Speaking to FTAdviser this morning following its results (August 5), O’Dwyer said RL was always looking for investments to allow it to deliver a better service.
However, he said it was unlikely that RL would enter into a merger.
Earlier this year, Royal London was in talks with its rival LV on a possible deal between the two firms.
Two days later, the firms ended talks about a possible merger, after LV said it had become clear "that our different mutual models mean such a merger would not be in the best interests of LV= members".
Discussing any future deals, O’Dwyer said: “Mergers are very unusual and LV was a particularly unusual case with another mutual.
“Now that's gone away, I don't think you will see us merging with anybody else, but we're always looking at ways that we can acquire additional capabilities into our business.”
When markets rise, we make a stretch free profit, but it has nothing to do with the amount of work that we're doing. Barry O'Dwyer, Royal LondonLast March, Royal London acquired robo-advice business Wealth Wizards from LV.
Wealth Wizards comprises a digital platform for advisers, a guidance and advice platform for financial services businesses, and a regulated digital financial adviser.
O’Dwyer said Wealth Wizards was a good example of the firm acquiring a business and taking a stake.
“When we bought that we took a stake in Responsible Life, which is a later life lending company,” he said. “That's a strategic stake that we expect to hold long term.
“We will make acquisitions or make investments that mean we can bring more capability into the business so that we can deliver a better service for customers, but it's not as if we are always looking for the next deal.
“It's more that where we think that we can bolt on additional capability, then we'll look to do that by acquisition where that makes sense.”
Half year results
Earlier today, 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.
O’Dwyer said: “The loss doesn't really focus on the operating profit and that's up substantially year on year. The loss is almost like a technical result as a result of what happens on markets so when markets fall, we make a statutory loss.
“When markets rise, we make a stretch free profit, but it has nothing to do with the amount of work that we're doing.”
He argued it was the impact of having “a huge balance sheet”.
We are working to try and sort of increase the size of that market but it has been a challenging six months for the protection market. - Barry O'Dwyer, Royal LondonNet 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.
“Our flagship is the government range, which is the default on our workplace pensions, but it's also the most popular choice for individual pensions, and that's continued to see strong net flows.
“We think advisers are turning to the governed range because first and foremost, in tough times, people go back to the brands they trust, and advisers trust Royal London.”
He added: “We've got a fantastic range. It's got great value, great performance, great service. But just as importantly, it's a broadly diversified multi asset solution with responsible investment as standard and it's a fantastic adviser proposition.
“It's great for their clients, and it has performed really, really well over a very long track record.”
Digital advice tool
In March, Royal London began the roll out of a “digital guidance” tool as it looked to point more of its 9mn customers to the value of advice.
“The impact has mostly been actually on customer sentiment rather than on the results because it was a free service that we offer to our work best mentioned clients,” he said.
“It's built with Wealth Wizards, and it's designed really to help people make good choices, particularly when they're facing a squeeze on household incomes like we are at the moment.”
O’Dwyer explained the new tool was about helping customers get a good financial health check, and he has seen "very strong" growth in the workplace pension volumes.
“Part of that we think is down to the strength of our offering and the breadth of our offerings,” he said.
“The fact this comes as standard for our workplace schemes has resonated well with workplace clients and so we've done well in the first half of this year in winning new workplace schemes.”
He added although part of that was down to innovation, the other aspect [of growth] was down to its governed range.
Meanwhile, Royal London’s protection business saw a spike during Covid but has fallen back since.
In April, Royal London expanded its 'underwrite later' option to a wider range of products after its initial launch last year.
Introduced in January 2021 for life cover on business and relevant life plans, 'underwrite later' allows clients to get cover while medical evidence is being obtained.
“We extended the regulator to other products. That's been a fantastic innovation for us and advisers love it but the protection market hasn't grown - in fact, it has fallen back in 2022.”
O’Dwyer added: “We still have work across the whole of the market to fill the protection gap. We're doing a lot of work with advisers who wouldn't naturally sell protection business to introduce how they can help their clients with some protection solutions, particularly in protecting against an inheritance tax.
“We are working to try and sort of increase the size of that market but it has been a challenging six months for the protection market."
sonia.rach@ft.com
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