Royal London reports strong trading performance and operating profits
31 March 2016
Royal London, the UK’s largest mutual life, pensions and investment company, presents its results for the year ended 31 December 2015.
Trading Highlights (figures in brackets show movement compared to 2014)
- New life and pensions business (on a PVNBP basis)2 £6,774m (+40%).
Excellent growth in new business sales reflects the strength of Royal London’s pensions and insurance propositions.
- Improved overall margin of 2% up from 1.4% in prior year on new life and pensions business has been achieved as operating efficiency initiatives have been embedded across the business.
- EEV Operating profit before tax and exceptional items £244m (+11%).
This increase is driven by the success of our pensions and insurance businesses and the record new business figures. New business profits rose to £137m (+61%).
- Embedded value has exceeded the £3bn mark for the first time, reaching- £3.2bn (+6%) following good total profit performance.
- IFRS transfer to unallocated divisible surplus £175m (+31%)
Our IFRS results also benefit from Royal London’s strong trading performance and improved margins.
- Group funds under management £84.5bn (+3%).
Increase due to net inflows and good underlying investment performance in difficult markets.
- Surplus regulatory (Insurance Groups Directive) capital £3,535m (+4%).
Our stronger capital position is a consequence of improved new business results and an increase in our subordinated debt.
- ProfitShare £70m (+17%)
ProfitShare allocated to eligible policyholders increased by 17% in 2015 as a result of the improved new business results and strong capital position. This brings the cumulative ProfitShare allocated to members to £536m since 2007.
Phil Loney, Group Chief Executive of Royal London, said:
“Our strategy of focusing on creating the best outcomes and the best experience for our customers reflects our position as the largest customer-owned company across our chosen markets. Our strategy continues to produce pleasing results and over the last four years Royal London has doubled its life and pension sales and has nearly doubled assets under management.
The last year saw a record breaking trading performance which brought with it a healthy increase in operating profit. New business growth was particularly strong with sales of group pensions and income drawdown products going from strength to strength. The fourth quarter of the year saw pension sales reach new highs which is especially satisfying as it follows on from the announcement that we will in future be sharing part of our profits with pension customers through our unique ProfitShare arrangement.
Following considerable investment in our protection proposition, sales of protection products through intermediaries are now surging ahead. Our direct-to-consumer division is now making significant headway in the market segments where it operates by providing better value for money and fairer products than the market incumbents. The strong growth in revenues has allowed a substantial increase in investment in the business at the same time as growing profits and strengthening the capital position of Royal London.
The main Royal London With-Profits Fund turned in another positive performance and is ahead of its benchmark over one, three and five years. The total bonuses paid to policyholders compare well with returns elsewhere in the industry. In addition, with-profits policyholders benefit from a ProfitShare; the average amount allocated to individual policies has been slightly increased (from 1.15% in 2014 to 1.4% in 2015) per policy this year. Over the last decade our profit sharing approach has boosted the value of policies held by qualifying customers to the tune of £536m.
Royal London remains well capitalised, with surplus regulatory capital increasing to £3,535m (£3,390m in 2014).”
For further information please contact:
0207 506 6715
1) Royal London is the largest mutual life, pensions and investment company in the UK, with Group funds under management of £84.5 billion. Group businesses serve around 9.1 million policies and employ 2,988 people. (Figures quoted are as at 31 December 2015).
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) Financial calendar
31 March 2016 Financial results for 2015 and conference call*
12 May 2016 Interim management statement and first quarter new business results
9 June 2016 Annual General Meeting
18 August 2016 Interim financial results and second quarter new business results
4 November 2016 Interim management statement and third quarter new business results
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
*Royal London held an investor conference call to present its financial results for 2015 on Thursday 31 March 2016. To listen to the audio replay of this call please dial 0800 032 9687, passcode 23361923.
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.