2019 HALF YEAR FINANCIAL RESULTS Andrea Montague 12 August 2019 - - PowerPoint PPT Presentation

2019 HALF YEAR FINANCIAL RESULTS

Andrea Montague 12 August 2019

2019 HALF YEAR FINANCIAL RESULTS

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FORWARD LOOKING STATEMENT

This document should be read in conjunction with Royal London’s 2019 Half Year Results Press Release, which can be found at: http://www.royallondon.com/about/media/news/ This document may contain forward-looking statements with respect to certain Royal London’s plans, its current goals and expectations relating to its future financial position. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Royal London’s control. These include, among others, UK economic and business conditions, market-related risks such as fluctuations in interest rates, the policies and actions of governmental and regulatory authorities, the impact of competition, the timing, impact and other uncertainties of future mergers or combinations within relevant industries. As a result, Royal London’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Royal London’s forward-looking statements. Royal London undertakes no obligation to update the forward-looking statements.

FINANCIAL HIGHLIGHTS

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2019 HALF YEAR FINANCIAL RESULTS

FINANCIAL HIGHLIGHTS

FLOWS Gross inflows2 £12,618m £9,589m £3,029m Net flows2 £5,473m £4,177m £1,296m IFRS IFRS profit before tax £411m £190m £221m IFRS post tax transfer to eligible policyholders £247m £196m £51m EEV EEV operating profit before tax £187m £187m £0m Life and pensions sales PVNBP3 £5,824m £6,077m (£253m) Total New business margin (incl. RLAM) 2.0% 1.8% 0.2% FUNDS Fund performance vs benchmark4 97% 58% 39%

30 Jun 19 30 Jun 18

All footnotes on page 12

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Change1

FUNDS Assets under management5 £130bn £114bn £16m CAPITAL Group Solvency Surplus (Investor View) 6 Group Capital cover ratio (Investor View) 6 £4.7bn 202% £4.4bn 197% £0.3bn 5%

30 Jun 19 31 Dec 18 Change1

114 130

105 110 115 120 125 130 135 YE 2018 HY 2019

Assets under management (£‘bn)

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2019

RECORD HIGH RLAM ASSETS UNDER MANAGEMENT OF £130 BILLION

20 HALF YEAR FINANCIAL RESULTS

Record high gross and net inflow Strong fund performance delivering higher than benchmark returns New business margin 1.1% (HY 2018 0.7%)

1,952 1,540 4,597 4,478 2,225 3,933 4,992 8,140 4,177 5,473 9,589 12,618 2,000 4,000 6,000 8,000 10,000 12,000 14,000 HY18 HY19 HY18 HY19 Net flow Gross inflow Internal External

Gross and net flows (£’m)

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INCREASE IN NEW BUSINESS MARGIN FOLLOWING FOCUS ON NEW BUSINESS PROFITABILITY

2019 HALF YEAR FINANCIAL RESULTS

PVNBP New business margin

Intermediary Pensions

£5,162m

(HY 2018: £5,398m)

2.4%

(HY 2018: 2.2%) Protection (UK and Ireland)

£421m

(HY 2018: £431m)

7.2%

(HY 2018: 5.8%) Consumer

£241m

(HY 2018: £248m)

2.8%

(HY 2018: (1.8%)) Life and pension business

£5,824m

(HY 2018: £6,077m)

2.8%

(HY 2018: 2.3%) 4,201 6,078 6,077 5,824

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 HY 2016 HY 2017 HY 2018 HY 2019

Life and Pensions PVNBP (£'m)

HY 2019 HY 2018 Change

Contribution from new business

£194m £142m £52m

Profit from managing existing business

£54m £69m £15m

Strategic development and other items

(£62)m (£33)m £29m

EEV OPERATING PROFIT

2019 HALF YEAR FINANCIAL RESULTS

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138 185 187 187

• 20

40 60 80 100 120 140 160 180 200 HY 2016 HY 2017 HY 2018 HY 2019

Group EEV operating profit before tax (£'m)

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CAPITAL POSITION REMAINS ROBUST

2019 HALF YEAR FINANCIAL RESULTS

All footnotes on page 12

9.0 9.3 4.5 4.5

YE 2018 HY 2019

Capital Position - Investor View6 Solo (£’bn)

Own Funds Own Funds SCR SCR Coverage ratio

206%

Surplus £4.8bn Surplus £4.5bn

201% Above position is on a solo basis, for Group the Surplus is £4.7bn at half year 2019 (HY 2018: £4.4bn) and coverage ratio 202% (HY 2018: 197%).

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GROWTH IN EXCESS SURPLUS

2019 HALF YEAR FINANCIAL RESULTS

4,801 (61) (56) (35) 4,542 175 237

Excess Surplus YE18 Existing business New business Variances and assumption changes Model changes Management Actions Excess Surplus Q219

Movement in Investor View Excess Surplus Solo (£'m)

Q&A

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THANK

YOU

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FOOTNOTES TO 2019 HALF YEAR FINANCIAL RESULTS

9 August 2019

1) Change is increase or decrease compared to 30 June 2018 (Income Statement, Flow and Investment Performance amounts) or 31 December 2018 (Balance Sheet and Capital amounts). 2) Gross and net flows incorporate The Royal London Mutual Insurance Society (RLMIS) and Royal London Asset Management (RLAM). Net flows from RLMIS represent the combined premiums and deposits received (net of reinsurance) less claims and redemptions (net of reinsurance). Given its nature, Protection business is not included. RLAM net flows represent external inflows less external

• utflows, including cash mandates.

3) Present value of new business premiums (PVNBP) is the total of new single premium sales received in the year plus the discounted value, at the point of sale, of the regular premiums the Group expects to receive over the term of the new contracts sold in the year. The rate used to discount the cash flows in the reported results has been derived from the YE18 swap curve. 4) Investment performance has been calculated using a weighted average of our active assets under management which are outperforming their respective benchmarks. Benchmarks differ by fund and reflect their mix of assets to ensure we are comparing like with like. Passive funds are excluded from this calculation as, whilst they have a place as part of a balanced portfolio, we are believers in the long- term value that active management can add. 5) Assets under Management represents the total of assets actively managed by, or on behalf of, the Group, including funds managed on behalf of third parties. It excludes assets administered through Ascentric, our platform business. 6) The ‘Investor View’ does not restrict the surplus in the closed funds.

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