Royal London has posted pre-tax losses of £181m in the first half of 2020 as the coronavirus pandemic hit asset values and caused a reduction in bond yields.
In a market update today (August 10), the pension provider reported it had seen reductions in profits and sales across a range of its business lines as it dealt with the outfall but assets under management remained stable.
The firm saw overall profits plunge from a positive £397m in H1 2019 due to reduced new business and increased investment in digital solutions.
It saw life and pension sales decrease 18 per cent to £4.7bn in the first half of 2020, mainly due to individuals putting off investment decisions and companies delaying decisions to move pension provider.
Royal London’s pension sales have been down for some time as in the first half of 2019 less defined benefit transfer activity saw sales drop by 4 per cent.
But at the time, the provider said this business area was growing as more customers reached retirement and sought greater flexibility with their pensions.
Assets on the Ascentric platform meanwhile decreased 4.3 per cent to £15.5bn due to volatile market conditions. Ascentric was bought by M&G in May this year, which is expected to complete by the end of the year.
Overall, net inflows experienced a sharp decline to £997m in H1 2020, down from £5.5bn in H1 2019, as growth in demand for sustainable funds were offset by outflows in cash funds and fixed income funds.
Despite this, Barry O’Dwyer, group chief executive at Royal London, said the provider’s capital position “remains strong” as new business sales for protection products grew by 15 per cent to help offset losses in other areas.
Mr O’Dwyer said: “Covid-19 will inevitably continue to have an impact on new business prospects.
“Looking further ahead, our strong capital position and unrivalled reputation with advisers and customers will stand us in good stead as we continue to help customers meet their protection, investment and long-term savings needs.”
Kevin Parry, chairman at Royal London, said: “Royal London has successfully transitioned to 98 per cent of our people working from home, enabling us to continue to provide our normal high level of service to customers.
“We remained open for business without needing to ask customers to delay interaction with us and we did this without taking any government support.
“The professionalism of our people has been outstanding. A phased return to work has been introduced for a small number of key workers and we continue to put plans in place so more of our people can revert to office based working in a safe and measured way.”
amy.austin@ft.com
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