Royal London has posted a profit before tax and dividends of £551m for 2013, up 72 per cent on 2012, following a £150m one-off gain due to the purchase of Co-operative’s life, pensions and asset management business.
The Edinburgh-based provider reported continuing new life and pensions business of £3,464m for 2013, up by 18 per cent on 2012, plus group funds under management of £73.6bn, up 48 per cent on 2012.
Funds under management included £20.4bn from the Co-op acquisition.
Phil Loney, Royal London’s group chief executive, said the results reflect the fact a lot changed in 2013, both for Royal London and for financial services in general.
He said: “Our businesses had to contend with new regulations at the same time as tough market conditions. We did so, for the most part, very successfully by producing one of the strongest profit performances in the recent history of the Group.
“Just as importantly, the changes we have made to our business have improved our ability to deliver the best experiences and outcomes for our members, customers and intermediary partners.
“New business profits increased in the year. A slight decline in existing business profits reflects an increase in strategic investment in the business to support a number of key goals; our auto enrolment programme, our move to operate under a new Royal London Brand and the launch of our direct business later in 2014.”
Royal London also declared a mutual dividend to relevant policyholders of £81m, down on the £88m awarded in 2012.
Furthermore, Mr Loney said the results reflected the development “of a revitalised Royal London brand” and the building of a direct-to-consumer offering, which he insisted would bring additional revenues to the group through targeting mass market consumers not served by financial advisers.
Reflecting on the potential impact of the chancellor’s shock decision to remove the requirement to purchase an annuity, Mr Loney said he expects more savers to choose drawdown “once annuities are no longer compulsory”.
He said: “The increase in the trivial commutation limits is something we have long favoured but the imminent removal of all limits has fundamentally changed the way we think about pensions.
“Greater flexibility is certain to improve the attraction of pensions as a savings vehicle at just the time when more people than ever are joining corporate pensions as a result of automatic enrolment.
“The government’s new pension policy will increase the need for good advice in the run up to retirement. We look forward to working with government and our regulators to develop imaginative and effective ways of providing such guidance.”
