Barry O’Dwyer, group chief executive at Royal London, is hopeful that profit and sales losses experienced in the first half of this year due to Covid will reverse once markets start to show signs of recovery.
Mr O’Dwyer told FTAdviser he was “not particularly worried” after Royal London posted pre-tax losses of £181m for H1, and also saw operating profits and pension sales fall, saying these would bounce back post-Covid.
He said: “We are not worried about today’s results and these things even themselves out over time.
“Operating profit is down because we had a challenging first six months of the year but our capital position is still robust so there is nothing worrying in any of those numbers.”
In yesterday's results, Royal London saw its 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.
The pensions side of the business had already seen sales drop in recent years but Mr O’Dwyer was confident the issue would “fix itself over time”.
He said: “Last year’s losses were due to a tail off in defined benefit transfers and our numbers were again down this year due to Covid-19. We are hopeful this will also fix itself over time.”
Mr O’Dwyer also said its drop in new business was a result of adviser firms having to adopt their processes during lockdown and is expecting a pick up in activity later this year.
“One thing that hit pensions hard in the first half of this year was disruption to IFA business models,” he said.
“A lot of IFA businesses run a personal business with face to face advice and this was hit hard by lockdown.
“IFAs have now changed their business models and are doing more video conferencing etc. We expect advisers will fix their business to cope in a socially distanced environment moving forward and we will see a pick up in activity in the second half of the year and beyond.”
However, while the firm expects business to grow with regards to individual pensions, it is likely there could be a slump on workplace pensions as government job support is removed.
Mr O’Dwyer said: “The individual side of pensions tends to be made up of individuals who already have substantial savings and there is a huge demand for advice.
“At Royal London we are a very heavily intermediary business and work well with IFAs and this side of the business will continue to grow.
“But on the workplace pension side a lot depends on the wider economy.
“We are coming to the end of the furlough and nobody really knows exactly what to expect when support is withdrawn.
“There may well be short term hit to workplace pensions as redundancies are expected.”
amy.austin@ft.com
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