LOW interest rates and difficult economic conditions took their toll on Scottish Life-owner Royal London in the first half of the year.
The company, the UK’s biggest mutually-owned life and pensions group whose brands also include Scottish Provident, Bright Grey and Caledonian Life, saw a 25 per cent fall in operating profits for the six months to 30 June to £94 million. New business dipped 1 per cent to £1.78 billion, with sales at its key Scottish Life pensions arm down 3 per cent to £1.2bn.
Group chief executive Phil Loney said low interest rates reduce revenues from customer policies and increase the value of liabilities in the group’s defined benefit pension schemes
But he said the group’s new business results show that Royal London was “trading robustly in a flat economy and a very competitive market”.
Loney said the 46 per cent increase to £221m seen in intermediary new business at its Bright Grey and Scottish Provident critical illness and life insurance business was “particularly pleasing”.
“In addition, we have improved our position in the group pensions market thereby matching the significant boost we experienced as a result of one large new group pension scheme in the first half of 2011,” he added.
Funds under management at the asset management arm stood at £44.9bn at the end of June, up 2 per cent on the £44bn recorded at the end of 2011.
The group said it had recently won a number of new mandates and expects “significant inflows” over the remainder of the year.
“Investment performance remains strong and our funds continue to gain external industry recognition through independent ratings,” said Loney.