Royal London 360° reported a 21% increase in new business for 2011, compared with 2010. How did that growth break down geographically?
Our biggest growth over the past few years has been in Asia. That has been split among several countries, including China, Japan, Taiwan, Malaysia and Thailand.
Did Asia make up the bulk of your new business last year?
No, not at all. It has been the growth area for us, but internationally we are about 30-35% Asia, 25% the Middle East and Africa, with the balance in Europe.
What was the key driver of Asian growth in 2011?
The development of regular-premium products – it is something we did not have previously. We have concentrated since the merger [of Scottish Life International Insurance and Scottish Provident International Life Assurance] on product development.
Since June 2008 we are probably the only offshore life company that has launched four new products.
Were your sales up in every region, or were there declines in some areas?
The only slight decline that we saw was in Africa. And that was predominantly because it has been a single-premium market for us, and single premiums were harder to come by.
Globally, did you see a fall in your single-premium sales?
Single-premium sales were actually up slightly. But the more significant growth was definitely on the regular-premium side. And that was regular-premium savings as opposed to regular-premium life.
How did appetite for single-premium and regular-premium products vary from region to region?
Europe and Africa have been more skewed towards single-premium. The Middle East has traditionally been our biggest market for life cover – but that changed in 2011, when the Far East became the biggest market for life cover.
What were the trends in terms of underlying fund selection by your clients?
On the lump-sum side there has been a big shift towards structured products. In nervous times clients still want to try and get a return greater than cash, but want an element of security.
And I think after August, when the markets fell back quite a bit, [structured products] became more attractive. The likes of RBS, Morgan Stanley and Deutsche Bank were launching numerous structured notes.
What trends did you see in the traditional asset classes?
We have seen a lot of people looking at equities over the past three to four months, and there is still quite a large demand for physical gold. Pictet, for example, offers an actual gold fund, as opposed to gold shares. Pictet is a well-known name, and that gives brokers comfort.
What other trends did you notice, in terms of fund selection?
We have seen quite a lot of money going into Shariah-based funds. We offer seven Shariah funds now on the regular-premium side.
It is not just the traditional Middle Eastern markets – there are also certain places in Africa and large Muslim communities in parts of Asia. There are a lot of other markets where Shariah funds are becoming more popular.
Do you expect the range of Shariah funds you offer to grow over the next few years?
Yes, I would say so. When we look at funds, certainly for what we call the guided architecture range, which is linked into the regular-premium [products], we do our own research.
But we also receive feedback from IFAs on the types of funds that they and their clients want. We see more demand for Shariah funds, without a doubt. Some of the bigger houses like HSBC are now offering these products.
Within the Shariah sector, which asset classes have been in demand?
The most popular funds have been those investing in precious metals.
A lot of people in the Muslim community – if you take the Middle East for example – are attracted by things like gold. So commodities are always high on their list, and general global equities are also attractive.
I think people going in for the longer term believe that prices are still relatively cheap. The average term [for a regular-premium investor] is ten-to-15 years, compared with the three-to-five years that you might find with a lump sum.
One of the most popular houses with IFAs has been BlackRock.
BlackRock runs specialist gold products – have those been selling well?
Yes, that range has always been popular, and the company’s Latin American fund has been attracting some business.
One house that we had not dealt with much previously, and which is proving popular, is Natixis – because of its bond funds.
Were there any other notable fund trends?
There is less demand these days for hedge funds, that’s clear – because in some instances the returns have not been what investors expected. It is probably a temporary blip.
The most popular [hedge] funds in the market, historically, have been in the Man AHL Diversified range. Their performance has suffered a bit in the past year or two, so it will depend on them getting the returns back.
Do you expect the interest in equities and precious metals to continue?
I think so, in the long term. If you look at the next 20, 30 or 50 years, there will be shortages of food and water, and demand for commodities.
The current growth of [the global] population is not sustainable, long term. So there will be a shortage of some of these commodities, which will generally push prices up.
What are your priorities in terms of selling Royal London 360° products?
Like everything it can be improved slightly, but I think we have got a very good product range which is comparable with anybody else in the market.
Our concentration now is on the service proposition. We have got some developments there in terms of online dealing and tools for brokers – it is about putting a lot more information and tools in the hands of the brokers.
Are you focusing on any particular regions in 2012?
We have seen strong growth in Africa. There has been plenty of development in the region, which is being fuelled by investment.
The highest profile [investor] is China, but money is also coming from South Africa, Germany and the US. There are a lot of infrastructure projects going on in Africa, and a lot of commodities. That brings in expatriates, and that tends to bring in more IFAs.
In which product areas do you expect to see sales growth in Africa?
I expect we will see a growth in savings products and life cover, over the next few years. We are also seeing a growth in the African middle classes in some of these countries. People want to save money for their retirement.
In Zambia, for example, we are seeing the retirement age move from 55 to 65. People are realising that they are going to have to work longer, and they are going to have to save for their retirement.
Also we see that in a lot of these growing markets, they want to put their children into education. That education may be in the UK, the US, Australia or Canada. Sometimes they want to save in the currency of where their child will go to receive education, as opposed to the local currency.
Is there much competition from domestic providers in the region?
No, because most of them will only offer products in their local currency, and investment in the local markets. People are more aware of what is going on in the rest of the world these days, and they want a slice of that.
Are there other regions you expect to become more important in sales terms?
I think we will [continue to] see growth in Asia. There is also still a lot of development in some Eastern European markets. Our key markets in that region are the Czech Republic and Russia, and we are seeing steady growth.
Are there any regions in which you are planning to recruit extra sales people?
By the end of the year, we might have additional sales resources across the board. I think we have got the potential to increase sales resources in all of the markets we are currently in. The only problem is finding good sales people.
