Royal London books higher profits despite sluggish economic growth


Royal London books higher profits despite sluggish economic growth

The mutual life and pensions firm said it is confident about hitting future financial targets.

An elderly woman at Rowheath House retirement home in Birmingham (PA)
An elderly woman at Rowheath House retirement home in Birmingham (PA)

Mutual life and pensions firm Royal London has reported a 9% rise in pre-tax profits, but it blamed sluggish economic growth and the end of the auto enrolment roll-out for tough conditions in the first half of the year.

The business struggled to boost its life and pension sales, which fell by £1 million to just over £6.077 billion, over the six months to June 30.

It said a rise in new business sales in personal pension and life assurance helped offset the drop in group pension sales as the auto enrolment launch started to come to a close.

But the firm still gained 86,000 new entrants to its group pension schemes over the first half of the year.

Royal London said it logged a 9% jump in pre-tax profits to £358 million over the period, despite tough comparatives a year earlier when the company benefited from a one-off £30 million boost after restructuring a reinsurance agreement.

Funds under management rose £3 billion to £117 billion over the period.

Royal London chief executive Phil Loney said: “Sluggish economic growth and the ending of the auto enrolment roll-out provided a challenging backdrop for pensions and investment companies in the first half of 2018.”

The group also experienced higher volatility in equity markets in the first half of 2018 due to “continued political and economic uncertainty as well as talk of trade wars”.

However, investments backing the asset shares of its Open Fund still managed a 1.2% return over the period.

Royal London assured the business is “well placed” to deliver on its future financial targets.

The company also said it is “confident” that “there will be no significant impact to the operations or the capital strength of the group” as a result of Brexit.

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The firm is currently in the process of setting up a subsidiary in Ireland in order to safeguard its EU business.

“We will continue to monitor the implications of the UK leaving the EU, but expect we will trade as normal,” Royal London said.

“We continue to work on behalf of our customers to provide them with stability and the best possible long-term returns.”

Press Association

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