Royal London sees no long-term hit from coronavirus

● Major Scottish employer highlights its capital strength after publishing results

Royal London, the life and pensions mutual that employs hundreds of staff in Scotland, has given a bullish outlook in the face of the market turmoil caused by the coronavirus crisis while stressing it was taking measures to protect its workers.

Reporting a 5 per cent rise in 2019 operating profit to £416 million on the back of strong new business earnings, the firm said it did not see a longterm impact to its business from the global Covid-19 outbreak.

Group chief executive Barry O’dwyer, a well-known Standard Life veteran who took on the top job in September, said: “From an operational perspective, we are doing what we can. From a wider business perspective, we have set ourselves up so that our capital remains robust regardless. Our capital position is strong and we can withstand these sorts of market shocks.”

He added: “Our current priority is the health and wellbeing of our colleagues so that we can continue to deliver for customers and clients. Our robust capital position means we do not expect the virus to have any material long-term impact on our business.”

O’dwyer, who began his career at Standard Life in 1988 and held a number of senior management positions in both the UK and Ireland, said the firm was encouraging as many people as possible to work from home. Royal London employs some 1,500 staff across its Edinburgh and Glasgow offices.

“We are fortunate that we operate within an industry where a lot of people are able to work from home,” O’dwyer added.

The latest results revealed that assets under management jumped 22 per cent last year to £139 billion, marking a new high, as net inflows into its funds business increased by a third year-on-year.

Net inflows totalled £9.9bn, up from some £7.7bn a year earlier.

Life and pensions new business sales were 5 per cent lower, however, “reflecting an industry-wide decline in the level of defined benefit to defined contribution pension transfers”.

Chairman Kevin Parry said: “In these challenging times for public health, insurance has never been more important. We continue to meet society’s needs for high quality life insurance, investment and pension products.

“As a mutual, we are member-owned. Our Profitshare is 7 per cent lower than last year due to the economic outlook indicating that the low interest rate environment will continue for some time yet.

“Our strong financial performance has helped to limit the economic impact on this year’s award, allowing us to add an aggregate £140m to eligible customers’ savings.”

O’dwyer added: “Over the long term, as long as markets recover, [the current coronavirus-related turmoil] is not a problem for regular investors, which is the case for the vast majority of the population who are now saving into a pension via the workplace.”