Royal London Asset Management  

Royal London profits slump due to market volatility

Royal London profits slump due to market volatility

Royal London posted a pre-tax loss of £228mn for the first half of the year due to falls in equity and bond markets.

In its half year results for the first six months of 2022, announced this morning (August 5), Royal London saw pre-tax losses hit £228mn, a significant fall on the £228mn in profits for the same period last year. 

The firm said falls in equity and bond markets led to negative economic variances compared to its expected return assumptions for assets supporting the life funds.

Assets under management fell to £150bn, down from £164bn at the end of 2021, with net inflows offset by negative market movements.

Net inflows were up to £2.5bn, compared to £405mn in the same period last year and its flagship governed range saw net inflows of £1.5bn, with AUM stable at £51bn. 

Royal London said this was down to increased pensions market activity and its long-term savings and investment offerings.

It saw 140,000 new pension policies taken out by customers during the first half of 2022, increasing the total number of UK pension policies to over 3.1mn.

The life and pensions new business sales were up 19 per cent at £5.5bn, up from £4.6bn in H1 2021, driven by a 24 per cent rise in individual and workplace pensions sales.

This comes as earlier this year, Royal London rolled out out a “digital guidance” tool to point more of its 9mn customers to the value of advice.

It was designed to give customers a “financial health check” and was delivered using the new technology through Wealth Wizards, a robo-adviser the mutual bought a year ago.

Royal London chief executive Barry O’Dwyer said: “As the increased cost of living continues to create uncertainty, building customers’ financial resilience remains at the forefront of our priorities. 

“In partnership with Wealth Wizards, we have delivered a free online tool which helps workplace pension members to assess and build their financial wellbeing. We are committed to supporting our members and customers to make the right, informed choices to protect their standard of living now and over the long term.” 

Meanwhile, the results also reported operating profit before tax for the firm at £109mn, up from £80mn in the same period last year.

“Recent market turmoil means that investors look to their independent financial advisers for reassurance and these advisers, in turn, look to providers they can rely on,” O’Dwyer said. 

“The trust advisers have in Royal London comes from a consistent track record of transparent investment governance, excellent returns, market-leading service and a mutual mindset focused on delivering for customers, not shareholders. 

“As a result, we have seen strong growth in new business sales, helping to deliver a 36 per cent increase in operating profit over the first half of the year."

The firm also reported UK protection sales slowed as the market has returned to pre-pandemic levels.