Royal London, the UK’s largest pension and investment mutual, has shown the strength of its mutual membership model in challenging times by making a record profit share of £150 million to eligible members.
Since 2007, the company has returned £942 million in its profit share payments.
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Royal London announces record EEV (earnings enhancing value) operating profit before tax of £396 million, up for £329 million in 2018, representing an increase of 20%. The company has record net flows of £4.1 billion generated by its investment wing, RLAM, Royal London Asset Management.
The company has 8.7 million policies in-force, employs 3,898 employees, including several thousand in Edinburgh. Royal London, which took over once-familiar Scottish brands such as Scottish Provident and Scottish Life, has recently rolled out its collaboration with CYBG plc, owners of Clydesdale Bank and Yorkshire Bank, to sell Royal London products across branches of both banks.
Sales of new business remained strong, with the expected reduction in Workplace Pensions sales as auto-enrolment staging came to an end, largely offset by the increase in Individual Pension and Life Assurance new business. This resulted in sales 6% lower than 2017 at £11,308 million.
Phil Loney, group chief executive, said: "It has been a record year for Royal London with EEV (earnings enhancing value) operating profit before tax reaching an all-time high of £396 million.
"This success has been shared with our members who will receive a ProfitShare of £150 million for 2018, taking our total ProfitShare distribution to £942 million since 2007. Adding investment growth to that has allowed us to contribute over £1 billion to our members' policies since 2007, a real demonstration of the added value of mutuality. When we do well, so do our members."
“In 2018 the end of the auto-enrolment roll-out, turbulent market conditions as a result of ongoing Brexit uncertainty and the continuing low interest rate environment presented challenges to our sector.
"However I am pleased to report that we saw strong life and pensions new business sales with strong individual pension sales and increases in protection sales from our intermediary businesses both in the UK and Ireland and also our direct to consumer business.”
The company is now a major player in the Over 50s insurance market.
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“We are among the market leaders in improving access to products and ensuring better customer outcomes, most notably through our Over 50s life product which we believe offers a fairer deal than the market norm and now commands a 23% market share. We were also first to the UK market with an insurance product tailored specifically for people with either type 1 or type 2 diabetes.”
Loney said the asset management business delivered record net external inflows of £4.1 billion (2017: £2.8 billion) with funds under management remaining constant at £114 billion, due both to the sale of the Channel Islands business and the backdrop of volatile market conditions. Assets under Administration at Ascentric remained steady at £14.5 billion, showing a small uplift from £14.4 billion in 2017.
