Royal London Reports Increased Profits Print E-mail

TEP – 8 October 2009

Profits at mutual life and pensions company Royal London has increased by 8 per cent at £108m in the six months to 30 June.

The increase of the European embedded value from £100m in the same period last year was helped by high new business margins and a strong increase in protection business margins from 4 per cent to 7.6 per cent according to the Edinburgh-based insurer.

It added that EEV profit before tax of £49m the same period last year was at a loss of £284m and new life and pensions business premiums increased 12 per cent to £1.2bn from £1.06bn.

Mike Yardley, group chief executive of Royal London, said that increasing operation profit is a good result.

He said: "As our markets continue to be affected by the difficult economic environment, increasing the operating profit to £108m is a good result. We continue to focus on our core markets - pensions, protection and asset management.

"The success of this strategy is demonstrated by the significant contribution from new business, which also includes the former Resolution businesses we acquired last year. All these businesses have been integrated into the group and are performing in line with initial expectations. New business margins were higher than in the first six months of last year with a particularly strong increase in protection business margins from 4 per cent to 7.6 per cent.

"The profit before tax compares favourably with a loss in the same period last year, mainly because of better investment performance. Since the end of June, markets have risen sharply resulting in a significant increase in our capital surplus. Business performance in the third quarter has continued to be satisfactory."

Standard & Poor's said in an analyst note written in June, that to succeed, the group needs to continue to differentiate its offering from that of the competition. Management has taken strong action to meet this challenge, addressing historical weaknesses in service and IT and thereby placing the group in a favourable position relative to that of many peers. Competitive position has also been supported by strong capitalization, product innovation, and a competitive expense base.

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