Interim Management Statement

RNS Number : 2853E

Hansard Global plc

09 May 2013

 



Hansard Global plc

Interim Management Statement

Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its  Interim Management Statement for the period from 1 July 2012 to date. All figures refer to the nine months ended 31 March 2013 ("Q3 2013"), except where indicated.

Summary

·     New business sales are ahead of the comparative period on all metrics reported by the Group, despite reduced new business flows in the early part of this financial year;

·     Growth of regular premium new business flows continues. On the basis of Present Value of New Business Premiums ("PVNBP"), regular premiums of £55.8m in the quarter (Q2 2013: £44.3m) have been earned primarily from the growth markets of the Far East;

·     Overall new business margin of approximately 13.5% (H1 2013: 12.1%) reflects the continued increase in the proportion of regular premium business, in line with the Group's stated strategy, and underpins increases in EEV operating profit in the nine month period;

·     Single premium flows of £24.8m to Q3 2013 have reduced from £35.7m received to Q3 2012. This reflects the Group's strategy of focussing 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. Closure plans are expected to be finalised by 31 May 2013;

·     The value of Assets under Administration as at 31 March 2013 has increased to £1.09bn (31 December 2012: £1.05bn);

·     Following an extensive search, Graham Morrall has been appointed to replace Joe Kanarek as Chief Distribution Officer. He will be joining from Zurich Insurance Group in mid-July 2013;

·     An interim dividend of 3.25p per share was paid to shareholders on 3 April 2013.

Gordon Marr, Group Chief Executive Officer, commented:

"We have recorded a positive new business performance in the third quarter of this financial year. We have a clear strategy and are confident that the Group's focus on regular premium flows from growth markets and our continuing investment in distribution infrastructure, systems and Hansard OnLine, positions us well for growth.

The fundamentals in our core markets are encouraging and this is translating into growing demand for our products - we believe that Hansard's prospects remain strong."

For further information:

Hansard Global plc                                                                               [phone]     

Gordon Marr, Group Chief Executive Officer

Vince Watkins, Chief Financial Officer

Bell Pottinger LLP                                                                               [phone]

Daniel de Belder                                                                                                                                               

HANSARD GLOBAL plc

INTERIM MANAGEMENT STATEMENT

OVERVIEW

Hansard's strategy to acquire more profitable regular premium new business from growth markets continues to be rewarded. Momentum in regular premium flows reported at the time of the half-year results announcement has continued. New business sales for the nine months ended 31 March 2013 are ahead of the comparative period on all metrics reported by the Group, despite reduced new business flows in the early part of this financial year. Regular premium flows are 17.7% ahead of Q3 2012 on the PVNBP basis.

New business flows for the period are summarised as follows (comparisons for the period ended Q3 2012 are on actual currency basis):

	Nine months ended			Three months ended
	31 March			31 March
	2013	2012	%	2013	2012	%
Basis	£m	£m	change	£m	£m	change
Compensation Credit	15.1	12.5	20.8%	6.7	3.9	71.8%
Present Value of New Business Premiums	139.2	132.9	4.7%	55.8	43.2	29.2%
Annualised Premium Equivalent	22.4	19.8	13.1%	9.7	6.3	54.0%

We are delighted to have appointed a highly qualified candidate, Graham Morrall, to replace Joe Kanarek as Chief Distribution Officer and we anticipate he will commence employment in mid-July 2013.  Graham joins from Zurich Insurance Group, where he held a number of roles, culminating in Chief Executive Officer of Zurich Global Life in Singapore. 

·        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 to close Hansard Europe Limited to new business with effect from 30 June 2013.

We believe that this decision will not have a significant impact on future levels of new business as the levels of new business in the period to Q3 2013 from the countries serviced by Hansard Europe are less than 10% of the Group's total new business for that period, on all metrics reported by the Group.

Plans to achieve closure and an orderly run-off are being developed with regulators and other stakeholders and are expected to be submitted to the Central Bank of Ireland by the end of May 2013. Following agreement of the plans, costs associated with the closure will be recognised in the Group's financial statements for the year ended 30 June 2013.

 ·            Litigation and policyholder complaints

The Group continues to defend itself against all claims. There is no material change to the status of any cases reported in the Interim Results announcement, although two new writs totalling €135,000 have been served recently on Hansard Europe Limited, jointly with other parties, in relation to the selection and performance of assets linked to policies.

Based on the pleadings and advice received to date from legal counsel the Group has not made any provision in respect of any potential litigation or related policyholder complaint.

FINANCIAL PERFORMANCE AND POSITION - NINE MONTHS TO 31 MARCH 2013

·           International Financial Reporting Standards ("IFRS")

During the period, the Group has continued to invest in distribution and other infrastructure and to generate IFRS profits backed by strong positive cash flows. Profit after tax is largely in line with the results of the first half of this financial year.

·           European Embedded Value ("EEV")

EEV operating profit continues to be generated as a result of profitable new business issued during the period. Positive investment return variances reflect increased market levels in the period.

·           Capitalisation and Solvency

The Group continues to be strongly capitalised enabling it to satisfy operational, regulatory, intermediary and policyholder expectations. At 31 March 2013 the aggregate minimum regulatory margin remains covered approximately 14 times by the Group's capital resources.

The Group's solvency position is well insulated against the current challenging capital market conditions. At the date of this report, the Group's liquid assets are held with a wide range of deposit institutions and in highly-rated money market liquidity funds.

New Business Flows - NINE months TO 31 MARCH 2013

Continued development of relationships with financial advisors, establishment of new relationships and introduction of new product initiatives in the early part of this financial year, particularly in the Far East and Latin America, have underpinned new business in the quarter and contributed to increased levels of more profitable regular premium sales.

New business sales in Q3 2013, on all metrics reported by the Group, were significantly above the levels of Q2 2013, reflecting the benefits of our investments and improved market conditions.

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

In line with the Group's strategy to acquire regular premium new business from growth markets, regular premium new business levels in the quarter of £47.6m constitute some 85% of total new business (Q2 2013: 82%). 

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 £8.2m remain at the reduced levels of the last few quarters.

PVNBP by Premium type	Nine months ended			Three months ended
	31 March			31 March
	2013	2012	%	2013	2012	%
	£m	£m	change	£m	£m	change
Regular premium	114.4	97.2	17.7%	47.6	29.6	60.8%
Single premium	24.8	35.7	(30.5)%	8.2	13.6	(39.7)%
Total	139.2	132.9	4.7%	55.8	43.2	29.2%

PVNBP by residence of policyholder	Nine months ended			Three months ended
	31 March			31 March
	2013	2012	%	2013	2012	%
	£m	£m	change	£m	£m	change
Far East	81.2	52.2	55.6%	38.8	16.6	133.7%
EU and EEA	21.4	32.9	(35.0)%	6.3	11.9	(47.1)%
Latin America	24.3	31.2	(22.1)%	6.2	8.1	(23.5)%
Rest of world	12.3	16.6	(25.9)%	4.5	6.6	(31.8)%
Total	139.2	132.9	4.7%	55.8	43.2	29.2%

·        New business margins

Higher levels of regular premium business from growth markets are reflected in the increased new business margin, when compared to H1 2013. New business margins on the PVNBP basis for the nine month period were approximately 13.5% (H1 2013: 12.1%). These margins are well above the industry average.

HANSARD ONLINE

The Group is continuing to develop Hansard OnLine in order to implement new business initiatives and meet the requirements of policyholders and intermediaries. In particular, over 90% of regular premium new business cases are currently being received OnLine, and approximately 70% of investment dealing transactions are currently processed OnLine.

Assets under Administration ("AUA")

Continued levels of regular premiums have underpinned AuA performance in Q3 2013, despite premium holidays taken by policyholders. With the effects of market gains in the quarter, AuA of £1.09bn as at 31 March 2013 is 5% above the level at 30 June 2012.

	Nine months ended		Three months ended
	31 March		31 March
	2013	2012	2013	2012
	£m	£m	£m	£m
Deposits to investment contracts	89.8	101.6	31.0	35.6
Withdrawals from contracts and charges	(145.2)	(151.6)	(52.6)	(57.6)
Effect of market and currency movements	107.9	(125.8)	61.8	26.7
Increase in period	52.5	(175.8)	40.2	4.7
Opening balance	1,033.8	1,229.6	1,046.1	1,049.1
Group Assets under Administration	1,086.3	1,053.8	1,086.3	1,053.8

Included in AuA at 31 March 2013, as reflected above, is £280m held for the benefit of policyholders of Hansard Europe Limited.

Results for the year ENDING 30 June 2013

New business results for the year ending 30 June 2013 are expected to be announced on 26 July 2013. Trading results for the year are expected to be announced on 26 September 2013.

Outlook

We have a clear strategy and are confident that the Group's focus on regular premium flows from growth markets and our continuing investment in distribution infrastructure, systems and Hansard OnLine, will position us for growth.

The fundamentals in our core markets are encouraging and this is translating into growing demand for our products - 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 will close 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

 

 

IMSBUGDUCUGBGXI