Royal London, the U.K. insurance company, has reported a rise in operating profit for the first half of the year. This increase was primarily driven by growth in workplace pensions, new business contributions, and higher risk-free rates, leading to an increase in expected returns on its assets.
Operating profit for the period reached £127 million ($161.4 million), compared to £109 million the previous year. Net inflows also saw a substantial boost, rising by 25% to over £3.2 billion. This growth was primarily fueled by higher external net flows into the company's global equity strategies.
While life and pensions new business sales declined in value to £4.87 billion from £5.49 billion, this dip can be attributed to higher interest rates, which decreased the present value of new business premiums. However, sales in workplace pensions and new business experienced a 7% increase, with new business contributions totaling £99 million, driven by impressive growth in workplace pension sales and cost control measures.
On the other hand, annuities and other business sales in the U.K. experienced a slight decline as higher market interest rates contributed to lower average policy sizes.
As of June 30, Royal London's assets under management rose to £153 billion from £147 billion at the end of December.
Looking ahead, the company anticipates continued volatility and uncertainty in the short term, as markets and policymakers respond to persistent levels of high inflation.