Mutual life and pensions firm Royal London has reported higher profits in the first half of the year despite a “challenging” backdrop, as the company’s chief executive called on the UK government to plan for life after Brexit.
The business, which employs some 1,400 staff in its Edinburgh and Glasgow offices, reported a 9 per cent jump in pre-tax profits and a £2 million rise in operating profits for the period to 30 June.
Life and pensions sales took a £1m hit, dropping to £6.077 billion, while its new business margin held steady at 1.8 per cent.
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. I’m pleased to report that Royal London has consolidated its record 2017 trading position with EEV [European embedded value] pre-tax profit up 9 per cent to £358m, reflecting an operating profit of £187m in the first six months of the year.”
The group reported that the investments backing asset shares of its Open Fund achieved a 1.2 per cent return, amid volatile equity markets due to “continued political and economic uncertainty as well as talk of trade wars”. Funds under management rose £3bn to £117bn over the period.
Speaking to The Scotsman, Loney described the insurance sector as “very well prepared” for the UK’s departure from the EU, but said regulators must be able to influence policy after Brexit.
He said: “We don’t want to be outside the EU, taking regulation from the EU, but not at the table influencing it. We, that is the regulators, need to be able to set the regulation for the UK.” And he urged the UK government to ensure there is a plan in place for increased pension contributions once Brexit comes into effect. He also called on the government to salvage a proposed pensions dashboard project, a secure online portal that allows users to view all their pensions schemes in one place.
Loney added: “The fear is that with all the legislative time being devoted to Brexit, we’re not going to get the legislative time that we need. There is a danger that the [Department for Work and Pensions] will lose interest.”
Royal London is currently turning its Irish arm into a subsidiary that will continue to trade after the UK leaves the EU, and which Loney saw as a logical step for the company.
He said: “For the last two years now the regulators, I think quite rightly, have been speaking to insurance companies to prepare for the worst, to prepare for a hard Brexit. It was natural for us to turn our Irish business into a subsidiary in the EU.
“There will be some new jobs out in Ireland but not at the expense of the UK.”
The firm employs some 3,745 staff across all locations, and in 2001 bought Scottish Life, which was founded in Edinburgh in 1881.