TIDM41BM TIDM60KE
RNS Number : 5763O
Royal London
10 February 2016
Press Release
10 February 2016
RECORD YEAR FOR ROYAL LONDON NEW BUSINESS
PHIL LONEY SLATES IDEA OF "PENSION ISA"
Royal London, the UK's largest mutual life, pensions and
investment company, presents its new business results for the
twelve months ending 31 December 2015.
Royal London has achieved outstanding new business growth in
2015. It has been four years since we embarked on our new strategy.
Since 2011, strategic changes including bringing together disparate
brands under a single Royal London brand have resulted in growth
across the board.
Performance highlights (figures in brackets show movement
compared to full year Q4
2014 unless otherwise stated)
-- New life and pensions business (on a PVNBP basis - see
editor's notes for details) of GBP6,774 million (+40%). Main
product line performance includes:
o Group Pensions GBP2,798m (+27%)
o Individual Pensions GBP1,926m (+39%)
o Drawdown GBP1,301m (+67%)
o Protection Intermediary GBP502m (+49%)
o Consumer GBP165m (+385%)
-- Improved overall margin of 1.8% (+29%) on new life and
pensions business has been achieved as operating efficiency
initiatives are embedded across the business.
-- Total Group funds under management of GBP84.5bn at 31
December 2015, up 2.7% on prior year (GBP82.3bn at 31 December
2014) despite a year of turbulent markets.
Business highlights
Royal London's strategy focuses on providing customers with
better value for money than competitors through excellence in
products and service, built from strong insight into customer
needs. This ethos reflects the fact that we are a customer owned
business and this has fuelled a period of unprecedented growth for
Royal London.
Over the four years to 31 December 2015 life and pension sales
have doubled (PVNBP of GBP6,774m in 2015, GBP3,291m in 2011) and
assets under management have grown by 92% over the same period (
GBP84.5bn 2015, GBP44.0bn 2011 ) driven by strong organic growth
and successful acquisitions. The quality of our customer service
and propositions, endorsed through another successful year of
awards in 2015, has enabled the Group to benefit from market
developments such as auto-enrolment and pension freedoms.
Royal London was named Company of the Year at the Money
Marketing Financial Services Awards. RLAM, the asset management
business, won nine awards for its investment performance. Royal
London was the recipient of three 5 star awards for service at the
Financial Adviser Service Awards.
By business, the key highlights were:
-- Workplace Pensions continue to deliver strong levels of sales
on the back of auto-enrolment. Our high service quality approach
for schemes continues to prove popular with advisers, winning
awards for best Group Pensions provider in both the Investment Life
and Pensions Moneyfacts and the Financial Adviser Service awards.
Royal London is therefore well placed for the increased volumes of
much smaller workplace pension schemes anticipated in 2016.
However, since smaller employers are the main focus of
auto-enrolment in 2016 we expect the overall premiums achieved from
these schemes as measured by PVNBP to reduce compared with the
company record achieved in 2015.
-- Individual Pensions continue to prosper from changes arising
from pension freedoms. Income Release continues to be the market
leading simplified drawdown proposition for advisers with new
business up 67% on the same period in 2014. Personal pension sales
also prospered, up 39% on the prior year, as customers increasingly
use Royal London's better value for money products to consolidate
funds from higher charging pension providers in anticipation of
moving into drawdown in future years. For the fourth year in a row
Royal London was named Best Income Drawdown provider in the
Investment Life & Pensions Moneyfacts awards.
-- Protection Intermediary new business volumes were up 49% to
GBP502m on the same period last year. Sales were driven through
changes to products to provide further enhancements in cover to our
customers and through further enhancing our service and digital
capability for both customers and advisers. As previously
announced, Bright Grey transferred to utilising the Royal London
brand during Q4 2015.
-- Consumer new business volumes more than quadrupled, up 385%
to GBP165m on 31 December 2015 from GBP34m on 31 December 2014.
There was strong recognition for the quality, fairness and value
for money provided by our core direct to consumer products. Over
50s Life Cover and Life Insurance, launched in 2014, were both
awarded 5 stars by Defaqto. Our pre-paid funeral plan product
continued to sell well through our alliance with Co-op Group, as
customers took action to protect themselves from the impact of high
levels of funeral cost inflation.
-- Royal London Asset Management (RLAM) continued to perform
well, attracting new business with gross inflows of GBP3.1bn
(GBP3.8bn at 31 December 2014). Key inflows were to the Buy &
Maintain strategy funds and to the Equity Income and Corporate Bond
funds.
-- The Ascentric wrap platform saw gross sales of GBP2.5bn
(GBP2.2bn at 31 December 2014) an increase of 14%. Funds under
administration also increased by 13% to GBP10.1bn (GBP8.9bn at 31
December 2014).
Phil Loney, Group Chief Executive of Royal London,
commented:
On business performance
"This is another strong set of results with all life and
pensions businesses putting in an excellent new business
performance and building on Royal London's strong track record. To
put this in context, over the last four years sales from our life
assurance and pension range have more than doubled. Our asset
management and platform businesses both saw good growth in total
assets despite a very volatile market. Over the same four year
period total group assets under management are up 92% (GBP84.5bn
2015 vs GBP44.0bn 2011).
"The excellent results we have achieved in 2015, and our
consistent record of growth in recent years clearly reflect the
time and effort Royal London has invested in our products and
services over a number of years. The success of our individual
pensions and income drawdown propositions has been evident for some
time as they continue to perform well in awards voted for by the
most discerning of judges, namely the impartial advisers who work
on behalf of our customers. We now see similar plaudits for our
workplace pensions offering which is among the best regarded in the
market.
"In the last year or so we have invested heavily in the
development of our offering to the intermediary protection market.
This investment is beginning to yield results as we see an
improvement in sales of protection through advisers of nearly 50%.
A similar story can be told of our new venture in simple direct to
consumer products which we launched in 2014 and which really
started to establish a name for itself during the latter part of
2015. We are beginning to win a reputation for fairer and better
value for money products in the direct to consumer market.
"I firmly believe that this success is down to our mutual
status. We are not driven by short term payback periods demanded by
shareholders and can focus on products and service that deliver
real customer value. We are proud to share our profits with our
growing numbers of eligible members and customers.
"In a very difficult market for all asset managers and
platforms, Royal London Asset
Management and Ascentric both had a good year. Both businesses
achieved strong gross sales performance and maintained commendable
year on year new net asset performance. This was achieved despite
the increasing volatility of markets, and changing investor risk
appetites, which have left several of our fund management
competitors facing net outflows."
On Pension ISAs
"Since last year's Budget we, along with other market
commentators have been engaged in a debate over the future of tax
relief on pension contributions. The critics of the perceived
unfairness of the current system, where 75% of tax relief goes to
high and additional rate tax-payers, have won the intellectual
argument and Royal London has been a leader in calling for change.
However it has never been true that all of the reform options are
better than the status quo. It is my belief that proponents of the
"ISA-style" (or "TEE") pension taxation are clearly thinking too
short term.
"There remains a considerable risk that "ISA Style" pensions,
even with an incentive thrown in, will simply turn people away from
long term saving. Savers will lose the certainty of a tax relief
system which ensures their saved income is not taxed twice, and be
thrown into an ISA-style system where they need to believe that
future generations of politicians will not renege on the deal and
tax their savings when they come to withdraw. Hands up anyone who
really believes that?
"I strongly urge the Chancellor to build on his excellent record
of introducing the pension freedoms by reforming the current tax
relief system and not abandoning it. He should not take the huge
gamble of introducing ISA style pensions, which would be reckless
at a time when the numbers saving into a workplace pension are
finally growing, following the successful introduction of automatic
enrolment. This is not the time to turn the system upside
down."
- ENDS -
For further information please contact:
Gareth Evans
Head of Corporate Affairs 0207 506 6715
Gareth.Evans@royallondon.com 07919 170069
Notes to editors:
1) Royal London is the largest mutual life, pensions and
investment company in the UK, with Group funds under management of
GBP84.5 billion. Group businesses provide around 9.1 million
policies and employ 2,988 people. (Figures quoted are as at 31
December 2015).
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