New Business Results

RNS Number : 1491A

Hansard Global plc

27 January 2011

 



27 January 2011

Hansard Global plc

("Hansard" or "the Group")

New business results for the six months ended 31 December 2010

Hansard Global plc, the specialist long-term savings provider, issues its new business results for the six months ended 31 December 2010 ("H1 2011"), reflecting new business levels in Q2 2011 over 21% higher than those of Q1 and over 53% higher than the same period in the prior year.

Summary

·     New business on the basis of Present Value of New Business Premiums ("PVNBP") in Q2 2011 is £62.7m, an increase of 53.3% over the same period in the previous financial year (Q2 2010: £40.9m);

·     Regular premium flows in Q2 2011 have grown by 60.1% over Q2 2010, and single premium flows by 47.2%;

·     Fifth consecutive quarter of new business growth on the PVNBP basis. Q2 2011 new business of £62.7m is 21% higher than Q1 (£51.8m);

·     Overall new business margin has strengthened to 7.4% (H1 2010: 6.5%) on the PVNBP basis;

·     Assets under Administration of £1.3bn as at 31 December 2010 have increased by 6.8% since 30 September 2010 and by 14.9% since 30 June 2010. Net positive policyholder cash flows have been maintained through the period.

·     On line new business functionality for regular premium products has been piloted successfully.

Leonard Polonsky, Chief Executive of Hansard Global plc, commented:

"The strong performance of the Group in the second quarter of this financial year has built on the distribution initiatives and investments seen in previous quarters and the Group's focus on the growth markets of the Far East and Latin America. We have achieved a fifth consecutive quarter of new business growth, aided by significant levels of more profitable regular premium products. We have also seen a continued increase in the value of assets under administration, up to £1.3 billion at 31 December 2010, reflecting positive policyholder cash flows over the second half of the 2010 calendar year and recovery in capital markets.

"We remain confident that the outlook for growth in new business remains positive for the Group."

For further information:

Hansard Global plc                                                                               [phone]

Leonard Polonsky, Chief Executive                                             

Gordon Marr, Managing Director

Vince Watkins, Chief Financial Officer                                                    

Pelham Bell Pottinger                                                                         [phone]

Daniel de Belder / Duncan Mayall                                                                                                                                                               

Hansard Global plc

New business results for the six months ended 31 December 2010

OVERVIEW

Improvements in market conditions, continued investment in Hansard OnLine and distribution infrastructure, and the growing level of interest in Hansard's products among financial advisors and their clients has contributed to an increased flow of new business over the last three months. New business flows in Q2 2011 are over 50% higher than those of Q2 2010, on all metrics used by the Group. The Group has achieved a fifth consecutive quarter of new business growth on the PVNBP basis.

New business for H1 2011 of £114.5m on the PVNBP basis is 55.8% above the level of the corresponding period of the previous financial year (H1 2010: £73.5m). The Group has continued to direct its resources to attract further sources of regular premium new business flows from growth markets. This is reflected in continuing growth in flows from Latin America and the Far East regions which, at £49.7m, are approximately 59% above the combined total for those regions for H1 2010. These increased regular premium flows support market leading new business margins of 7.4% for the period (H1 2010: 6.5%).

New business flows are summarised as follows (comparisons are on an actual currency basis).

	Three months ended			Six months ended
	31 December			31 December
	2010	2009	%	2010	2009	%
Basis	£m	£m	change	£m	£m	change
Compensation Credit	4.8	3.0	60.0 %	7.9	5.3	49.1 %
Present Value of New Business Premiums	62.7	40.9	53.3 %	114.5	73.5	55.8 %
Annualised Premium Equivalent	8.7	5.6	55.4 %	15.0	9.8	53.1 %

The Group's investment in strategic projects to develop Hansard OnLine, including the implementation of new business initiatives and more efficient administrative processes, is bearing fruit. In particular, over 400 policies have been introduced electronically in H1 2011 by those financial advisors using the online new business facility through Hansard OnLine. This represents approximately 32% of regular premium business issued in the period. The facility continues to be enhanced and is being extended to other intermediary groupings.

The Group continues to be strongly capitalised enabling us to satisfy the expectations of our policyholders, regulators and those financial advisors who introduce business to us.

New Business Flows - THREE months ended 31 DECEMBER 2010

Despite a reduction in single premium business from the level of Q1 2011, the Group has achieved a fifth consecutive quarter of new business growth on the PVNBP basis. New business in Q2, at £62.7m, is 21% higher than Q1. This has been driven largely by continued development of relationships with financial advisors and establishment of new relationships, particularly in the Far East.

Reflecting the Group's strategy to direct its market development and other resources to attract further sources of regular premium new business flows, regular premium flows of £30.9m PVNBP in the quarter are 82% higher than the levels of Q1 2011 (£17.0m).

·    Compensation Credit ("CC")

Compensation Credit is the Group's prime indicator of new business activity. CC measures the relative value of each piece of new business to allow the Group to maintain margins, protect capital and is used in all financial incentive arrangements established by the Group.

New business flows totalled £4.8m CC for the quarter compared with £3.1m in Q1 2011, an increase of 54.8%.

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

New business for the quarter of £62.7m PVNBP is 53.3% above the level of the corresponding period of the previous financial year. Regular premium flows have grown by 60.1% over Q2 2010 and single premium flows by 47.2%. Regular premium flows in Q1 2011 comprised just under half of new business flows which is the highest percentage for over two years and supports market leading new business margins of 7.4% for the half-year (H1 2010: 6.5%).

Single premium contracts totalled £31.8m or 50.7% of new business flows (Q2 2010: £21.6m or 52.8%).

Establishment of new relationships in the Far East, continued investment in distribution infrastructure, and the implementation of online new business functionality have contributed to a threefold increase in new business from that region over the flows of the preceding quarter. New business flows, predominantly regular premiums, accounted for £18.7m (Q1 2011: £6.3m) PVNBP.

Flows of £14.4m from Latin America have increased by 40% over those of Q1 2011 (£10.3m), while those of the EU and EEA regions grew by 26.5% to £16.7m.

	Three months ended			Six months ended
	31 December			31 December
	2010	2009	%	2010	2009	%
PVNBP by product type	£m	£m	change	£m	£m	change
Regular premium	30.9	19.3	60.1 %	47.9	32.2	48.8 %
Single premium	31.8	21.6	47.2 %	66.6	41.3	61.3 %
Total	62.7	40.9	53.3 %	114.5	73.5	55.8 %

	Three months ended			Six months ended
	31 December			31 December
	2010	2009	%	2010	2009	%
PVNBP by geographical area	£m	£m	change	£m	£m	change
EU and EEA	16.7	16.6	0.6 %	29.9	31.4	(4.8) %
Far East	18.7	8.1	130.9 %	25.0	13.6	83.8 %
Latin America	14.4	9.3	54.8 %	24.7	17.6	40.3 %
Rest of world	12.9	6.9	87.0 %	34.9	10.9	220.2 %
Total	62.7	40.9	53.3 %	114.5	73.5	55.8 %

Single premium new business flows of £34.8m in Q1 2011 incorporated some exceptionally large cases from the Rest of the World regions that had the effect of distorting reported new business flows and overall new business margins. Single premiums in Q2 2011 have reduced by 8.6% from Q1 2011, but represent an increase of 47.2% from Q2 2010. While this reflects a recovery in investor confidence, the flow of single premium business in certain parts of the EU and EEA regions remains restrained as a result of volatile market conditions and current regulatory complexity.

New business margins

The Group continues to issue new business on terms that meet target returns and contribute to profit. The new business margin is sensitive to volumes and the product mix: as a result of the substantial value of regular premium business issued in Q2 2011, which is more profitable to the Group than single premium business, the overall new business margin for H1 2011 is approximately 7.4% (H1 2010: 6.5%). This has increased substantially from the level of 5.1% reported at the end of Q1, which had been impacted by a small number of high value single premium contracts issued in that quarter.

Assets under Administration ("AUA")

Net positive policyholder cashflows have been received during the six month period. The growth in levels of new business can be clearly seen in the increased deposits to investment contracts reported below.

The value of AUA at 31 December 2010 was£1.3bn, an increase of 6.8% since 30 September 2010, and 14.9% since 30 June 2010, helped also by the continued recovery in capital markets.

	Three months ended		Six months ended
	31 December		31 December
	2010	2009	2010	2009
	£m	£m	£m	£m
Deposits to investment contracts	55.4	32.4	106.9	67.3
Withdrawals from contracts	(37.9)	(37.4)	(75.7)	(87.4)
Effect of market and currency movements	65.9	45.6	137.4	179.9
Increase in period	83.4	40.6	168.6	159.8
Opening balance	1,219.9	1,121.3	1,134.7	1,002.1
Assets under Administration	1,303.3	1,161.9	1,303.3	1,161.9

Results for the half-year

Trading results for the half-year ended 31 December 2010 are expected to be announced on 24 February 2011.

Outlook

While conditions remain uncertain in Europe we are optimistic that the Group's focus on the growth markets of the Far East and Latin America and our continuing investment in distribution infrastructure, systems and online platform, will position us for growth in volume and profitability. 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 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 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, 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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