Deteriorating market conditions in the second half of 2007 led Royal London to a £345m drop in before tax profit (IFRS basis) last year, to £128m.
Royal London says the difficult market conditions impacted investment returns, which fell from £2.28bn to £865m.
Aside from investment return, the firm says it performed well last year, with before tax operating profit (EEV basis) climbing to £147m, up from £116m in 2006.
Royal London increased its new business contribution by £14m in the period, to £61m – while funds under management climbed to £33.1bn, up from £30.8bn at the end of 2006.
Mike Yardley, Royal London group chief executive, says the results reflect the financial strength and profitability focus of the firm.
“The best indicator of the underlying performance of the business is the EEV operating profit, which shows a healthy increase of 27% over 2006,” he says.
“I am also delighted with the 30% increase in new business contribution to profits.
“It is clear that some of our competitors are willing to write unprofitable business. We will not follow them and are proving that we are able to continue to increase new business in many market sectors whilst remaining focussed on profitability.”
Yardley also says Royal London’s planned acquisition of certain Resolution businesses and assets is well underway.
“The Resolution transaction will strengthen Royal London’s position in the protection market in the UK and also our international operations,” he says.
"Looking forward, our strategy remains unchanged. We will continue to focus on our core markets - pensions, protection, international and asset management – and on writing new business we believe will be profitable.
“Although there will undoubtedly be challenges to be overcome from turbulent economic conditions, Royal London is well placed to continue to grow profitably."
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