New business results

RNS Number : 5236Y

Hansard Global plc

27 January 2014

 

27 January 2014

Hansard Global plc

New business results for the six months ended 31 December 2013

Hansard Global plc, the specialist long-term savings provider, issues its new business results for the six months ended 31 December 2013 (H1 2014).

Summary

·    New business of Hansard International Limited of £55.2m PVNBP in the period is 24.2% below H1 2013. This is primarily as a result of the cessation of a large distribution relationship in the Far East;

·    Single premium flows of £10.8m have increased by 13.5% from H1 2013, while regular premium flows of £44.4m have reduced from £63.2m received in H1 2013;

·    New business margins on the PVNBP basis have reduced to approximately 7.5% (Q1 2014: 10.0%);

·    Following recent settlement agreements, writs totalling approximately £2.5m remain outstanding against Hansard Europe (H1 2013: £11.6m);

·    IFRS results are expected to be in line with expectations, despite the litigation settlements.

 

Gordon Marr, Group Chief Executive Officer, commented:

"We anticipated a reduction in new business flows in Q2 2014 and expect H2 2014 new business to be significantly below an exceptionally strong comparative in H2 2013. We remain confident however that the Group is well positioned in growth markets and is appropriately capitalised to take advantage of distribution opportunities in the latter part of this financial year and in the future. The Group's strong capital position will allow it to pay dividends in line with the guidance previously provided.

As announced, we have been undertaking a thorough review of our new business strategy in order to diversify new business flows and increase the scale of our business. We believe there are a number of significant growth opportunities available to the Group which we will be announcing on 4 March 2014 following completion of this review. "

For further information:

Hansard Global plc                                                                            [phone]

Gordon Marr, Group Chief Executive Officer

Vince Watkins, Chief Financial Officer

Pelham Bell Pottinger                                                                      [phone]

Daniel de Belder                                                                                                                                          

Hansard Global plc

New business results for the six months ended 31 December 2013

OVERVIEW

Following the closure of Hansard Europe Limited to new business with effect from 30 June 2013, the Group continues to focus reporting of new business performance on that of Hansard International Limited alone. Reporting of Assets under Administration incorporates cash flows relating to policies issued by both Hansard International and Hansard Europe.

New business levels in H1 2014 are approximately 25% below the level ofnew business earned by Hansard International in H1 2013. This is primarily as a result of a large distributor ceasing new business production, with a consequent shortfall in new business issued in Q2 2014, as reported in the Group's Interim Management Statement on 8 November 2013.

We have been undertaking a thorough review of our new business strategy in order to diversify new business flows and increase the scale of our business. We believe there are a number of significant growth opportunities available to the Group which we will be announcing on 4 March 2014 following completion of this review.

New Business Flows

New business flows for Hansard International for H1 2014 are summarised as follows (comparisons are on an actual currency basis):

	Six months ended				Three months ended
	31 December				31 December
	2013	2012	%		2013	2012	%
Basis	£m	£m	change		£m	£m	change
Compensation Credit	5.7	7.8	(26.9)%		2.2	4.3	(48.8)%
Present Value of New Business Premiums	55.2	72.8	(24.2)%		20.8	39.7	(47.6)%
Annualised Premium Equivalent	8.7	11.4	(23.7)%		3.4	6.2	(45.2)%

 

Throughout the period the Group has continued to develop relationships with financial advisors in target markets. The results of this activity, supported by the introduction of product-based incentive arrangements and by enhancements to Hansard OnLine, have underpinned new business flows in Q2 2014.  However, following the cessation of production of a large distributor, new business growth in the Far East has been down on the prior year comparative period which was particularly strong. Therefore new business sales in that quarter, on all metrics reported by the Group, are significantly below the levels of Q2 2013.

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

New business premiums of £55.2m in the period are 24.2% below H1 2013. As a result, regular premium flows of £44.4m have reduced from £63.2m received in H1 2013.

Single premium flows of £10.8m have increased by 13.5% from H1 2013.

	Six months ended				Three months ended
	31 December				31 December
	2013	2012	%		2013	2012	%
PVNBP by product type	£m	£m	change		£m	£m	change
Regular premium	44.4	63.2	(29.4)%		16.5	34.8	(52.6)%
Single premium	10.8	9.6	13.5 %		4.3	4.9	(12.2)%
Total	55.2	72.8	(24.2)%		20.8	39.7	(47.6)%

	Six months ended				Three months ended
	31 December				31 December
	2013	2012	%		2013	2012	%
PVNBP by geographical area	£m	£m	change		£m	£m	change
Latin America	16.6	18.1	(8.3)%		7.9	11.1	(28.8)%
Far East	26.4	42.4	(37.7)%		7.6	22.8	(66.7)%
Rest of World	7.0	7.4	(5.4)%		4.1	3.7	10.8 %
EU and EEA	5.2	4.9	6.1 %		1.2	2.1	(42.9)%
Total	55.2	72.8	(24.2)%		20.8	39.7	(47.6)%

·    New business margins

The Group's strategy is to focus on generating new business on terms that meet target returns and contribute to profit. In line with our strategy we have introduced product and other incentives and retained market-leading margins of 7.5% on the PVNBP basis (Q1 2014: 10.0%).

HANSARD ONLINE

The Group continues to improve Hansard OnLine in order to implement new business initiatives, increase service levels for policyholders and intermediaries, and embed process efficiencies. In particular, over 90% of regular premium new business cases have been processed OnLine in H1 2014 and over 90% of investment dealing transactions are currently processed OnLine.

Assets under Administration ("AUA")

The following table summarises Group AUA performance and therefore includes additional contributions relating to single and regular premium policies issued by Hansard Europe in prior years.

The level of AUA is underpinned by regular premium flows, reflecting the Group's strategic aims. As a result of the closure of Hansard Europe to new business the overall level of single premium flows received by the Group in H1 2014 has reduced from the previous year.

Taken with the effects of limited net market gains in the quarter, AUA of £0.99bn as at 31 December 2013 is marginally below the position at 30 September 2013. AUA of Hansard International has decreased by 2% since 30 June 2013, while AUA of Hansard Europe has fallen by 9% to £260m at 31 December 2013.

	Six months ended			Three months ended
	31 December			31 December
	2013	2012		2013	2012
	£m	£m		£m	£m
Deposits to investment contracts - regular premiums	46.6	43.6		23.4	23.4
Deposits to investment contracts - single premiums	11.1	16.6		4.3	7.8
Withdrawals from contracts and charges	(101.9)	(93.9)		(54.4)	(51.2)
Effect of market and currency movements	2.0	46.1		12.3	18.6
	(42.2)	12.4		(14.4)	(1.4)
Opening balance	1,028.1	1,033.8		1,000.3	1,047.6
Assets under Administration at 31 December	985.9	1,046.2		985.9	1,046.2

 

HANSARD EUROPE LIMITED

·    Litigation and policyholder complaints

Hansard Europe continues to carefully manage its litigation and other exposures in order to protect regulatory capital holdings and reduce uncertainty. Following recent settlement agreements, writs totalling approximately £2.5m remain outstanding against Hansard Europe (H1 2013: £11.6m).

·     Revised operating model

The plans approved by the Central Bank of Ireland to achieve an orderly run-off of the activities of Hansard Europe have been implemented. All control functions are exercised from that company's office in the Republic of Ireland and administrative processes are performed from the Group's offices in the Isle of Man.

Results for the half-year ENDED 31 December 2013

Trading results for the half-year are expected to be announced on 27 February 2014. 

Outlook

We expect H2 2014 new business to be significantly below the exceptionally strong comparative of £99m PVNBP in H2 2013. We remain confident however that the Group is well positioned in growth markets and is appropriately capitalised to take advantage of distribution opportunities generated through the review of our new business strategy in the latter part of this financial year and in the future.

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 controlled 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 policyholders and financial advisors 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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