In its 2022 financial results announcement this week, UK ICMIF member Royal London reported that it had added a total of GBP 675m over the last two years to its long-standing customers’ policy values as a result of its closed with-profits fund consolidation programme, which is now complete.
The mutual insurer also announced that its customers will continue to share in the success of the organisation through a ProfitShare allocation of GBP 155 million.
Each year, Royal London aims to boost its customers’ retirement savings by adding a share of its profits to their plans. ProfitShare is a discretionary enhancement for eligible Royal London customers with unit-linked or with-profits policies. The allocation is considered annually and depends on a number of factors. Since the introduction of ProfitShare in 2007, Royal London has added more than GBP 1.2 billion to the value of eligible customers’ savings.
Royal London is the UK’s largest mutual life, pensions and investment company, providing long-term savings, protection and asset management products and services in the UK and Ireland. Its strategy is built around being an insight-led modern mutual, focused on growing sustainably by deepening customer relationships.
Barry O’Dwyer (pictured speaking at the ICMIF Centenary Conference, see below), Group Chief Executive, commented: “In 2022 we concluded our programme to simplify our business. As a direct result, Royal London has been able to increase the value of our long-standing customers’ policies by GBP 675 million in total through the consolidation of closed with-profits funds. We have also successfully modernised many elements of our business, introducing more efficient digital services for over four million customers whose policies have been moved onto enhanced systems.
“During the year we have continued to see good growth, delivering a 12% increase in new business sales in 2022. Supported by our focus on cost efficiency as we have streamlined our operations, this has driven a 58% increase in operating profit.”
Kevin Parry OBE, Chairman, commented: “Our ability to share our success with customers is only possible because we are a mutual. Our aim is to invest continually in our business while awarding discretionary ProfitShare every year. We have again maintained our allocation rates awarding GBP 155 million to eligible customers. Our continued strength means they are receiving ProfitShare for the seventh year in a row, demonstrating Royal London’s consistent approach.
“We also believe our role and responsibilities extend to supporting wider-society and in 2022, charitable and social impact initiatives benefited from over GBP 2 million in donations and support, the equivalent of 1% of our operating profit. This included support for our flagship national charity partner Turn2us, who provide guidance and financial relief to families in crisis. In addition, we also broadened our charitable giving to organisations who are focused on preventing and limiting the impact of serious illnesses, including Cancer Research UK, and we will be looking at additional opportunities to build on this over the coming year.”
Driven by purpose
Royal London’s mutual status helps it to be genuinely purpose-driven. Since it was conceived in 2020, the articulation of its purpose – ‘Protecting today, investing in tomorrow. Together we are mutually responsible’ – has truly galvanised its colleagues. It has allowed the mutual to successfully navigate short-term challenges, while focusing on the long-term.
Clarity of purpose ensures the company is very deliberate about the role it will play and the difference it intends to make for the benefit of its members and customers, and wider society.
While its purpose determines its direction, Royal London’s strategy to deliver it is to be an insight-led modern mutual, growing sustainably by deepening customer relationships. This means it will use the information customers share with them to help build their financial resilience in a sustainable way.
Sustainability is a key part of Royal London’s strategy. First and foremost, the mutual wants to help customers to maximise their financial security but it also wants to help them build the best possible world to retire into. This is a complex area but the company wants to its customers’ collective strength to best effect, influencing positive change in the companies where its invests customer’s money and using its voice as the UK’s largest mutual insurance group to lobby policymakers for societal change.
Royal London also wants to be financially sustainable. That means being careful stewards of its capital, investing sufficiently to make sure products and services remain competitive, managing costs carefully to generate the best possible value-for-money and sharing the benefits of its success with eligible members via ProfitShare.
Royal London’s Group CEO Barry O’Dwyer was a panellist in a panel session at the 2022 ICMIF Centenary Conference in Rome, Italy, on”Mutuality at the heart of a purpose-driven business”. This panel of ICMIF member CEOs looked at how mutual/cooperative insurers were embracing their mutual purpose and values as part of ambitious growth strategies to create long-term, sustainable value for all stakeholders; how mutuality acts as an enabler for their purpose-led businesses; and how they create a competitive advantage through their mutual difference.
A recording and summary of the session can be accessed via the ICMIF Knowledge Hub or please contact ICMIF to be sent the link.