Royal London new business up 38% to £12bn

Royal London said its new life and pensions business soared 38% to £12 billion and funds under management rose 14% to £114 billion in 2017.

The mutual said its operating profit before tax on a European embedded value (EEV) basis — a measure of insurance company performance that values future cashflows — rose 17% to £329 million.

Member-owned Royal London, which includes the former Scottish Life and Scottish Provident businesses, is the UK’s largest mutual life insurance and pensions company.

The mutual’s ProfitShare (after tax) distribution to eligible members rises to £142 million from £114 million.

Royal London CEO Phil Loney said: “In a year full of political and economic uncertainty which impacted market volatility and consumer spending, we achieved a 17% increase in EEV operating profit before tax, largely due to strong sales growth across our businesses.

“This growth reflects our well established strategy of continually improving the quality of products and service offered to our customers, demonstrating our customer-owned business model.

“As a member-owned business our customers are at the heart of everything we do.

“Royal London members and qualifying customers have received almost a billion pound boost to their policies since 2007 – three quarters of a billion coming from sharing our profits and the remainder from cumulative investment returns on these profits.

“This is a real demonstration of how we make a meaningful difference to our customers.

“Our 2017 ProfitShare of £142m was supported by a record year for new business backed by strong investment performance, despite a backdrop of continued political upheaval.

“Royal London’s funds under management increased to £114bn with a record breaking year for gross sales for our asset management business. A new, unique all-in charging structure drove strong new sales for Ascentric, our platform business.

“We also saw strong sales of workplace and individual pensions while Royal London’s drawdown proposition served us well during a time when low interest rates made this type of product the retirement vehicle of choice.

“The completion of the initial stages of the UK wide auto-enrolment project means that the size of the workplace pension new business market will reduce in 2018 and we expect our own workplace pension sales to fall accordingly.

“In 2018 our primary focus will be on supporting our current workplace pension customers through the planned increases in employer and employee contribution levels, whilst continuing to offer a quality workplace pensions solution for those employers dissatisfied with their current pension provider.

“Our Protection businesses continued to go from strength to strength across the board. Our innovative work simplifying the underwriting journey on streamlined mortgages, was referred to as a ‘game-changer’ and advisers praised our pioneering work on diabetes cover.

“Royal London Ireland had an outstanding year, exceeding prior year and growing market share to over 16%.

“Royal London’s consumer business is now one of the top sellers of Over 50s life cover.

“We believe this growth was driven by the recognition that our product is fairer and better value compared to our competitors.

“Royal London is the only provider to be awarded a 5* rating for Over 50s cover by the consumer group Fairer Finance.

“We have continued to be recognised for excellent customer service across all of our businesses, offering consistently high quality service to customers and the advisers who work on their behalf.

“Our net promoter score, measuring how likely consumers are to recommend us to friends and family, continued to increase in 2017 and financial advisers have recognised all of Royal London’s businesses as 5 star service providers.

“The backdrop to much of our business is the political agenda for longer term saving.

“The pensions landscape has seen revolutionary and largely positive changes, but more can be done to deliver real consumer benefits.

“Auto-enrolment has enabled millions of people to contribute to a private pension for the first time, but the Government’s 8% combined contribution target is only a starting point and contributions need to be increased further over time.

“The Government also needs to widen the net to bring in self-employed people.

“However, there is one area where we need stability. 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.

“This would help to support consumer confidence in pensions just at the time that employer and employee contribution rates are set to increase as part of the auto-enrolment project.

“We continue to work closely with Government on the development of the Pensions Dashboard, a potential game-changer for consumers.

“Government should drive the initiative forward, making it compulsory for all schemes and pension providers to supply data that will inform consumer choice.”