Last checked at 29 Jan 2013 07:00
29 January 2013
Hansard Global plc
("Hansard" or "the Group")
New business results for the six months ended 31 December 2012
Hansard Global plc, the specialist long-term savings provider, issues its new business results for the six months ended 31 December 2012 (H1 2013), which demonstrate continuing success in the Group's strategy to source regular premium new business from international growth markets and to drive significantly higher new business margins.
Summary
·; Strong growth in regular premium sales has underpinned Q2 2013 sales of £44.3m on the basis of Present Value of New Business Premiums ("PVNBP") which are 13.3% ahead of Q1 2013 levels;
·; Overall new business margin of 12.1% (H1 2012: 10.4%) reflects the continued increase in volume and proportion of regular premium business, in line with the Group's stated strategy;
·; Regular premium new business in H1 2013 of £66.8m PVNBP, primarily from the growth markets of the Far East and Latin America, remained in line with the £67.6m recorded in H1 2012;
·; As a result of the Group's strategy of focussing on more profitable regular premium new business and uncertain economic conditions in Europe, single premium new business flows of £16.6m in the period have fallen from £22.1m in H1 2012;
·; Over 1,300 policies have been introduced electronically in H1 2013 using the Online new business facility through Hansard OnLine, representing approximately 76% of regular premium policies issued in H1;
·; Assets under Administration of £1.05bn as at 31 December 2012 are broadly in line with the position at 30 September 2012 and marginally above the level at 30 June 2012.
Gordon Marr, Group Chief Executive Officer, commented:
"We have recorded a strong new business performance in the second quarter of this financial year, showing positive momentum in the Group. The initiatives and investments we have made in distribution, infrastructure and new products continue to bear fruit.
"We remain confident that the outlook for growth remains positive for the Group."
For further information:
Hansard Global plc +44 (0) 1624 688000
Gordon Marr, Group Chief Executive Officer
Vince Watkins, Chief Financial Officer
Bell Pottinger LLP +44 (0) 20 7861 3232
Daniel de Belder Hansard Global plc
New business results for the six months ended 31 December 2012
OVERVIEW
Hansard's new business sales have seen significant growth in the second quarter. Based on PVNBP, sales in Q2 2013 were 13.3% ahead of Q1 2013 and, using the Group's internal metric, Compensation Credit, sales were 15.4% higher. The majority of the Group's new business flows are from the growth markets of the Far East and Latin America.
The growth in Q2 2013 has offset a weaker Q1 with the result that new business for H1 2013 is marginally below the levels of the prior year.
Continued activity to source more profitable regular premium new business is reflected in £66.8m PVNBP in H1 2013, a reduction of 1.2% from the record levels of H1 2012, while uncertain economic conditions in Europe have also contributed to reduced single premium sales of £16.6m in the period (H1 2012: £22.1m). Higher margin regular premium sales in the period were 80% of total new business flows (H1 2012: 75%).
We believe that our strategic decision to focus on non-EU markets, and the Far East and Latin America in particular, has been vindicated given the continuing instability in the eurozone.
New business flows for the six months ended 31 December 2012 are summarised as follows (comparisons are on an actual currency basis);
Three months ended | Six months ended | ||||||
31 December | 31 December | ||||||
2012 | 2011 | % | 2012 | 2011 | % | ||
Basis | £m | £m | change | £m | £m | change | |
Compensation Credit | 4.5 | 4.3 | 4.7% | 8.4 | 8.6 | (2.3) % | |
Present Value of New Business Premiums | 44.3 | 45.2 | (2.0)% | 83.4 | 89.7 | (7.0)% | |
Annualised Premium Equivalent | 6.7 | 6.9 | (1.5)% | 12.7 | 13.5 | (5.9)% | |
The Group's investment in distribution and other infrastructure in order to access additional sources of regular premium new business and to enhance existing relationships with IFAs and other intermediaries in the Group's target markets continues. In particular the online new business facility through Hansard OnLine continues to be implemented and over 1,300 policies have been introduced electronically in H1 2013 by those financial advisors using the functionality (H1 2012: 1,000 policies). This represents approximately 76% of regular premium policies in H1.
Following our announcement on 4 January 2013 we continue the process to find a replacement for Joe Kanarek as Chief Distribution Officer and we will update the market as and when appropriate.
New Business Flows - THREE months ended 31 December 2012
Continued development of relationships with financial advisors, establishment of new relationships and introduction of new product initiatives, particularly in the Far East and Latin America, has underpinned new business in the quarter and has contributed to increased levels of more profitable regular premium sales.
As anticipated, new business sales in Q2 2013, on all metrics reported by the Group, were significantly above the levels of Q1 2013.
·; 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 and protect capital and is used in all financial incentive arrangements established by the Group.
Sales of £4.5m CC in Q2 2013 are 15.4% higher than those of Q1 2013 and 4.7% above Q2 2012, reflecting the attractiveness of our long term investment products among financial advisors and their clients.
·; Present Value of New Business Premiums ("PVNBP")
Regular premium sales of £36.5m in Q2 2013 are 20.5% above Q1 2013 and 8.3% above Q2 2012. Lack of investor confidence is more markedly seen in lower levels of single premium business in the quarter, which is down 32.2% against last year and, as a result, total new business for the quarter of £44.3m is 2.0% below the level of Q2 2012.
Reflecting the success of the Group's strategy, regular premium flows in Q2 2013 comprised 82% of total new business, compared to 75% in Q2 2012. Sustained levels of new business and the emphasis on regular premium sales has resulted in market leading new business margins of 12.1% for the half-year (H1 2012: 10.4%).
Relationships with independent financial advisors in the Far East continue to deliver significant new business. Q2 2013 sales of £22.8m, which are primarily regular premium policies, have increased over both Q1 2013 and Q2 2012. Sales of £42.4m for the six month period have increased by 19% over H1 2012.
Renewed focus on relationships in Latin America and product initiatives have resulted in a resurgence of interest among advisors and their clients such that Q2 2013 new business flows of £11.1m are 58% higher than Q1 2013 and approaching levels experienced in prior periods.
New business from the regions of EU and EEA, and the Rest of the World has decreased against Q2 2012, primarily as a result of reduced single premium flows.
Three months ended | Six months ended | ||||||
31 December | 31 December | ||||||
2012 | 2011 | % | 2012 | 2011 | % | ||
PVNBP by product type | £m | £m | change | £m | £m | change | |
Regular premium | 36.5 | 33.7 | 8.3 % | 66.8 | 67.6 | (1.2) % | |
Single premium | 7.8 | 11.5 | (32.2)% | 16.6 | 22.1 | (24.9)% | |
Total | 44.3 | 45.2 | (2.0)% | 83.4 | 89.7 | (7.0)% | |
Three months ended | Six months ended | ||||||
31 December | 31 December | ||||||
2012 | 2011 | % | 2012 | 2011 | % | ||
PVNBP by geographical area | £m | £m | change | £m | £m | change | |
Far East | 22.8 | 19.2 | 18.8 % | 42.4 | 35.6 | 19.1 % | |
Latin America | 11.1 | 10.0 | 11.0% | 18.1 | 23.1 | (21.6)% | |
EU and EEA | 6.5 | 11.1 | (41.4)% | 15.1 | 21.0 | (28.1)% | |
Rest of World | 3.9 | 4.9 | (20.4)% | 7.8 | 10.0 | (22.0)% | |
Total | 44.3 | 45.2 | (2.0)% | 83.4 | 89.7 | (7.0)% | |
HANSARD ONLINE
The Group is continuing to develop Hansard OnLine in order to implement new business initiatives. Over 5,100 regular premium new business cases have been processed online by the Group since piloting commenced in November 2009. Approximately 76% of new regular premium policies in H1 2013 were introduced using Hansard OnLine and approximately 70% of investment dealing transactions are currently processed OnLine (an increase from 60% in June 2012).
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 H1 2013, which is more profitable to the Group than single premium business, the overall new business margin for H1 2013 is 12.1% (H1 2012: 10.4%).
Assets under Administration ("AUA")
Increased levels of regular premiums have underpinned AUA performance in Q2 2013, despite continued levels of premium holidays enjoyed by policyholders at present. Taken with the effects of market gains in the quarter, AUA of £1.05bn as at 31 December 2012 is broadly in line with the position at 30 September 2012 and marginally above the level at 30 June 2012.
Three months ended | Six months ended | ||||
31 December | 31 December | ||||
2012 | 2011 | 2012 | 2011 | ||
£m | £m | £m | £m | ||
Deposits to investment contracts - regular premiums | 23.4 | 20.8 | 43.6 | 43.9 | |
Deposits to investment contracts - single premiums | 7.8 | 11.5 | 16.6 | 22.1 | |
Withdrawals from contracts and charges | (51.2) | (44.3) | (93.9) | (92.7) | |
Effect of market and currency movements | 18.6 | (1.4) | 46.1 | (152.5) | |
(1.4) | (13.4) | 12.4 | (179.2) | ||
Opening balance | 1,047.6 | 1,063.8 | 1,033.8 | 1,229.6 | |
Assets under Administration at 31 December | 1,046.2 | 1,050.4 | 1,046.2 | 1,050.4 | |
Results for the half-year
Trading results for the half-year ended 31 December 2012 are expected to be announced on 28 February 2013.
Outlook
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.
There is a momentum behind the business and 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 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.