New Business Figures

RNS Number : 8590I

Hansard Global plc

31 July 2012

 



31 July 2012

Hansard Global plc

("Hansard" or "the Group")

New business results for the year ended 30 June 2012

Hansard Global plc, the specialist long-term savings provider, today announces its new business results for the year ended 30 June 2012. 

Summary

·    Strong growth in regular new business volumes at industry leading margins:

-     Regular premium new business of £124.4m PVNBP for the year, primarily from the growth economies of the Far East and Latin America, is 11.1% above the level of the previous year, and is a record level for the Group; 

-     New business margins of 9.5% on the PVNBP basis for the year (2011: 8.3%) reflects the continued increase in regular premium business, in line with the Group's stated strategy;

·    As a result of the Group's strategy of focusing on more profitable regular premium new business, together with large single premium cases totalling £20m issued in Q1 last year, single premium new business flows of £51.3m in the period are 53% lower than the prior year;

·    Compensation Credit is up 3.6% to £17.1m for the year, the highest level achieved since the beginning of the global financial crisis;

·     Assets under Administration at 30 June 2012 of £1.02bn have decreased by 3.1% since 31 March 2012, reflecting market falls in that period;

·      IFRS profit is expected to be in line with expectations. EEV operating profit has been impacted by assumption changes primarily concerning premium transactions (e.g. premium holidays) and is expected to be in the range of £3m to £6m for the year. EEV as at 30 June 2012, further constrained by investment market performance, is expected to be below expectations.

Leonard Polonsky, Chairman of Hansard Global plc, commented:

"The new business performance of the Group is encouraging. In line with our strategy we have continued to invest in regular premium flows and to focus on growth markets. While the challenging economic environment has reduced EEV, we remain cautiously optimistic for the future."

For further information

Hansard Global plc                                                                     [phone]

Leonard Polonsky, Chairman                                    

Gordon Marr, Managing Director

Vince Watkins, Chief Financial Officer                                                          

Pelham Bell Pottinger                                                               [phone]

Daniel de Belder

HANSARD GLOBAL plc

New business performance in the year ended 30 June 2012

OVERVIEW

Despite challenging economic conditions that have impacted new business volumes and assets under administration, the Group's strategic focus on growth markets, coupled with continued investment in Hansard OnLine, has been rewarded by increased volumes of regular premium new business. On the basis of Present Value of New Business Premiums ("PVNBP"), regular premium flows of £124.4m in the year are at a record level for the Group, and 11.1% above the previous financial year.

These higher levels of regular premium business are reflected in the increased new business margin when compared to FY2011. New business margins on the PVNBP basis for the year were 9.5% (2011: 8.3%). These margins are well above the industry average.

Despite increased regular premium flows, total new business flows of £175.7m in the year are 20.5% below the previous financial year. This reflects a reduction in the number of single premium policies, driven primarily by continuing market volatility and policyholder uncertainty. Single premiums in the year are £51.3m compared with £109.1m in 2011. As reported previously, large single premium cases issued in Q1 2011 totalling £20.0m have distorted the comparison to last year.

New business volumes for the year and the quarter ended 30 June 2012 on the Group's internal metric, Compensation Credit, and on two metrics widely used by the market are summarised as follows. Comparisons are on an actual currency basis.

	Year ended 30 June			Quarter ended 30 June
	2012	2011	%	2012	2011	%
Basis	£m	£m	change	£m	£m	change
Compensation Credit	17.1	16.5	3.6 %	4.6	4.5	2.2 %
Present Value of New Business Premiums	175.7	221.1	(20.5)%	42.8	59.0	(27.5)%
Annualised Premium Equivalent	27.0	30.1	(10.3)%	7.2	8.1	(11.1)%

The increase in Compensation Credit further illustrates that the Group continues to grow new business levels profitably, relative to those seen prior to the beginning of the global financial crisis four years ago. The level of £17.1m is the highest achieved by the Group since the year ended 30 June 2007.

New business flows on the PVNBP basis

The Group continues to generate the majority of its new business from the Far East and Latin America. This is predominantly regular premium business introduced by Independent Financial Advisors, many of whom use the Hansard OnLine new business functionality. An increase in the proportion of more profitable regular premium flows has led to the increased new business margin. 

Regular premium flows of £124.4m PVNBP for the year are 11.1% above the previous year. Regular premium products accounted for almost 71% of the Group's PVNBP in the year (2011: 50.7%). This is consistent with our strategy of attracting a greater mix of regular premium flows.

Single premium flows that are typically sourced from the EU and the Rest of the World have been reduced from previous levels as policyholder investment decisions are deferred in the face of instability in the Eurozone and a continuing difficult market environment.

	Year ended			Three months ended
	30 June			30 June
	2012	2011	%	2012	2011	%
	£m	£m	change	£m	£m	change
Regular premium	124.4	112.0	11.1 %	27.2	30.9	(12.0)%
Single premium	51.3	109.1	(53.0)%	15.5	28.1	(44.8)%
PVNBP	175.7	221.1	(20.5)%	42.7	59.0	(27.6)%

New business flows by region

	Year ended			Three months ended
	30 June			30 June
	2012	2011	%	2012	2011	%
	£m	£m	change	£m	£m	change
Far East	69.4	60.7	14.3 %	17.2	18.2	(5.5)%
EU and EEA	46.6	64.0	(27.2)%	13.7	21.7	(36.9)%
Latin America	37.1	51.4	(27.8)%	5.9	14.2	(58.5)%
Rest of World	22.6	45.0	(49.8)%	5.9	4.9	10.4 %
PVNBP	175.7	221.1	(20.5)%	42.7	59.0	(27.6)%

The value of new business premiums is influenced, among other factors, by the Group's expectations of future premium collections on regular premium contracts issued during the year. Where these expectations at year end are different from the assumptions used in the calculation in prior quarters, the assumptions are amended in Q4 to better report the cumulative value of new business. The impact of assumption changes in the current year has been to reduce regular premium PVNBP for the year by £7.6m (2011: £2m) or 6%, compared with the assumptions used in the previous year, and is reflected in Q4 reporting above.  Before that adjustment, regular premium new business in the last quarter of this financial year would have been reported as £34.8m, some 12% over Q4 2011.

The factors giving rise to these assumption changes are those reported during the year as experience variances under EEV, such as premium reductions, premium holidays and reduced policyholder transactions, all of which serve to constrain margins and, therefore, EEV operating profit and EEV at year end. EEV operating profit for the year is anticipated to be in the range of £3m to £6m. EEV at 30 June 2012 is expected to be below expectations.

New business margins

Higher levels of regular premium business are reflected in the increased new business margin when compared to FY2011. New business margins on the PVNBP basis for the year were 9.5% (2011: 8.3%). These margins are well above the industry average. 

HANSARD ONLINE

The Group continues to invest in distribution and other infrastructure in order to enhance existing relationships with IFAs and other intermediaries in the Group's target markets. In particular over 1,900 policies were introduced electronically this year by those financial advisors in international markets using the online new business facility through Hansard OnLine. This incorporates over 60% of the relevant regular premium policies issued in the year.

Functionality to support online submission of a range of products for European-based advisors is being rolled out over the next few weeks.

Assets under Administration

The value of Assets under Administration ("AuA") at 30 June 2012 is £1.02bn, a decrease of 3.1% since 31 March 2012, reflecting the downturn in global markets in Q4 and continued uncertainty in the Eurozone that has had an impact on policyholder behaviour and sterling-reported asset values.

The change in the mix of new business towards more regular premiums is reflected in positive cash flows that are offset by withdrawals of larger single premium contracts, and by premium holidays affecting regular premium policies.

	Year ended		Three months ended
	30 June		30 June
	2012	2011	2012	2011
	£m	£m	£m	£m
Deposits to investment contracts	138.7	186.4	37.1	46.6
Withdrawals from contracts and charges	(191.7)	(200.7)	(40.1)	(47.3)
Effect of market and currency movements	(155.2)	109.2	(29.4)	(36.6)
(Decrease) / increase in period	(208.2)	94.9	(32.4)	(37.3)
Opening balance	1,229.6	1,134.7	1,053.8	1,266.9
Assets under Administration	1,021.4	1,229.6	1,021.4	1,229.6

AuA Currency Composition

The investment choices of policyholders and their agents generally reflect the currency of the territories in which they are resident. The Group's AuA is therefore subject to currency rate fluctuations which are magnified as a result of the current weakness of the Euro against major currencies, where the currency is trading at low levels not experienced for a number of years.  The effect of currency movements in the current year is a reduction of £18.2m (2011: gain of £18.5m).

The principal currencies in which assets are denominated at 30 June are as follows:

	2012	2011
Currency	%	%
US Dollar	53.3	50.3
Euro	25.6	27.8
Sterling	16.6	15.8
Other	4.5	6.1
Total	100.0	100.0

litigation

As reported previously, the Group has been subject to a number of policyholder complaints in relation to the selection and performance of assets linked to policies. An initial Court hearing into the majority of these complaints was held in Norway in April, at which the Judge concluded that the Group has a case to answer. The Group does not provide investment advice and accordingly intends to appeal this judgement and to defend its position strenuously. Based on the pleadings and advice received to date from legal counsel the Group has not made any provision in respect of any complaints.

Results for the year ended 30 June 2012

Trading results for the year are expected to be announced on 21 September 2012.

Outlook

Notwithstanding challenging economic conditions, we believe that the Group's focus on the growth economies of the Far East and Latin America and our continuing investment in distribution infrastructure, systems and online platform, position us for future growth.

Notes to editors:

·    Hansard Global plc is the holding company of the Hansard Group of companies. The Company was listed on the London Stock Exchange in December 2006. The Group is a specialist long-term savings provider, based in the Isle of Man.

·    The Group offers a range of flexible and tax-efficient investment products within a life assurance policy wrapper, designed to appeal to affluent, international investors.

·    The Group utilises a low-cost distribution model by selling policies exclusively through a network of independent financial advisors, and the retail operations of certain financial institutions who provide access to their clients in more than 170 countries. The Group's distribution model is supported by Hansard OnLine, a multi-language internet platform, and is scaleable.

·    The principal geographic markets in which the Group currently services financial advisors and policyholders are the Far East, Latin America and the Middle East, in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Limited.

·    The Group's objective is to grow its business by attracting new business and positioning itself to adapt rapidly to market trends and conditions. The scaleability and flexibility of the Group's operations allow it to enter or develop new geographic markets and exploit growth opportunities within existing markets without the need for significant further investment.

Forward-looking statements:

This announcement may contain certain forward-looking statements with respect to certain of Hansard Global plc's plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve risk and uncertainties because they relate to future events and circumstances which are beyond Hansard Global plc's control. As a result, Hansard Global plc's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in Hansard Global plc's forward-looking statements. Hansard Global plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make. No statement in this announcement is intended to be a profit forecast or be relied upon as a guide for future performance.

 

END

 

 

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