New business results

RNS Number : 1896K

Hansard Global plc

26 July 2013

 



Hansard Global plc

New business results for the year ended 30 June 2013

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its new business results for the year ended 30 June 2013 ("FY 2013"), which demonstrate continuing success in the Group's strategy to source profitable regular premium new business from international growth markets.

Summary

·     Growth of regular premium new business flows continues. On the basis of Present Value of New Business Premiums ("PVNBP"), regular premiums of £136.1m have been earned in the year, primarily from the growth markets of the Far East. This is a record level for a financial year and 9.4% above FY 2012;

·     Overall new business margin of 12.6% (H1 2013: 12.1%) demonstrates the continued growth of regular premium business, in line with the Group's strategy;

·     Single premium flows of £32.5m for the year have reduced from £51.3m received in FY 2012. This reflects the Group's strategy of focusing on more profitable regular premium new business and the reduced new business flows for Hansard Europe Limited following the announcement of its closure to new business;

·     Despite market falls in Q4 2013, the value of Assets under Administration as at 30 June 2013 has increased to £1.04bn (30 June 2012: £1.03bn);

·     Plans to achieve an orderly run-off of the activities of Hansard Europe Limited have been developed with regulators and stakeholders and submitted to the Central Bank of Ireland for their consideration. We anticipate agreeing the plan shortly.

 

Gordon Marr, Group Chief Executive Officer, commented:

"The fundamentals in our core markets are encouraging and this has translated into an increase in demand for our products. We have continued to grow regular premium new business in FY 2013 and achieved a record level of £136.1m PVNBP. This is testament to the success of our strategy of focusing on regular premium business in growth markets. 

We believe that Hansard's prospects remain strong and that our continuing investment in distribution infrastructure and Hansard OnLine will position us for future growth. We look forward to refreshing the Group's new business strategies with our new Chief Distribution Officer, Graham Morrall."

For further information:

Hansard Global plc                                                                               [phone]     

Gordon Marr, Group Chief Executive Officer

Vince Watkins, Chief Financial Officer

Bell Pottinger LLP                                                                               [phone]

Duncan Mayall                                                                                                                                      

HANSARD GLOBAL plc

OVERVIEW

Hansard's strategy to acquire more profitable regular premium new business from growth markets continues to be rewarded. New business sales for FY 2013 are 14.6% ahead of FY 2012, on the Group's internal metric, Compensation Credit.  Since June 2009, following the global financial crisis, the Group's new business flows have increased by an average of 15% annually.

On the basis of the Present Value of New Business Premiums, regular premium flows for the year are at a record level of £136.1m and 9.4% ahead of FY 2012, as we continue to develop markets in the Far East. Single premiums have fallen from £51.3m in FY 2012 to £32.5m, reflecting the Group's reduced activity in Europe and the announcement in February this year of our intention to close Hansard Europe Limited to new business.

New business flows for the year are summarised as follows:

	Year ended 30 June			Quarter ended 30 June
	2013	2012	%	2013	2012	%
Basis	£m	£m	change	£m	£m	change
Compensation Credit	19.6	17.1	14.6 %	4.5	4.6	(2.2)%
Present Value of New Business Premiums	168.6	175.7	(4.0)%	29.4	42.8	(31.3)%
Annualised Premium Equivalent	29.4	27.0	8.9 %	7.0	7.2	(2.8)%

Graham Morrall has been appointed to replace Joe Kanarek as Chief Distribution Officer.  Graham joined the Group earlier this month from Zurich Insurance Group, where he held a number of roles, culminating in Chief Executive Officer of Zurich Global Life in Singapore.

The Board recognises the contribution of Joe Kanarek to the Group's success. Joe has been with the Group since 2000 and retired on 30 June 2013.

New Business Flows - YEAR ENDED 30 JUNE 2013

Continued development of relationships with financial advisors, establishment of new relationships, and the introduction of new product initiatives in the early part of this financial year have contributed to the growth in regular premium new business flows. This has been particularly successful in those areas of the Far East targeted by the Group. We have achieved a record performance in regular premium new business flows in spite of the fact that economic conditions and other factors in Latin American markets have restricted the growth of new business in the year from those markets.

The volume of regular premium new business from those target markets has been offset by a reduction in single premium flows resulting from the closure of Hansard Europe Limited to new business.

·           Present Value of New Business Premiums ("PVNBP")

In line with the Group's strategic aims, the value of regular premium flows from growth markets has continued to rise and so, despite a reduction of £18.8m in single premium flows, total PVNBP for FY 2013 is only 4.0% (£7.1m) less than FY 2012.

Regular premium new business levels in the year of £136.1m constituted some 81% of total new business (FY 2012: 71%). 

Reflecting the strategic focus on regular premium business, volatile market conditions in Europe and the reduced new business flows for Hansard Europe Limited following the announcement of its closure to new business, single premium new business levels of £7.7m in Q4 2013 remain at the reduced levels of the last few quarters.

PVNBP by Premium type	Year ended 30 June			Quarter ended 30 June
	2013	2012	%	2013	2012	%
	£m	£m	change	£m	£m	change
Regular premium	136.1	124.4	9.4 %	21.7	27.2	(20.2)%
Single premium	32.5	51.3	(36.6)%	7.7	15.6	(50.6)%
Total	168.6	175.7	(4.0)%	29.4	42.8	(31.3)%

PVNBP by residence of policyholder	Year ended 30 June			Quarter ended 30 June
	2013	2012	%	2013	2012	%
	£m	£m	change	£m	£m	change
Far East	98.9	69.4	42.5 %	17.7	17.2	2.9 %
Latin America	27.3	37.1	(26.4)%	3.1	5.9	(47.5)%
EU and EEA	26.0	46.6	(44.2)%	4.6	13.7	(66.4)%
Rest of world	16.4	22.6	(27.4)%	4.0	6.0	(33.3)%
Total	168.6	175.7	(4.0)%	29.4	42.8	(31.3)%

The new business flows in Q4 2013 reflect declines in advisor confidence as concerns over the potential tapering of quantitative easing by US authorities and growing expectations of reduced growth in emerging markets led to a fall in capital market levels in that quarter which temporarily reduced demand for long-term savings products.

As in previous years we have adjusted reported new business in Q4 for assumption changes, the effect of which is to reduce the reported PVNBP for the quarter, when compared with previous quarters. This adjustment relates to the Group's expectations of future premium collections on regular premium contracts issued during the year and future discount rates. Where these expectations at year end are different from the assumptions used in the PVNBP calculation in prior quarters, the assumptions are amended to better report the cumulative value of new business. The impact of these assumption changes has been to reduce PVNBP in Q4 2013 by £15.8m (Q4 2012: £7.6m). 

·        New business margins

Higher levels of regular premium business from growth markets are reflected in the increased new business margin. New business margins on the PVNBP basis for FY 2013 were 12.6% (H1 2013: 12.1%). These margins remain well above the industry average.

HANSARD EUROPE LIMITED

As announced on 28 February 2013, Hansard has concluded that it is in the long-term interests of the Group to reduce its exposure to Europe and therefore Hansard Europe Limited was closed to new business with effect from 30 June 2013. The levels of new business in FY 2013 from the countries serviced by Hansard Europe are less than 10% of the Group's total new business for the year, on all metrics reported by the Group.

Plans to achieve an orderly run-off of the company's activities have been developed with regulators and stakeholders and submitted to the Central Bank of Ireland for their consideration. We anticipate agreeing the plan shortly.

HANSARD ONLINE

The Group is continuing to develop Hansard OnLine in order to meet the requirements of policyholders and intermediaries. In particular, over 90% of regular premium new business cases are currently being received OnLine, and over 75% of investment dealing transactions are processed OnLine.

Assets under Administration ("AUA")

Continued levels of regular premiums have underpinned AuA performance throughout the year, despite premium holidays taken by policyholders. With the effects of market falls in Q4 2013, AuA of £1.04bn as at 30 June 2013 is marginally above the level at 30 June 2012.

	Year ended 30 June		Quarter ended 30 June
	2013	2012	2013	2012
	£m	£m	£m	£m
Deposits to investment contracts	120.5	138.6	30.8	37.0
Withdrawals from contracts and charges	(197.3)	(187.9)	(52.2)	(36.3)
Effect of market and currency movements	79.7	(146.5)	(28.2)	(20.7)
Increase in period	2.9	(195.8)	(49.6)	(20.0)
Opening balance	1,033.8	1,229.6	1,086.3	1,053.8
Group Assets under Administration	1,036.7	1,033.8	1,036.7	1,033.8

Included in AuA at 30 June 2013, as reflected above, is £0.3bn held for the benefit of the policyholders of Hansard Europe Limited.

Results for the year ENDING 30 June 2013

Trading results for the year are expected to be announced on 26 September 2013.

Outlook

We are confident that the Group's focus on regular premium flows from growth markets and our continuing investment in distribution infrastructure and Hansard OnLine will position us for growth. We believe that Hansard's prospects remain strong.

 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 two life assurance companies. Hansard Europe Limited closed to new business with effect from 30 June 2013.

·    The Group's objective is to grow 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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