Royal London Reports Profits of 404m for 2009

TEP – 31 March 2010

The Royal London group has posted profits of £404m for 2009, compared with a loss of £762m in 2008.

Royal London bosses stated an increased contribution from new business together with increases in the expected return for the year and positive benefits of modelling improvements had been offset by adverse operating experience and adverse assumption changes.

In addition, the contribution from new business had improved to £63m from £52m in 2008 - an increase of 21 per cent.

It said: "While the margin has benefited from the inclusion of the Scottish Provident business for the full year, this has been partly offset by the impact of a more prudent approach to accounting for development expenses.

"The overall results for the group are affected by the investment return on the with profits fund and the principal driver behind the £842m increase in after-tax profits is the improved investment return compared to 2008."

Over the year the group saw an increase in new life, pensions and asset management business, which saw profits on this part of the business increase 25 per cent to £80m from £64m a year earlier.

Meanwhile, the total present value of new life and pensions business premiums was up 10 per cent to £2,461m from £2,237m in 2008.

The group added the total assets under administration for the Ascentric wrap platform were up 94 per cent over 2009.

During 2009 funds under management for the group increased to £37.5bn, and Royal London stated it would be allocating a mutual dividend again for 2009, totalling £25m.

Furthermore, the Royal London with profits fund investments backing the asset shares delivered a pre-tax return of 12.4 per cent in 2009 from a negative 16.1 per cent in 2008.

Mike Yardley, group chief executive of Royal London, said: "In difficult conditions we have achieved a good overall performance.

"We have grown our sales, increased our profits from new business and further strengthened our capital position.

"The performance of our businesses is very good in the prevailing conditions, with the former Resolution businesses producing a substantial contribution to our profits.

"The group is financially strong with the IGD surplus increasing by a third during the year and group embedded value up by 28 per cent to over £1.8bn.

"As a result of our performance in 2009, I am pleased be able to announce that we are allocating a mutual dividend of £25m, which allows with-profits members to share directly in the success of their business.

"The economic environment remains difficult with little likelihood of a marked improvement in the short term. However, I am confident that the Group is positioned to continue to perform well."  

Elsewhere, the group has confirmed that it is at an early stage of discussions about a combination of Royal Liver's business with its own.

Royal Liver is an incorporated friendly society. It is the sixth largest mutual insurer in the UK based on assets of £3.7bn and gross written premiums of £212m as at 31 December 2008.

The group said: "There is no guarantee that any transaction will take place."