The latest financials from Royal London show that a loss in 2018 was turned into a healthy profit of £436m before tax in 2019. Net asset management revenue went up by 29%, which offset a decline of 5% in the Life and Pensions sector of the business.
In the official statement however, Royal London added a note of caution for 2020;
We welcome the increased certainty that comes with the EU withdrawal agreement having been enacted, and look forward to the Government facilitating the advancement of the economically important insurance and asset management industries in the UK in a well-regulated environment. The last five years have been characterised by unprecedented growth in our markets, helped by legislative and regulatory change. We are now at a more mature stage post the introduction of auto-enrolment and pension freedoms. Consequently, growth in our markets is likely to return to long-term trend levels.
In the short term, the uncertainty surrounding the impact of coronavirus is expected to prolong market volatility and impact consumer confidence. As a result, trading conditions in 2020 are likely to be difficult.
Barry O’Dwyer, Group Chief Executive, commented:
“Royal London had a successful 2019 despite last year’s political and economic uncertainty. Our investment performance has been outstanding with 98% of active funds outperforming their three-year benchmark. Together with our reputation for excellent customer service, this has helped to attract more new business and we have seen another year of extremely strong net inflows.
Life and pension sales are lower than the record highs seen in recent years but our operating profit remains robust. Our mutual status means we share these profits with our customers and, since the introduction of ProfitShare in 2007, we have added more than £1bn to the value of eligible customers’ savings.
Coronavirus represents a new risk for the world economy and therefore for our business. Our current priority is the health and wellbeing of our colleagues so that we can continue to deliver for customers and clients. Our robust capital position means we do not expect the virus to have any material long-term impact on our business.”
Kevin Parry, Chairman, commented:
“In these challenging times for public health, insurance has never been more important. We continue to meet society’s needs for high quality life insurance, investment and pension products.
As a mutual, we are member-owned. Our ProfitShare is 7% lower than last year due to the economic outlook indicating that the low interest rate environment will continue for some time yet. Our strong financial performance has helped to limit the economic impact on this year’s award, allowing us to add an aggregate £140m to eligible customers’ savings.”