Royal London Group has posted a 24 per cent increase in pre-tax profits to £306m, boosted by gains from its acquisition of The Co-operative Group’s life, pensions and asset management business.
The company made an operating profit of £246m in 2012 on an EEV basis.
On an IFRS basis, Royal London made a pre-tax profit of £530m, up 17 per cent from £454m in 2012.
Royal London acquired Co-operative Insurance Society and The Co-op Asset Management businesses in July. It paid an initial £40m for the two businesses, and has agreed a deferred consideration of £180m.
The deal generated a one-off gain of £150m.
During the year Royal London also disposed of its offshore savings, investment and protection business Royal London 360 through a management buyout. The disposal contributed to an operating loss of £40m from discontinued operations as a result of the sale.
Total group funds under management rose from £49.8bn to £73.6bn as at 31 December, including £20.4bn of funds acquired through the Co-op deal. Ascentric, Royal London’s platform, increased assets under administration from £5.1bn to £7.3bn.
With-profits bonuses went from £282m to £318m, while the mutual dividend went from £88m to £81m.
The company plans to launch its direct to consumer business, first announced in June, later this year.
On reforms to the pensions market, Royal London says the introduction of a 0.75 per cent charge cap and removal of commission has a “potentially adverse impact on the value of our pensions business”.
But it says the company is well-positioned to take advantage of reforms announced in the Budget which will allow people to take their entire pension pot as cash from age 55, particularly in relation to income drawdown.
Royal London group chief executive Phil Loney says: “After reflecting economic variances, our EEV profit before tax was significantly increased on last year. This reflects favourable economic conditions and a positive contribution from the CIS acquisition and also good operating performance in pensions and asset management.
“We have a strong track record for innovation in the market for income drawdown and we expect many more savers to choose this option once annuities are no longer compulsory. The Government’s new pension policy will increase the need for good advice in the run-up to retirement. We look forward to working with Government and our regulators to develop imaginative and effective ways of providing such guidance.”