Scottish Life boosts Royal London profits

A strong performance from pensions arm Scottish Life helped Royal London's operating profits rise 42% to £243m in 2010 compared to the previous year.

The contribution from new business for the year was £84m; an improvement of 33% over the period.

Scottish Life performed particularly well, increasing its new business contribution by 88% with sales in 2010 up 37% to £2,159m (2009 £1,578m) on a PVNBP basis.

Royal London says: "Whilst the sales in the first quarter of the year were boosted by the implementation of the change in the minimum pension age, sales volumes throughout the rest of the year remained strong."

The group's total present value of new life and pension business premiums also increased by 26% to £3,104m (2009 £2,461m).

Meanwhile, its asset management and administration businesses have continued to grow, with funds under management rising from £37.5bn to £42.2bn. Wrap Ascentric more than doubled assets under administration to £2.5bn at the end of 2010.

Its with-profits fund investments delivered a pre-tax return of 13.1% in 2010 (2009 12.2%) and 1.2% above the benchmark (2009 1.6% above benchmark). All major asset classes also outperformed their sector benchmarks.

As a result of its strong performance, Royal London is paying a mutual dividend of  £85m, well up on the £25m paid out in 2009.

Mike Yardley, group chief executive of Royal London, says: "The overall performance of our businesses has been impressive, especially given the prevailing conditions.

"We have grown sales; increased significantly our operating profit and our profit from new business; and further strengthened our capital position. The group is financially strong, with the IGD surplus increasing by 56% during the year and group embedded value up by 12% to over £2bn."

The group says it has also continued to work closely with Royal Liver during the year on the potential transfer of its business to Royal London.

"Strategically, the transfer of Royal Liver would add more scale to the Royal London Group. Further updates will be provided as and when appropriate," it says.