Mutual life insurance and pensions giant Royal London has found itself in the red for the first half of 2020.
From a pre-tax profit of £397 million in the first six months of 2019, Royal London plummeted this year to a loss before tax of £181 million. The H1 hit was attributed to lower investment returns in the period, as well as higher liability valuations due to a reduction in discount rates used in valuing long-term business provisions.
In a release, Royal London clarified: “There has not been any material adverse experience in the first half of the year as a result of the COVID-19 pandemic. A £10 million reserve for COVID-19 related claims was charged in the first half of the year to allow for potential higher claims in the future.
“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.”
Meanwhile the insurer’s operating profit in the six-month span saw a decrease from last year’s £90 million to £36 million this time around. According to Royal London, the lower figure was primarily driven not only by an 18% decline in new business sales but also increased investment in the firm’s digital infrastructure.
Commenting on the numbers, chief executive Barry O’Dwyer stated: “COVID-19 will inevitably continue to have an impact on new business prospects.
“Looking further ahead, our strong capital position and unrivalled reputation with advisers and customers will stand us in good stead as we continue to help customers meet their protection, investment, and long-term savings needs.”
Citing the “immense effort from colleagues,” O’Dwyer said there has been no disruption to what he described as Royal London’s award-winning customer service.