Overview of Business Performance - Investis
Overview of Business Performance - Investis
Overview of Business Performance - Investis
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<strong>Overview</strong> <strong>of</strong> <strong>Business</strong> <strong>Performance</strong><br />
bank’s funding base comprised customer accounts and<br />
long-term debt. In addition the high quality and low risk<br />
nature <strong>of</strong> the group’s lending activities - overwhelmingly<br />
prime residential mortgages provide a pool <strong>of</strong> assets<br />
against which funding can be drawn through the ECB<br />
repurchase facility. At 31 December 2007 available<br />
ECB facilities totalled a17.2bln, (a20bln nominal<br />
collateralised asset pool), against which drawings <strong>of</strong><br />
a5.3bln had been made. The balance <strong>of</strong> a11.9bln,<br />
which is available together with the other eligible assets<br />
which have not yet been collateralised, provide a secure<br />
underpinning <strong>of</strong> the groups’ funding requirements for<br />
2008.<br />
In the latter part <strong>of</strong> 2007 in response to the increased<br />
cost <strong>of</strong> wholesale funding, the group increased<br />
mortgage and other credit interest rates on selected<br />
products in order to protect margins against increased<br />
wholesale funding rates.<br />
DIVISIONAL PERFORMANCE REVIEW<br />
Insurance and Investment Operating Review<br />
2007 was an extremely buoyant year for life and<br />
investment business in Ireland, and all <strong>of</strong> the group’s<br />
divisions - Retail, Corporate <strong>Business</strong> and ILIM -<br />
performed extremely well.<br />
The life and investment business had two major points<br />
<strong>of</strong> focus during 2007- positioning Irish Life as the<br />
dominant pension solutions provider in Ireland and<br />
developing our life business to enable it capture the<br />
wealth management opportunity in Ireland, which<br />
has arisen through the growth in mass affl uence. In<br />
2007 pensions sales were ahead 39% year-on-year and<br />
accounted for 59% <strong>of</strong> total group life sales in Irish Life<br />
Assurance. Progress has also been made on our wealth<br />
management objective. We have started to build the<br />
competencies and know how in our existing distribution<br />
channels to enable us to access a bigger share <strong>of</strong> this<br />
rapidly growing market, as well as establishing some<br />
new structures in the group, focused exclusively on<br />
the high net worth and mass affl uent sector, which will<br />
be responsible for developing new products and new<br />
distribution to fully exploit this opportunity.<br />
In the Retail Life division sales growth <strong>of</strong> 31% to a414m<br />
(2006: a317m) led to an increase in market share to in<br />
excess <strong>of</strong> 25% with all distribution channels and product<br />
lines performing well. In the Corporate <strong>Business</strong><br />
division sales increased 33% and this division continues<br />
to be the dominant force in the corporate life and<br />
pensions arena. Driven by excellent fund management<br />
performance in both their passive and active funds, ILIM<br />
had a record sales year with gross investment infl ows <strong>of</strong><br />
a3.4bln, a 79% increase on the funds infl ow <strong>of</strong> a1.9bln<br />
in 2006.<br />
APE 1 sales in the group’s principal life businesses are<br />
summarised below:<br />
2007 2006<br />
bm am %<br />
Retail Life 414 317 31<br />
Corporate Life 220 165 33<br />
Irish Life International 39 34 15<br />
673 516 30<br />
Investment (ILIM) 341 190 79<br />
1,014 706 44<br />
PVNBP 2 sales in the group’s principal life businesses are<br />
summarised below:<br />
2007 2006<br />
bm am %<br />
Retail Life 2,745 2,145 28<br />
Corporate Life 1,355 998 36<br />
Irish Life International 390 339 15<br />
4,490 3,482 29<br />
Investment (ILIM) 3,406 1,901 79<br />
7,896 5,383 47<br />
1<br />
APE sales are calculated as annual value <strong>of</strong> regular premiums plus 10%<br />
<strong>of</strong> the value <strong>of</strong> single premiums<br />
2<br />
PVNBP sales are calculated as total single premiums plus the<br />
discounted value <strong>of</strong> regular premiums expected to be received over the<br />
term <strong>of</strong> the contracts<br />
Retail Life<br />
The group’s retail business concentrates on sales <strong>of</strong> life<br />
and pensions products to the retail market in Ireland. It<br />
is a market leader with a comprehensive product range<br />
spanning pensions, protection, investment and regular<br />
savings with a market share in excess <strong>of</strong> 25%.<br />
The Retail Life business follows a multi-channel<br />
distribution strategy with independent brokers,<br />
bancassurance (via permanent tsb), direct sales,<br />
franchises, institutional (other bank branches) and<br />
telephone / internet channels providing the business<br />
with unrivalled distribution reach and customer access<br />
points. This distribution reach ensures that the business<br />
is not overly dependant on one channel.<br />
The retail life assurance market was extremely buoyant<br />
in 2007 and sales in the Retail Life division increased<br />
31% to a414m (2006: a317m). On a PVNBP basis,<br />
sales were ahead 28% to a2.7bln (2006: a2.1bln).<br />
The principal drivers <strong>of</strong> the sales performance were<br />
pensions (up 46%) and investments (up 23%). Both<br />
lines <strong>of</strong> business benefi ted from the group’s excellent<br />
investment performance and track record, with<br />
pensions also benefi ting from the introduction <strong>of</strong> a<br />
new self administered pension product and lump sum<br />
investments benefi ting from maturing SSIA accounts in<br />
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