Royal London’s strategy to expand its distribution networks to become more easily accessible to consumers helped the life and pensions provider make a profit for the first time in new direct to consumer business.
Direct new businesses became profitable for the first time during 2016 with business margins at 1.4 per cent, compared to a loss of 8.8 per cent in 2015, and an 82 per cent increase in consumer sales to £301m.
Last year Royal London announced a partnership with 11,000 Post Office locations to sell its life insurance products, and also offers prepaid funeral plans through Co-operative Funeralcare and Ecclesiastical Insurance.
Royal London’s Ascentric wrap platform saw assets under administration increase by a quarter to £12.3bn, but suffered £44m of added cost due to the revamp of its backend software.
Its intermediary life and pensions business was up by a third to £647m after the company moved to bring all its protection business under the Royal London brand and introduced an online underwriting option.
Demand for workplace pensions provided a 38 per cent boost to group pensions to £3.bn, and the introduction of the drawdown governance tool for advisers along with the ongoing popularity of the Governed Retirement Income Portfolios (GRIPs) provided stable performance in individual pensions and drawdown.
Rising bond values and low interest rates boosted funds under management at Royal London Asset Management to a record high £100bn during 2016, up from £85bn in 2015.
Phil Loney, group chief executive of Royal London, called 2016 a “turbulent” for politics and markets but said that the business’s strategy to broaden its distribution networks was “coming to fruition”.
“It is clear from the sustained track record of growth that our strategy is working: we are delivering high-quality products and service; we are investing in our capabilities, making it easier for advisers to do business with us; and we are entering new consumer markets to offer better value where we see that the market is delivering a poor deal for consumers.”
julia.faurschou@ft.com
