Royal London slumps to a £181m loss with pension sales plummeting as individuals and companies put off decisions due to Covid crisis
- Royal London made a loss of £181m in the first half after a £397m profit in 2019
- Individual pension sales fell 18% to £2.6bn, workplace down 25% to £1.4bn
- But sales of life insurance rose 15% to £407m
- It paid out £8.5m to families of more than 1,200 customers who died of Covid-19
Royal London, the UK’s largest mutual insurer, slumped to a loss in the first half as the coronavirus pandemic dragged investment returns and bond yields lower.
The insurer also said it paid out £8.5million to the families of more than 1,200 customers who lost their lives as a result of Covid-19 and set aside another £10million for potential future claims.
But it warned: ‘There remains uncertainty over the eventual impact of the pandemic including both future rates of mortality, as well as the wider health impacts from the deferral of non Covid-19 related medical treatments.’
Pension sales fall: Royal London said people put off investment decisions and companies postponed plans to move pension scheme providers due to the coronavirus pandemic
Royal London, which provides life and protection insurance as well as pensions and savings policies to around 8million people in the UK, made a pre-tax loss of £181million in the first six months of the year, compared to a profit of £397million in the same period in 2019.
New pension policies sales fell 18 per cent to £4.7billion as people put off investment decisions and companies postponed plans to move pension scheme providers due to the Covid-19 crisis, Royal London said.
Individual pension sales fell 18 per cent to £2.6billion, while workplace pension sales tumbled 25 per cent to £1.4billion.
However, sales of life insurance, critical illness and income protection policies rose 15 per cent to £407million, which Royal London says it’s partly down to people seeking financial protection due to the coronavirus pandemic.
Royal London provides life and protection insurance as well as pensions and savings policies to around 8million people in the UK
Chief executive Barry O’Dwyer said: ‘New business sales for protection products grew by 15 per cent, which was partly as a result of the pandemic reminding customers of the importance of life insurance, critical illness and income protection.
‘Pension sales were lower as a consequence of the disruption to advisers’ ability to do business during lockdown.’
But assets under management remained stable at £139billion at the end of June, with net inflow of £997million offset by ‘adverse market movements’ of £492million.
It said the coronavirus had triggered £175million of payouts in the first six months of 2020 – even though it has made the controversial decision not to hand money to thousands of small companies which had taken out business interruption policies, which is being considered by the High Court.