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Royal London sees 21% jump in new business profits

Royal London sees 21% jump in new business profits

Royal London has revealed “strong” new business figures, particularly in intermediary pensions and in the wealth business, resulting in new business profits of £85m, up from £70m in 2013, and existing business profits of £159m, up from £140m the year before.

The annual result, published today (31 March), revealed an operating profit before tax of £220m for 2014, up 12 per cent on 2013.

However, profit from continuing operations before tax and profit share fell 53 per cent to £259m last year. Royal London blamed this on a one-off £61m charge relating to the workplace pensions charge cap.

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Asset management and administration businesses continued to grow last year with total group funds under management increasing from £73.6bn as at 31 December 2013 to £82.3bn at 31 December 2014.

Ascentric, Royal London’s wrap platform administrator, increased its assets under administration by 22 per cent during 2014 to £8.9bn.

Pension volumes were up 49 per cent on 2013 due to the group pensions market following the introduction of auto-enrolment. Bosses claimed the boost was also down to the strength of Royal London’s individual pensions and drawdown propositions.

The increase in margin is largely attributed to a reduction in acquisition and maintenance unit costs resulting from the increase in volumes of business sold, Royal London added.

Protection, comprising the Bright Grey, Scottish Provident and Caledonian Life brands, saw overall volumes down. Royal London said this reflected the very competitive protection market in 2014 at a time when margins increased reflecting the higher value associated with this business arising from lower market yields at December 2014.

Royal London Asset Management’s new business volumes from new asset management mandates were down 5 per cent on 2013, while the margin has increased slightly.

Phil Loney, Royal London’s group chief executive, said: “The last year was marked by a very strong trading performance and a healthy increase in operating profit.

“New business performance was strong with particularly good contributions from group pensions and sales of income drawdown products. We anticipate that these will continue to be areas of growth for some time to come.

“We continued to see strong inflows into our investment management operations. 2014 saw significant inflows into our equity income, cash plus and fixed income funds.

“We are building our protection offering. The intermediary protection business is seeing a positive response to the improvements we made in the final quarter to both technology and improved critical illness definitions.

“Our consumer protection business has been growing significantly since it started marketing insurance products direct to consumers in Q4 2014. Our new consumer division is now offering three new products.”

emma.hughes@ft.com