Surging demand for flexible personal pensions and a government drive to get all businesses to offer a workplace pension helped leading mutual company Royal London to post a 17 percent rise in full-year operating profit. The member-owned group, the UK's largest mutual life insurance and pensions company, 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.
"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," Chief Executive Phil Loney told Reuters. 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 percent 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 percent. 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.
The company has also 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.
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.