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Royal assembly

Given the number of new entrants into the offshore market last year, Royal London can be said to have bucked the trend by merging its two international businesses into one. The mutual acquired Scottish Provident’s protection and offshore arms from Resolution during the first quarter of 2008 in a deal that was completed by June.

The decision was immediately taken to combine Scottish Life International and Scottish Provident International Life Assurance into a single provider and the new entity, Royal London 360°, officially launched last month.

Merging two businesses is never easy but the relative lack of overlap between the pair must have made this particular consolidation more straightforward than most.

Spila, when under Abbey ownership, had predominantly concentrated on the high-net-worth UK market and also had a licensed operation in Hong Kong. In contrast, SLI’s main focus has been on the Middle East, where it has offices in Lebanon and Dubai, along with Germany and the Far East.

Head of marketing Douglas Law says that the decision to opt for a new brand name was designed to reflect both the strength of the group and its increased diversity and global reach.

He says: “We consulted with our regional managers and key brokers and it became apparent that there were clear advantages to using the Royal London brand. It has a lot of strength and heritage and SLI had operated under the Royal London name in Germany.”

The decision about which product lines to retain was largely driven by geography. Spila’s Select portfolio bond has been kept as the firm’s core offering to the UK market. As an offshore bond offering, access to over 1,000 funds and featuring withdrawal facilities, a range of currencies and a flexible charging structure, Law says it is best sui-ted to its high-net-worth target market.

Similarly, Choice, Spila’s investment bond for the Hong Kong market, was retained and will now also be distributed through the third party links that SLI had established in the region.

The same logic holds with the products marketed by SLI in the Middle East. The Personal Investment Management Service, which is in effect a single-premium investment bond, Protected Lifestyle, a flexible life insurance policy, and Paragon, a regular savings plan launched last June, will continue to be sold with the same terms but under the Royal London 360° monicker.

The only significant area of overlap was in the trust space but these have been rationalised to incorporate a range of core products alongside more niche offerings, such as qualifying recognised overseas pension schemes (Qrops).

The main concerns of advisers when any firm undergoes such major corporate activity centre upon the continuity of products and, even more importantly, the maintenance of service standards.

Royal London 360° appears to have achieved both. Jason Witcombe, a director at Evolve Financial Planning, has clients in what were the Spila offshore portfolio bonds. “We have not had any issues throughout the transition, it has just been business as usual,” he says.

Indeed, Royal London’s offshore business volumes appear to be have been largely unaffected by the merger and its potential for upheaval, with total sales up by 1 per cent last year.

Group chief executive Mike Yardley says: “This was a satisfactory result in the context of the economic environment and given the significant amount of work needed to integrate the business with Scottish Provident International to create Royal London 360°.”

Sales of portfolio bonds rose by 11 per cent in the UK and by 25 per cent in international markets in 2008, taking the combined offshore business’s assets under management to £3.2bn.

Law admits that the offshore market is becoming increasingly competitive, however. The entry of Standard Life, Legal & General and Prudential into the fray over the past two years has brought new pressures on pricing.

Jo Roberts, a director at, says that Royal London 360° rarely appears in the top three names when it gets quotes on terms for new business.

Law accepts this and there is a suggestion that some of the attractive charging and commission structures being offered are part of a landgrab by the newer entrants.

“The UK is a key market for us but we are very clear that every case has to be profitable and arguably some of our competitors, judging by a number of the quotes we have seen, are writing business on terms that are just not sustainable,” he says.

The UK market may be key to Royal London 360° but the firm is constantly looking to diversify and grow its business around the globe. It has recently signed a white-label deal with Absa, which will see it develop an investment bond for the South African bank.

Yardley expects the expansion of white-labelling deals with wrap platforms to be a significant driver of Royal London 360°’s growth going forwards.

Besides Absa, SLI had an existing tie-up with Nucleus while Spila had similar arrangements in place with James Hay, from its days under Abbey ownership, and the Novia platform. Further distribution deals are likely to be announced over the coming year.

The firm is not standing still on the product front either. Law says enhancements are planned for both its international protection and regular savings contracts, which will see improved tools and servicing for both products.

Royal London 360° may not be as revolutionary as it name might suggest but it undoubtedly offers a compelling proposition that is likely to give the bigger name new entrants to the offshore market more than a run for their money.


Fanning flames of inflation

I can’t say I have been cheered by what I have found since my return to these shores. The deterioration in sentiment in the short time I have been away is alarming and the news continues to be universally bad. Japan is suffering hugely, the global automobile industry seems to be going the way of the banks and Eastern Europe appears to be imploding. No wonder investors are spooked.


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