Royal London continues to share profits with customers

9 March 2022

Royal London profit share B ODwyer - March 2022

ICMIF member Royal London (UK) announced last week that its customers will continue to share in the success of the mutual through an increase in its ProfitShare allocation.

As part of the announcement of its annual results for 2021, Royal London said its ProfitShare allocation to 1.8 million eligible customers would increase by 15.8% to GBP 169 million in 2021 (2020: GBP 146 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 pensions, protection and wealth management products and services in the UK, and protection products in Ireland. Its strategy is built around being an insight-led modern mutual, focused on growing sustainably by deepening customer relationships.

Commenting on the annual results, Barry O’Dwyer (pictured), Group Chief Executive said “In 1861, Royal London was established by working people to help families to protect themselves from the shame of suffering a pauper’s funeral. Although our business has grown and developed over the years, our purpose as a mutual has never been more relevant. We help families in the UK and Ireland to protect what they have today and invest in a better tomorrow. We are responsible stewards of our customers’ money. As a mutual, our customers get to share in our success.

“2021 was a good year for Royal London. Sales and profits are both up on last year. We have maintained very strong flows into our asset management business, helping assets to hit record levels. Our Governed Range remains a hugely popular choice amongst independent financial advisers and this range alone accounts for over GBP 50 billion of our customers’ investments. The action we have taken to reduce the carbon intensity of the equity investments in this range shows that a well-run portfolio can generate excellent returns in a responsible way.”

Kevin Parry OBE, Chairman, commented: “We are committed to our mutual status and are strong advocates of the role mutuals play in financial services. This year we will share GBP 169 million with 1.8 million eligible customers. Since we introduced ProfitShare in 2007, Royal London has returned more than GBP 1.2 billion, which is only possible because we are a mutual.

“In the last 10 days, the conflict in Ukraine has significantly increased the human and socio-economic risks in Europe and the World. We are closely monitoring all developments and have made an emergency charitable donation of GBP 250,000 to the British Red Cross Ukraine Crisis Appeal that is providing humanitarian relief in Ukraine.”

Delivering with purpose

The year 2021 was a year of challenge and opportunity, in which Royal London supported its customers as society began to emerge from the Covid-19 pandemic.

In 2021, the company received over 100,000 calls in relation to bereavements across protection and pension products, paying out GBP 25m in Covid-19-related claims. During the year, it paid out protection claims totalling GBP 596m in the UK, helping approximately 80,000 customers.

Royal London has continued to enhance its propositions to meet customer needs. Over 2021, it introduced new products across all three business units.

The mutual also launched Investment Pathways – a range of solutions aimed at non-advised customers who are moving their pension into income drawdown. In addition, it progressed the consolidation of four with-profits funds, already closed to new business, into the Royal London Main Fund, with an uplift in policy value for all eligible policyholders.

Its initiatives to help build financial resilience included the launch of ‘How to Die Well: a practical guide to Death, Dying and Loss’, which was part of its ‘Lost for Words’ campaign. This book features practical, emotional and financial guidance for people dealing with bereavement.

As a responsible investor, Royal London continued as one of the clear leaders in this area and have a track record measured over decades rather than months. In 2021, it added further to its range in with the launch of a Global Sustainable Credit fund, complementing the Global Sustainable Equity fund launched in 2020.

The COP26 UN Climate Change conference in Glasgow last year was a major milestone in putting action to limit climate change centre stage. Royal London was there, making the case for its customers. As a guardian of substantial funds, it can play a significant part in influencing how we move fairly to a sustainable world.

Investing for the future

Royal London is investing in programmes to simplify and modernise its infrastructure and have progressed its Legacy Simplification programme. By focusing on fund consolidation and system migration, the company has created a more efficient and de-risked operating model, improving the quality and ease of customers’ servicing experience.

Through its Legacy Simplification programme, it is migrating legacy books of business from older mainframe systems onto a single more modern IT system to reduce risk and improve services to customers. Two system migrations were completed in 2021, moving over 171,000 policies. This work builds on the migrations completed in 2020 and brings the total number of migrated policies to 3.2 million.

The mutual recognises the need to continue to build on its digital capabilities, as through data-driven insights it can better understand and anticipate customer needs and behaviour. Together with increasing digital capabilities, this insight helps Royal London support advisers more efficiently. To this end, the company acquired Wealth Wizards, a digital platform for financial advisers with market-leading technology to help improve efficiency in the provision of advice.

For member-only strategic content on the cooperative/mutual insurance sector, ICMIF members have exclusive access to a range of online resources through the ICMIF Knowledge Hub.

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