New business results for year ended 30 June 2014

Hansard Global plc

NEW BUSINESS RESULTS FOR THE YEAR ENDED 30 JUNE 2014

OVERVIEW

In the quarter to 30 June 2014 the Group has undertaken a wide range of activities in target markets to launch its Strategic Plan and new products. Launch events have taken place in areas such as Hong Kong, Malaysia, Brazil and the United Arab Emirates. These have generated considerable interest among Independent Financial Advisors and policyholders.

 

Market development activities in other regions have continued. There has been encouraging feedback in relation to the new products from both existing and new intermediaries. We believe that these activities, and other actions planned, will provide a platform for sustainable diversified new business flows and increased scale.

 

New Business Flows - year ended 30 june 2014

New business flows for Hansard International for FY 2014 on a range of metrics are summarised as follows:

 

	Year ended				Three months ended
	30 June				30 June
	2014	2013	%		2014		2013		%
Basis	£m	£m	change		£m		£m		change
Compensation Credit	9.3	18.6	(50.0)%			1.7		4.3		(60.7)%
Present Value of New Business Premiums	83.0	172.1	(51.8)%		10.9		41.5		(73.7)%
Annualised Premium Equivalent	14.3	27.3	(47.6)%		2.8		6.5		(56.9)%

 

Throughout the year the Group has continued to develop relationships with financial advisors in a number of target markets including the Far East, Latin America and the Middle East. In particular, the Group has increased its sales presence in Malaysia to take better advantage of its licensed position and early signs are positive.

 

The results of this activity, supported by the introduction of product-based incentive arrangements, the launch of new products, and by enhancements to Hansard OnLine, has underpinned new business flows. 

 

Following the suspension of activities by a large distributor in Japan, new business emanating from the Far East is significantly reduced from the prior year, which was particularly strong. As a consequence, new business sales for FY 2014 on all metrics reported by the Group are approximately half of the levels of the prior year, as anticipated.

 

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

Through Hansard International's activities, the Group continues to focus on the distribution of regular premium products in a range of jurisdictions. Following its product launches the Group intends to widen the range of target jurisdictions although the Group has suspended accepting new business from Japan.

New business flows for Hansard International for FY 2014 on the basis of PVNBP are summarised as follows:

	Year ended				Three months ended
	30 June				30 June
	2014	2013	%		2014	2013	%
PVNBP by product type	£m	£m	change		£m	£m	change
Regular premium	63.7	151.0	(57.8)%		6.5	36.0	(81.9)%
Single premium	19.3	21.1	(8.5)%		4.4	5.5	(20.0)%
Total	83.0	172.1	(51.8)%		10.9	41.5	(73.7)%

 

	Year ended				Three months ended
	30 June				30 June
	2014	2013	%		2014	2013	%
PVNBP by geographical area	£m	£m	change		£m	£m	change
Latin America	27.0	30.6	(11.8)%		4.4	6.3	(30.2)%
Far East	35.9	114.2	(68.6)%		3.1	28.0	(88.9)%
Rest of World	12.9	17.1	(24.6)%		2.8	5.4	(48.1)%
EU and EEA	7.2	10.2	(29.4)%		0.6	1.8	(66.7)%
Total	83.0	172.1	(51.8)%		10.9	41.5	(73.7)%

 

The value of new business premiums is influenced, among other factors, by the Group's expectations of future premium collections on regular premium contracts issued during the year. Where these expectations at year end are different from the assumptions used in the calculation in prior quarters, the assumptions are amended in Q4 to better report the cumulative value of new business. As has been the case in previous years, this adjustment is reflected in Q4 2014 reporting.

 

The impact of assumption changes in the current year has been to reduce PVNBP for the year by £7.5m or 8%, compared with the assumptions used in the previous year. Before that adjustment, cumulative new business flows for FY 2014 would have been reported as £90.5m and new business in Q4 2014 would have been reported as £18.4m or 56% below the comparative period.

 

·    New business margins

Continued low volumes of new business impact directly on the Group's new business margins.  Reduced volumes, coupled with the changed product design and other incentives in operation during the year, have resulted in margins of approximately 4.0% on the PVNBP basis for FY 2014 (Q3 2014: 5.5%).

 

HANSARD ONLINE

The Group continues to improve Hansard OnLine in order to complement new business initiatives by maintaining a competitive advantage over the Company's peers, increase service levels for policyholders and intermediaries, and embed process efficiencies. Currently over 90% of regular premium new business cases, and over 90% of investment dealing transactions, are processed online.

 

Assets under Administration ("AUA")

The level of AuA is underpinned by regular premium flows, reflecting the Group's strategic aims.

The following table summarises Group AuA performance and includes additional contributions of approximately £7m (FY 2013: £18m) relating to single and regular premium contracts issued by Hansard Europe in prior years. As a result of the closure of Hansard Europe to new business with effect from 30 June 2013 the level of single premiums received by the Group in FY 2014 has reduced from the previous year.

 

	Year ended			Three months ended
	30 June			30 June
	2014	2013		2014	2013
	£m	£m		£m	£m
Deposits to investment contracts - regular premiums	85.1	87.9		19.4	22.9
Deposits to investment contracts - single premiums	19.6	32.5		4.3	7.7
Withdrawals from contracts and charges	(196.5)	(199.5)		(50.8)	(54.3)
Effect of market and currency movements	7.3	73.4		9.4	(34.5)
	(84.5)	(5.7)		(17.7)	(58.2)
Opening balance	1,028.1	1,033.8		961.3	1,086.3
Assets under Administration at 30 June	943.6	1,028.1		943.6	1,028.1

 

The value of AuA is based upon the assets selected by or on behalf of policyholders to meet their needs from time to time. Reflecting the wide geographical spread of the Group's policyholders, the majority of premium contributions and AuA are designated in currencies other than sterling. The strengthening of sterling against those currencies in the year has largely offset market gains of the underlying assets.  AuA of £0.94bn as at 30 June 2014 is marginally below the position at 31 March 2014.

chargeable events certificates

As previously announced the Group has identified weaknesses in relation to the issue of Chargeable Events certificates required by HMRC.  We will shortly submit to HMRC our assessment of potential liability and will provide an update when issuing the Group's results for the year ended 30 June 2014. We continue to estimate the Group's exposure, including professional costs, to be approximately £5m.

 

Litigation and policyholder complaints

The Group continues to carefully manage its litigation and other exposures in order to protect regulatory capital holdings and reduce uncertainty.Writs totalling approximately £5.9m remain outstanding at 30 June 2014 (2013: £3.9m). 

 

Results for the year ENDING 30 june 2014

Results for the year are expected to be announced on 25 September 2014.

 

  

Outlook

Through the implementation of the Group's Strategic Plan and the introduction of new products, the Group will be better placed to deliver increased levels of new business, and diversify its exposure across a range of distributors and countries with an attractively competitive offering.

 

While initial indications are encouraging, we anticipate new business sales for Q1 2015 will be largely in line with those of Q4 2014.

 

 
 

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.

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

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.