In the first six months of this year, sales at the Isle of Man-based company fell by 8%, from £209m to £192m, compared with the first half of 2011. This is significantly less than sales at some of Royal London’s competitors, many of which witnessed falls of around 20%.
Royal London said sales were supported by a decision taken earlier this year to re-focus the business away from “big ticket, low margin” single premium business to high margin, regular premium business. This push began at the start of the year, with the re-pricing of its Quantum product – sales of which increased by 62% during the first half of this year.
Natalie Hall, director of marketing at Royal London 360°, said regular premium business is a “far easier sell” in the current investment climate, and points to stats from the Association of International Life Offices which revealed that regular premium business overtook that of single premium for the first time last year.
Hall added that the business also has a strategic focus on attracting quality business.
“We do not write business at a loss just to grab headline APE, new business volume is not important to RL360°, it is the quality of the business that makes the difference,” she said.
“By focussing on working with distributors who have good persistency – which means good quality advice – providers can ride it through the tougher times a little easier.”
At the group level, Royal London, which is the UK’s largest mutual life and pensions company, also reported strong first half results, with only a 1% fall in its total new business from £1,799m last year to £1,780m in 2012.
Assets under management at the group also proved resilient to economic headwinds, with the company chalking up record AUM of £47bn.
The strong AUM were supported by a rise in assets under management on the company’s platform, Ascentric, which increased by 16% from £3.7bn to £4.3bn. However, new business, or as it is reported by Ascentric – new assets under management – fell by 21% during the six month period.
Despite the resilient results, profits have suffered. In European Embedded Value terms, the company saw profits fall 13% from £123m to £107m, while IFRS operating profit and IFRS before tax were down 25% and 38%, respectively.
“Our profits have been impacted by the adverse economic conditions and particularly the continuing low interest rate environment, which reduces the pace at which revenues emerge from the policies held by our existing customers and members and which increases the value of liabilities in the group’s defined benefit pension schemes,” said group chief executive Phil Loney.