Royal London to pay policyholders £85m on annual profit rise

Thousands of policyholders at Royal London will share in an £85 million special payment after the Scottish Life-owner yesterday reported a jump in annual profits.

The firm said the "mutual dividend", which was up from 25m a year earlier, would allow "relevant policyholders to share directly in the success of their business".

Operating profit in the year to 31 December rose 42 per cent to 243m while profit from new business was up by a third to 107m, compared with 80m in 2009.

As revealed in the group's February update, new life and pensions sales totalled just over 3.1 billion, an increase of 26 per cent on a year earlier. The result was fuelled by strong performances from its pension and asset management arms.

Royal London is the largest mutual life and pensions company in the UK and has almost 2,800 staff, including about 1,300 in Edinburgh, with a further 300 jobs north of the Border outsourced to Capita.

Outgoing chief executive Mike Yardley said: "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."

He added: "The economic environment remains difficult, with little likelihood of a marked improvement in the short term. However I am confident that the group will continue to perform well."

The results showed that profit after tax - measured on an industry-standard European embedded value basis - totalled 313m, down from 429m, before deduction of the mutual dividend.

Earlier this week, Royal London announced that Phil Loney, Lloyds Banking Group's head of life and pensions, would be replacing Yardley as chief executive by October.