New Business Results

RNS Number : 9549Z

Hansard Global plc

28 July 2008

 



New business results for the year ended 30 June 2008

Hansard Global plc ('Hansard' or 'the Group'), the specialist long-term savings provider, today announces its new business results for the year ended 30 June 2008.  

SUMMARY

• Underlying new business performance in line with expectations

• New business margins maintained at approximately 8.2% in difficult markets 

• Regular Premium business flows remain strong at £18.5m APE (2007: £18.8m)

• Single Premium business of £13.0m APE (2007: £16.7m) reflects continuing financial markets uncertainty

• PVNBP of £240.1m (2007: £277.1m) in line with reduction in Single Premium business

• Assets under Administration up 1.6% to £1.15bn (30 June 2007: £1.13bn) despite a fall of 13% in MSCI World Index over the year.

Leonard Polonsky, Chief Executive of Hansard Global, commented:

'The new business performance of the Group for the year ended 30 June 2008 is in line with our expectations, with new business levels reflecting continuing tough market conditions. Regular premium flows remain strong, particularly in the Far East and Latin America. However, the ongoing uncertainty in the financial markets has continued to impact single premium flows. We expect this pattern to continue, at least in the near term, until global markets recover. 

 'Nonetheless, Assets under Administration rose 1.6% in the year, reflecting high retention of policyholders and positive premium flows, despite the continued decline in capital markets over the period since October 2007. 

'Hansard receives business from a well-diversified portfolio of intermediaries around the world. Continued investment in these relationships and our proposition, together with the Group's robust balance sheet, means that Hansard has the strength to withstand the current market conditions and is well positioned for growth in volume and profit as the environment improves.'

For further information 

Hansard                                                                                        01624 688000

Leonard Polonsky, Chief Executive            

Gordon Marr, Director                    

Bell Pottinger                                                                              020 7861 3232

Ben Woodford                        

Dan de Belder                        

  New Business Flows 

Performance in the year ended 30 June 2008

Underlying new business performance for the year, excluding the impact of one particular large

case discussed below, is in line with guidance provided in the Interim Management

Statement published in May 2008. New business on an Annualised Premium Equivalent ('APE')

basis was £31.5m, and £240.1m on the basis of Present Value of New Business Premiums

('PVNBP').

The Group has achieved continued strong Regular Premium new business flows, particularly from the Far East and Latin America, reflecting continued willingness within those markets to better protect wealth and family needs. At £18.5m APE, the level of Regular Premium business in the year to June was broadly equivalent to the record level of Regular Premium business achieved in the previous year.

Single Premium business at £13.0m APE was down 22.2% from the £16.7m achieved last year. The reduced flow of Single Premium business from Europe reflects continued investor uncertainty resulting from the current difficult capital market climate and investment reticence in the Group's target markets. A relaxation of margin in relation to certain European Single Premium new business has been beneficial to new business flows in the last quarter, with approximately £1.2m APE issued under a targeted incentive arrangement. This arrangement will be applied to a similar amount of business expected to be issued in July.

The level of reported Single Premium new business achieved has been significantly affected by the restructuring of one particular large case in June. This demonstrates the potential volatility of Single Premium new business on the Group's results and the high retention rate of assets. The contract was issued in Euros and represents Compensation Credit ('CC') of £217k; APE of £2.17m and PVNBP of £21.7m. 

New business sales volumes are expressed in terms of the Group's internal metric, CC, and two bases generally made available to the market, APE and PVNBP. The Group believes that CC is an appropriate measure of new business as it indicates the relative value of each piece of new business to allow the Group to maintain margins and protect capital.

Excluding the impact of the restructured contract, the underlying new business flows for the year ended 30 June 2008 are as follows. Comparisons against the corresponding year are on an actual currency basis.

Basis	2008	2007
	£m	£m	% change
CC	16.8	18.1	(7.2)%
APE	31.5	35.5	(11.3)%
PVNBP	240.1	277.1	(13.4)%

New business flows for the year ended 30 June 2008 (including the restructured case) are detailed in tables 1 to 8 and summarised as follows (comparisons on actual currency basis).

Basis	2008	2007
	£m	£m	% change
CC	17.0	18.1	(6.1)%
APE	33.7	35.5	(5.1)%
PVNBP	261.8	277.1	(5.5)%

Hansard receives business from a strong and well-diversified portfolio of intermediaries around the world, which results in new business being received in a range of currencies. The principal currency receipts (as a percentage of APE) are set out below.

Currency	2008	2007
	%	%
US Dollars	48.0	50.0
Euro	31.0	22.0
Sterling	5.0	9.0

New business premiums on an APE basis during the financial year totalled £33.7 million. This represents a decrease of 7.1%, calculated on a constant currency basis, over the £36.3 million APE of the previous financial year.  

The continued strengthening of sterling against the US Dollar and other major currencies has the effect of depressing new business figures reported in sterling. The presentation of these figures on a constant currency basis provides an appropriate representation of the activities of the intermediaries who introduce business to the Group.

Premium analysis and new business margins

Regular new business premiums, particularly from the Far East and Latin America, have represented the driver for growth, with APE of £18.5m (2007: £18.8m on actual exchange rate basis) or 58.7% (2007: 53.0%) of underlying new business flows.

Excluding the impact of the restructured contract, the new business margins are expected to be approximately 8.2% on the basis of PVNBP. These margins are well above industry average, principally due to Hansard's efficient operating model and the Group's continual focus on value and the maintenance of the margin. 

The impact of the increased levels of Regular Premium business, together with modelling improvements, have partially offset the effect of expense assumptions at current levels of new business and a relaxation of margin in relation to recently introduced European Single Premium new business. 

Including the impact of the restructured contract, the new business margins are expected to be approximately 7.7% on the PVNBP basis, illustrating the reduced margins achieved from large Single Premium cases.

Assets under Administration 

The value of Assets under Administration ('AUA') as at 30 June 2008, at £1.15 billion, has risen by 1.6% since 30 June 2007, despite the impact of weakening exchange rates on those non-sterling assets held within policy contracts and continued falls in market values since October 2007. The MSCI World Index has fallen over 13% in the year.

The value of AUA has continued to grow despite the uncertainty in capital markets over the year. This reflects net positive cash flows from the large number of regular premium contracts that the Group administers on behalf of policyholders around the world. 

Policyholders have the ability to rotate assets held within policy contracts and therefore do not generally seek to withdraw funds from contracts in times of market volatility, which contrasts favourably with the levels of withdrawals experienced by a number of retail funds over the course of the year and further emphasises the strength of the life insurance wrapper.

Funds offering downside protection in volatile capital markets comprised 19% of the Group's AUA at 30 June 2008 (2007: 16%). This reflects the ability of the Policyholder to reposition assets within portfolios to suit their changing requirements.

The value of AUA is linked directly to Policyholder investment choices, new business flows and prevailing market conditions. The investment choices of policyholders and their agents generally reflect the currency of the territories in which they are resident. The accumulated asset values are therefore subject to currency rate fluctuations. The principal currencies in which assets are designated at 30 June are as follows:

Currency	2008	2007
	%	%
US Dollars	38.0	37.0
Euro	33.0	30.0
Sterling	18.0	20.0

Account Executive recruitment

The Group's strategy of recruiting Account Executives to develop relationships with Intermediaries is an important step in increasing new business levels. Four experienced Account Executives have been recruited since 31 December 2007. Two Account Executives will be leaving the Group in the next few months. Recruitment activity continues and we anticipate that a further experienced individual will join us within the next month.

Outlook 

The Group believes that the flow of Regular Premium cases will continue at the same levels over the course of the current financial year, although continuing uncertainty in the capital markets is expected to restrain growth in Single Premium business in the near term. We expect that this will become more evident in Q1 2009 when comparisons are made with the significant levels of new business issued in Q1 last year.

Competitive pressures and expense assumptions at the forecast level of activity may lead to a slight decrease in new business margins over the period.

Hansard receives business from a strong and well-diversified portfolio of intermediaries around the world. Continued investment in our relationships and our proposition, together with the Group's robust balance sheet, means that the Group has the strength to withstand the current economic and financial market conditions and is well positioned for growth in volume and profit as the macro environment improves.

Preliminary Results for the year ended 30 June 2008

Preliminary Results for the year ended 30 June 2008 (presented under IFRS) will be announced on 24 September 2008.

HANSARD GLOBAL PLC

NEW BUSINESS RESULTS FOR THE YEAR ENDED 30 JUNE 2008

1.    APE on an Actual Exchange Rate basis

	Unaudited Year ended 30 June
	2008 £m	2007 £m	Change %
New Business Premiums (APE)(1)
Regular	18.5	18.8	(1.6)%
Single	15.2	16.7	(9.0)%
	33.7	35.5	(5.1)%
New Business Premiums (APE)(1)(3)
EU and EEA	14.9	15.8	(5.7)%
Far East	10.8	10.2	5.9 %
Latin America	5.4	5.0	8.0 %
Rest of World	2.6	4.5	(42.2)%
	33.7	35.5	(5.1)%

2.    APE on a Constant Currency Basis

	Unaudited Year ended 30 June
	2008 £m	2007 £m	Change %
New Business Premiums (APE)(1)(2)
Regular	18.5	17.7	4.5 %
Single	15.2	18.6	(18.3)%
	33.7	36.3	(7.2)%
New Business Premiums (APE)(1)(2)(3)
EU and EEA	14.9	16.9	(11.8)%
Far East	10.8	10.1	6.9 %
Latin America	5.4	4.9	10.2 %
Rest of World	2.6	4.4	(40.9)%
	33.7	36.3	(7.2)%

3.    Compensation Credit

	Unaudited Year ended 30 June
	2008 £m	2007 £m	Change %
Actual Exchange Rate Basis (CC)(4)	17.0	18.1	(6.1)%
Constant Currency Basis (CC)(4)(5)	17.0	18.5	(8.1)%

4.    Present Value of New Business Premiums

	Unaudited Year ended 30 June
	2008 £m	2007 £m	Change %
Actual Exchange Rate Basis (PVNBP)(6)	261.8	277.1	(5.5%)
Constant Currency Basis (PVNBP)(6)(7)	261.8	286.5	(8.6%)

HANSARD GLOBAL PLC

NEW BUSINESS RESULTS FOR THE QUARTER ENDED 30 JUNE 2008

5.    APE on an Actual Exchange Rate basis

	Unaudited Three months ended 30 June
	2008 £m	2007 £m	Change  %
New Business Premiums (APE)(1)
Regular	5.1	5.2	(1.9)%
Single	5.4	4.1	31.7 %
	10.5	9.3	12.9 %
New Business Premiums (APE)(1)(3)
EU and EEA	5.9	3.9	51.3 %
Far East	2.4	2.9	(17.2) %
Latin America	1.7	1.3	30.8%
Rest of World	0.5	1.2	(58.3)%
	10.5	9.3	12.9 %

6.    APE on a Constant Currency Basis

	Unaudited Three months ended 30 June
	2008 £m	2007 £m	Change  %
New Business Premiums (APE)(1)(2)
Regular	5.1	5.4	(5.6%)
Single	5.4	4.5	20.0%
	10.5	9.9	6.1%
New Business Premiums (APE)(1)(2)(3)
EU and EEA	5.9	4.4	34.1 %
Far East	2.4	3.0	(20.0)%
Latin America	1.7	1.3	30.8 %
Rest of World	0.5	1.2	(58.3)%
	10.5	9.9	6.1 %

7.    Compensation Credit

	Unaudited Three months ended 30 June
	2008 £m	2007 £m	Change  %
Actual Exchange Rate Basis (CC)(4)	4.6	4.9	(6.1)%
Constant Currency Basis (CC)(4)(5)	4.6	5.3	(13.2)%

8.    Present Value of New Business Premiums

	Unaudited Three months ended 30 June
	2008 £m	2007 £m	Change  %
Actual Exchange Rate Basis (PVNBP)(6)	84.2	74.8	12.6 %
Constant Currency Basis (PVNBP)(6)(7)	84.2	80.4	4.7 %

9.    Assets under Administration

	Unaudited As at	Audited As at		Unaudited As at
	30 June 2008 £m	30 June 2007 £m	Change %	31 March 2008 £m
Assets under Administration (8)	1,148	1,130	1.6 %	1,154

Notes

• New business from long-term savings is calculated on an APE basis in accordance with the life assurance industry convention by adding new regular premiums and one tenth of single premiums. Premiums arising in foreign currencies reflected in tables 1&5 above are translated to sterling at the rates of exchange ruling at the transaction date.

• APE in the year ended 30 June 2007 is presented in tables 2&6 above on a constant currency basis. Premiums arising in foreign currencies in the period are translated to sterling at the average rates of exchange applicable to the year ended 30 June 2008. 

• The geographical split of new business premiums is based on the country of residence of the policyholder.

• CC represents the value of new business premiums on the Group's internal measurement basis. The values reflected in tables 3&7 above on an actual exchange rate basis are calculated in a manner consistent with the prior period. Premiums arising in foreign currencies are translated to sterling at the rates of exchange ruling at the transaction date.

• CC in the year ended 30 June 2007 is also presented in tables 3&7 above on a constant currency basis. Premiums arising in foreign currencies are translated to sterling at the average rates of exchange applicable to the year ended 30 June 2008.

• PVNBP in tables 4&8 above is the present value of new regular premiums plus 100% of single premiums, calculated using assumptions consistent with those used to determine new business contribution. Premiums arising in foreign currencies are translated to sterling at the rates of exchange ruling at the transaction date.

• PVNBP in the year ended 30 June 2007 is also presented in tables 4&8 above on a constant currency basis. Premiums arising in foreign currencies are translated to sterling at the average rates of exchange applicable to the year ended 30 June 2008.

• Assets under Administration are valued at market values at the relevant date, using closing exchange rates against sterling. 

• The principal exchange rates applied are as follows:

	U.S Dollar	Euro
30 June 2008	£1 = $2.00	£1 = €1.26
30 June 2007	£1 = $2.01	£1 = €1.48
Average to 30 June 2008	£1 = $2.01	£1 = €1.39
Average to 30 June 2007	£1 = $1.94	£1 = €1.48

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 on 18 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 financial services intermediaries, independent financial advisers and the retail operations of certain financial institutions (collectively 'Intermediaries'), who provide access to their clients in more than 170 countries. The Group's distribution model is supported by an award-winning, multi-language internet platform, and is scaleable. 

• The principal geographic markets in which the Group currently services Intermediaries and policyholders are the Far East, the Middle East, and Latin America in the case of Hansard International Limited, and Western Europe in the case of Hansard Europe Limited, the Group's two life assurance companies. 

• 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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