opinion of a company’s overall financial capacity (its creditworthiness) to pay its general financial obligations. An FSR is an opinion of the financial security characteristics of an insurance company which includes its ability to pay claims on its insurance policies and contracts in accordance with their terms.

We have not approached Standard & Poor's to provide an FSR as we believe that our CCR rating provides an appropriate explanation of our financial strength.

Subordinated debt

We currently have debt investors, following subordinated debt issues (called 'Notes') in 2013, 2015, 2019 and 2023. Most of these are institutional investors, as the Notes cannot be sold directly to retail investors. By 'subordinated', we mean that we will pay the claims of our members and policyholders before the claims of these debt investors.

Being a mutual organisation, Royal London cannot issue debt directly. Instead we have established wholly owned special purpose vehicles (SPVs), guaranteed by The Royal London Mutual Insurance Society Limited. The proceeds of the Notes are on lent to Royal London from the SPVs on the same interest, repayment and subordinated terms that apply to the Notes.