Royal London, the UK’s largest mutual life, pensions and investment company presents its new business results for the three months ending 31 March 2015.
Key performance indicators (figures in brackets show movement compared to Q1 2014)
-
Total continuing new life and pensions business (on a PVNBP basis)[1]was up 40% at £1,379 million (£988m in March 2014). Main product line performance includes:
-
Group Pensions £515m (+16%)
-
Individual Pensions £474m (+68%)
-
Drawdown £244m (+67%)
-
Protection Intermediary £107m (+32%)
-
Protection Consumer £5m (+400%)
-
The Group has achieved strong growth across all of its pension products:
-
Group pension sales have continued to gain momentum with a 16% increase on 2014, which was a record year for Royal London sales of workplace pensions.
-
Sales of Royal London’s individual pensions have increased by 68%. Similarly, sales of Royal London’s integrated drawdown facility have increased by 67%.
-
The new pension freedoms are providing a strong stimulus to sales of Royal London’s individual pension and drawdown facility, which is a popular recommendation for impartial advisers seeking good value for money, a high quality investment solution and strong customer service.
-
The asset management business continues to perform well, with Royal London Asset Management (RLAM) achieving net new external business inflows of £111m (31 March 2014 £902m). RLAM has delivered steady wholesale business with net sales of £302m; the significant net flows were into UK Equity Income (£91m), corporate bonds (£67m), Sterling Credit (£39m) and Cash Plus (£27m). The positive wholesale business momentum gained in 2014 has been carried through into 2015. Institutional flows have been slower than previous quarters, with the majority of flows into our Cash and Buy & Maintain funds.
-
The Ascentric wrap platform reached £9.53 billion assets under administration at the end of Q1 2015 (7% increase on Q4 2014), with grossinflows of £555.7m (2014 £530.5m). The arrival of the much anticipated pension freedoms on 6 April saw a dramatic rise in SIPP business for Ascentric during Q1, with income drawdown applications increasing by over 80% on Q1 2014. Ascentric’s focus for the rest of 2015 remains the delivery of its new back-office technology giving the business numerous efficiencies and scalability in an increasingly competitive market.
-
Royal London’s consumer protection business has been growing significantly since it started selling insurance products direct to consumers in 2014.
-
New business volumes for the intermediary protection business are up 32% on Q1 2014. The strong momentum built in Q4 2014 has continued into Q1 2015. This has been helped by the recent enhancements to Royal London’s critical illness proposition in February, with March sales levels for applications reaching their highest since December 2012, when the introduction of the gender directive led to a significant increase in volumes. The Group will bring together Bright Grey and Scottish Provident as a single Royal London branded protection business by the end of this year.
-
Total Group funds under management were £86.3bn at 31 March 2015, up 5% on 31 December 2014.
Group Chief Executive, Phil Loney commented:
Business Performance
“This is a very strong set of numbers, which comes on top of last year’s record results. In the key areas of pensions and protection we continue to increase market share. The fact that we continue to do so is a result of our investment in the quality of our product and service proposition.
We have invested considerable time and resource in developing our protection proposition for intermediary distribution, for example by introducing smarter underwriting and giving greater clarity to our critical illness definitions. This effort is beginning to pay off as new business levels are up 32% on the same period last year.
Our Wealth businesses have continued their growth story during the period by delivering significant inflows to complement rising valuations for existing assets. Ascentric’s assets under administration reached £9.53bn, a 7% increase on Q4 2014. RLAM recorded net new external business inflows of £111m and now manages over £86bn of client assets.
Individual and group pensions continue to build market share, again on the basis of the quality of these award-winning propositions. We have begun to see the emergence of a “secondary market” in corporate schemes set up to meet the employer duties for auto-enrolment. Employers and their advisers have switched their business to Royal London after dissatisfaction with their first provider’s service. We expect to see more schemes switching as the quality of our servicing wins out in a competitive market. We believe this is an encouraging trend for pension scheme members given that the OFT’s 2013 study of the DC workplace pensions market found such high levels of disengagement amongst employers and low levels of this kind of “shopping around” to secure better value.
We saw significant inflows (68% up on Q1 2014) of individual pensions business as advisers switched client funds in anticipation of the pension freedoms which came into effect just after the end of this quarter. It is clear that many advisers are recommending our award-winning Income Drawdown proposition for their clients as they approach retirement.”
Savings Culture
“We welcomed the liberalisation of the pension system from the outset, and George Osborne deserves credit for giving long term saving a real "shot in the arm" with this bold initiative. We now hope that the new Conservative government will focus on building a savings culture in the UK which replaces the debt culture of the last two decades, and helps all citizens to become more financially resilient and enjoy better living standards in later life. We welcome the appointment of Dr. Ros Altmann to the role of Pensions Minister and hope that she will prioritise:
The rapid introduction of a new "cheap and cheerful" regulated advice regime which makes focused financial advice affordable for all and ensures that the pension freedoms achieve their true potential.
A thoughtful review of the current system and levels of tax relief available on pension contributions before any changes are made. It is simply not fair that income which is saved for the future should be taxed twice.
A gradualist approach to increasing the level of contributions that employees make to auto enrolled pension schemes so that we nudge younger savers, with help from their employers, towards saving around 15% of income that is generally needed to properly provide for later life.
Legislation to make an open market approach to annuity sales compulsory so that customers can access the best deals available.
Legislation should also ensure that consumers are protected when engaging in any secondary annuity market through a requirement to obtain financial advice before cashing in their annuity.
Consolidating the Money Advice Service and The Pension Advisory Service into a single truly excellent financial education service for all, which works hand in hand with advisors and providers to build financial literacy.
|
