Royal London’s protection product premiums fell by 26.7% year-on-year, according to the mutual’s full-year 2023 results.
The results reveal that the present value of new business premiums (PVNP) fell from £1,037m in 2022 to £760m in 2023.
On the positive side,, new business sales of protection products more than doubled from £11m in 2022, when the mutual posted a 72% decline in new business sales of its protection products, to £23m last year.
Elaborating on the performance of the protection business, the mutual said the decrease in new business sales had been impacted by interest rate increases and a one-off transfer of a funeral investment plan of around £100m in 2022, as well as the cost of living pressures impacting market demand.
It added that despite the decrease in sales, new business contribution increased due to actions taken at the end of 2022 to exit the over 50s life insurance market and to manage the cost base.
These actions resulted in a significant increase in the new business margin to 3.0% from 1.1% in 2022, it added.
Over the year Royal London reported that its market share of advised individual protection business increased amid a year-on-year fall in the size of the overall advised market, which was impacted by falling mortgage volumes.
It added it continued to write a mix of business across the protection range through advisers and distributors.
Almost all (99%) of protection claims were paid out during 2023, providing £676m to approximately 71,000 customers and their families.
Policy transfer
Touching on the April 2023 announcement to acquire Aegon UK’s closed individual protection business, Royal London said policies are expected to transfer to Royal London in the second half of 2024, subject to the completion of a court-approved Part VII transfer.
Aegon UK has reinsured the portfolio to Royal London for the interim period.
Royal London revealed its My Royal London portal has more than 205,000 protection customers registered and as cost of living challenges persist, the information shared via the portal has helped customers to understand their options if they are considering cancelling their policies.
The year also saw Royal London add the capability to set up policies under trust digitally, helping more customers ensure their claims will be paid more quickly and to the right beneficiaries.
And due to an “ever increasing” number of customers using its customer portal and a new targeted engagement plan to increase customer awareness, the mutual revealed it has increased the number of customers who are benefitting from wellbeing and early care medical services – with over 6,500 registered users in 2023.
The past year also saw Royal London broaden its critical Iillness definitions in a bid to provide clarity and to ensure easier and quicker payments at claim.
In a drive to speed up underwriting decisions for customers, a range of improvements were introduced to allow immediate decisions to be offered as often as possible and ensure the decision remains fair to customers and improves the ability to offer terms against more applications.
The mutual also mentioned improvements to support services for advisors, such as allowing their support teams to access the advisor dashboard for better efficiency.
Protection sales in Ireland
In Ireland new business sales grew to £230m from £203m in 2022, primarily through increased pension sales of £51m from £5m in following a successful product launch in September 2022.
There was also a decline in protection sales, which were impacted by the increases in risk-free rates., but on a comparable basis, protection sales were up 10%.
New business contribution decreased by £6m to £11m and new business margin decreased to 4.8% from 8.5% in 2022 reflecting the relatively higher cost of the pensions product as the mutual continues to grow scale.
Across the group, operating profit before tax increased by 19% to £249m from £210m in 2022.
Good news amid significant uncertainty
Barry O’Dwyer, group CEO at Royal London, (pictured) said: “Royal London is a customer-owned mutual, so we don’t have shareholders.
“This means that the 19% growth in our operating profit before tax is good news for our customers.
“The profits we make are reinvested in the business to improve our offerings and service for customers, returned to eligible customers via ProfitShare, and used to support our charitable and social impact activities.
“In 2023, we welcomed 930 new workplace pension schemes, allowing us to support a further 240,000 new pension savers.
“The breadth and depth of our investment range attracted over £4bn in net inflows, as we grew our membership base, and delivered strong active investment performance while expanding our fund range and international reach.”
Kevin Parry OBE, chairman of Royal London, added: “2023 was another year of significant uncertainty, however our mutuality enables us to continue to focus on the long term and to put our members and customers firmly at the heart of our decision-making.
“We have again shared our success with eligible customers through ProfitShare. I am delighted that our ongoing performance and continued strength has enabled us to share £163m with over two million eligible customers.”