Scottish Life’s parent back in profit

ROYAL London, the UK’s biggest mutual life and pensions company behind brands including Scottish Life, has delivered a swing back into profit in the first half of the year driven by strong new business figures.

In his last results announcement before he steps down as chief executive in October, Mike Yardley said growth at the group’s life and pensions division had offset continuing tough trading in its insurance products operation.

Its Royal London 360° business, which services offshore investors, was the star performer with new business up by 37 per cent to £209 million.

Edinburgh-based Scottish Life saw new business rise by 10 per cent to £1.24 billion helped by winning a major group pensions scheme. But Bright Grey and Scottish Provident, which specialise in products such as critical illness policies and have been affected by the weak mortgage market, saw new business down 17 per cent at £141m.

The net new business growth helped the company swing from losses of £2m in the first half last year – blamed on poor stock market conditions – to pre-tax profits of £138m in the same period this year. Operating profits were up 11 per cent to £123m.

Yardley, who is being replaced in his role by Phil Loney who is managing director of life, pensions and investments at Lloyds, said: “The group has once again delivered a good set of financial results and is clearly financially robust. We have increased the operating profit, which we believe is the best measure of performance, as well as improving the contribution from new life and pensions business.

“Markets may well continue to be volatile, but our strong capital position will help ensure that Royal London continues to deliver good performance.”

Yardley said that although Scottish Life and Royal London 360° had performed very well, the protection market continued to be difficult.

“2011 will be a challenging year for the economy, but I am confident our focus on quality products and quality service will help us to continue to deliver good performance,” he said.

“The group is in good shape and has the potential to move on to even greater achievements in the coming years.”

The departing chief executive said he hoped to have news of Royal London’s bid to acquire Co-operative Financial Services’ life and pension business, which has around £20bn in funds under management, “in the near future”.

Earlier this year, Royal London took over troubled rival Royal Liver, which had some £3.1bn of assets. Last week the company brought an end to 100 years of Royal Liver’s occupancy of the Merseyside building that bears its name. More than 100 jobs will be lost as Royal London absorbs the company.

The life and pensions group has about 1,300 staff in Edinburgh, with a further 300 north of the Border outsourced to Capita.