Royal London profits up 17 per cent

Royal London profits up 17 per cent

The member-owned group Royal London, which employs 1,100 in Edinburgh and 100 in Glasgow, has posted a 17 per cent rise in operating profits to £329 million.

The performance at the UK’s largest mutual life insurance and pensions company comes on the back of surging demand for flexible personal pensions, while a government drive to get all businesses to offer a workplace pension helped leading.

The company has been one of the chief winners from a government drive to force all businesses to offer a workplace pension through so-called auto-enrollment.

New business across its pensions operations rose 12 percent to 4.4 billion pounds.

However, while Royal London said customers continued to take advantage of changes to UK pension rules giving individuals more choice about what to do with their money and were looking to invest more in its funds and income-drawdown products that allow pension savers access to their money in stages, chief executive Phil Loney used the publishing of his firm’s latest figures to call on the government for a five-year freeze on changes to pension tax relief.

He said the pensions landscape had seen “revolutionary and largely positive changes” but greater stability was needed.

“Pensions tax relief has been subject to no less than six cuts in the last seven years and we are asking the government to commit to a five-year moratorium on further changes,” Loney said.

“Governments are playing around with pensions every year and that really undermines public confidence. We don’t want to put them off saving because of what’s being done repeatedly on pensions tax relief.

“We need a period of pensions being boring and reliable again.”

Meanwhile, Royal London also said it continued to benefit from a five-year turnaround plan to streamline operations into three distinct units — pensions, insurance and asset management — in a process that has helped it to take a larger share of each market.

Mr Loney said: “Royal London over the past five years … has changed position in the market. We used to be number six or seven in most of our key markets; we’re now, typically, number two or three.”

The company reported operating profit before tax on a European embedded value (EEV) basis — a measure of insurance company performance that values future cashflows — of 329 million pounds ($464 million), against 282 million pounds in 2016.

That was helped by a 38 per cent increase in new life and pensions business to 12 billion pounds, up from 8.7 billion pounds, though the new business margin slipped slightly to 1.8 percent from 1.9 per cent.

Elsewhere, sales of life insurance products through intermediaries rose 25 percent to 807 million pounds while assets under management at its investment arm, Royal London Asset Management, climbed 14 percent to 114 billion pounds.

Mr Loney said he was particularly pleased that Royal London had virtually doubled in size in terms of funds under management in the past six years, and that in its main markets it was now the second or third biggest player “compared with sixth or seventh in 2011”.

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