21 July 2022
Hansard Global plc
New business results for the year ended 30 June 2022
Hansard Global plc ("Hansard" or "the Group"), the specialist long-term savings provider, issues its trading update for the quarter ended 30 June 2022 ("Q4 2022"). All figures refer to this period, except where indicated. Financial year ("FY 2022") figures refer to 1 July 2021 to 30 June 2022.
Summary
· New business for the financial year ended 30 June 2022 was £120.5m in PVNBP ("Present Value of New Business Premiums") terms, down 30.3% from £173.0m in FY 2021;
· New business for Q4 2022 was £24.8m, 49.8% lower than £49.4m in Q4 2021 (incorporating the impact of annual changes in actuarial assumptions to the calculation of PVNBP in Q4);
· New business for the quarter and financial year was impacted by economic uncertainty, geopolitical developments, the aftermath of Covid-19 restrictions around the world, and a general hesitancy by clients to commit to long-term savings products;
· Assets under administration were £1.1bn as at 30 June 2022, down from £1.2bn at 30 June 2021, primarily reflecting declines in global stock markets over the year;
· The Group remains on track for replacing its policy administration systems to support its next generation of products whilst realising associated cost and efficiency gains;
· While the Group continues to work with its prospective Japanese distribution partner towards a suitable launch date, we now anticipate further obstacles to the Group's envisaged timeframe for the product launch, due principally to Covid-related operational challenges facing our partner and changes in its senior personnel. While continuing this engagement we are accelerating action to access alternative distributors and distribution channels via initiatives already commenced as part of our existing plans for Japan.
Graham Sheward, Group Chief Executive Officer, commented:
"Given the timeline challenges being experienced with our chosen initial distributor in Japan, we are proactively focussing more of our efforts on alternative distributors and distribution channels. A targeted expansion to additional distributors has always formed part of our longer-term plans and this is now being prioritised at greater pace.
We are also working hard to improve new business levels through a combination of new product development, new broker relationships and the deployment of additional experienced sales management executives into the business."
For further information:
Hansard Global plc +44 (0) 1624 688 000
Graham Sheward, Group Chief Executive Officer
Tim Davies, Chief Financial Officer
Email: investor-relations@hansard.com
Camarco +44 (0) 7532 107 817
Ben Woodford, Hugo Liddy
Hansard Global plc
TRADING UPDATE for the PERIOD ended 30 June 2022
OVERVIEW
The Group continues to focus on the distribution of regular and single premium savings and investment products in a range of jurisdictions around the world.
New business for the quarter and financial year continued to be impacted by economic uncertainty, geopolitical developments, the aftermath of Covid-19 restrictions around the world, and a general hesitancy by clients to commit to long-term savings products, particularly those with contractual regular premiums. The prior year comparative figures benefited from a number of high net worth single premium policies which did not repeat in FY 2022.
In Present Value of New Business Premiums ("PVNBP") terms, new business for Q4 2022 was 49.8% lower than Q4 2021. For the year ended 30 June 2022, new business was 30.3% lower compared to the prior year comparative.
The comparisons for Q4 are impacted by our annual assessment of actuarial assumptions which take place each year in Q4 and are reflected in the Q4 results. The Q4 2021 review incorporated significant positive adjustments which increased the value of new business premiums assigned to regular premium savings plans. The review in Q4 2022 did not result in a similar size of increase. Further analysis of this impact is outlined in more detail below.
New Business Flows
New business flows for the quarter and the year ended 30 June are summarised as follows:
|
| Three months ended |
| Year ended |
| ||||
|
| 30 June |
| 30 June |
| ||||
|
| 2022 | 2021 | % |
| 2022 | 2021 | % | |
| Basis | £m | £m | change |
| £m | £m | change | |
| Present Value of New Business Premiums | 24.8 | 49.4 | (49.8%) |
| 120.5 | 173.0 | (30.3%) | |
|
Present Value of New Business Premiums excluding the impact of annual assumption changes made in Q4 of the relevant year
|
22.3 |
39.1 |
(43.0%) |
|
118.0 |
162.7 |
(27.5%) | |
| Annualised Premium Equivalent | 3.2 | 5.5 | (41.8%) |
| 16.4 | 23.1 | (29.0%) | |
The present value of new business premiums is influenced, amongst 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. This adjustment is reflected in the Q4 reported new business figures and can, where material, impact the underlying Q4 result.
In the prior year, improved experience in the collection of premiums over the lifetime of policy contracts resulted in an increase to PVNBP for the year of £10.3m, reflected in Q4 2021. For the 2022 financial year, the change in assumptions had a smaller increase of £2.5m, reflected in Q4 2022.
Excluding the impact of those adjustments, new business was down 43.0% for Q4 2022 versus Q4 2021 and down 27.5% for FY 2022 versus FY 2021 (as shown in line 2 of the table above).
In Annual Premium Equivalent ("APE") terms, new business was down 41.8% for the quarter and down 29.0% for the year. APE figures are unaffected by the updated assumptions above.
The split of regular and single new business premiums on the PVNBP basis was as follows:
| | Three months ended |
| Year ended |
| ||||
| | 30 June |
| 30 June |
| ||||
| | 2022 | 2021 | % |
| 2022 | 2021 | % | |
| PVNBP by product type | £m | £m | change |
| £m | £m | change | |
| Regular premium | 17.2 | 33.6 | (48.8%) |
| 76.9 | 109.6 | (29.8%) | |
| Single premium | 7.6 | 15.8 | (51.9%) |
| 43.6 | 63.4 | (31.2%) | |
| Total | 24.8 | 49.4 | (49.8%) | | 120.5 | 173.0 | (30.3%) | |
The regional split of new business premiums on the PVNBP basis was follows:
| | Three months ended |
| Year ended |
| ||||
| | 30 June |
| 30 June |
| ||||
| | 2022 | 2021 | % |
| 2022 | 2021 | % | |
| PVNBP by geographical area | £m | £m | change |
| £m | £m | change | |
| Middle East and Africa | 9.3 | 19.0 | (51.1%) |
| 44.3 | 68.3 | (35.1%) | |
| Rest of World | 5.5 | 14.3 | (61.5%) |
| 33.9 | 50.7 | (33.1%) | |
| Latin America | 7.5 | 11.7 | (35.9%) |
| 28.2 | 40.3 | (30.0%) | |
| Far East | 2.5 | 4.4 | (43.2%) |
| 14.1 | 13.7 | 2.9% | |
| Total | 24.8 | 49.4 | (49.8%) |
| 120.5 | 173.0 | (30.3%) | |
The overall environment remained challenging for investment and long-term savings plans. As noted above, the comparisons for regular premium new business are impacted by the annual review of actuarial assumptions feeding into the net present value of premiums written.
The general experience across each region saw a reduction both in the number of cases sold and in the quantity of high-value cases sold.
As mentioned in our previous quarterly update, we have recruited two senior additions to our sales team: a Head of Sales and a Head of New Business Development, to help develop and grow future new business levels. This has also been supplemented by the addition of an experienced new regional sales manager for our Middle East and Africa region. With the relaxation of Covid-19 restrictions in a number of regions we are also re-locating two regional sales managers permanently into their regions to grow business locally.
The Head of Sales has taken oversight of our global broker-channel sales team and is tasked to deliver a number of our key distribution and relationship initiatives, enhancing our overall broker proposition. Over the past quarter he has made good progress, reorganising our sales operations to get more out of our regional sales manager resources, putting a new sales plan in place and rolling out new targets and incentives for the coming financial year.
The Head of New Business Development is tasked with developing business relationships with new distributors and further invigorating relationships with current distributors. A number of new developments have already been delivered, including streamlining the onboarding process for new brokers as part of our plan to expand further our networks of distributors.
The expanded sales team will drive a number of broker and product initiatives to increase new business in the current year and beyond. This includes the development and launch of new products for key target markets, updates and improvements to existing products and the recruitment of additional localised sales colleagues into key growth regions.
Assets under Administration ("AUA")
The composition and value of AuA is based upon the assets selected by or on behalf of contract holders to meet their savings and investment needs. Reflecting the wide geographical spread of the Group's customer base, the majority of premium contributions and of AuA are designated in currencies other than sterling. Over 60% of Group AuA are denominated in US dollars.
The total of such assets is affected by the level of new premium contributions received from new and existing policy contracts, the amount of assets withdrawn by contract holders, charges and the effect of investment market and currency movements. These factors ultimately affect the level of fund-based income earned by the Group. Net withdrawals are typically experienced in Hansard Europe dac ("Hansard Europe"), which closed to new business in 2013.
During Q4 2022, AuA decreased by £73.5m or 6.3%, primarily reflecting the impact of global economic concerns on stock markets. Significantly lower single premium inflows were offset by lower contract withdrawals. For the year ended 30 June 2022, AuA decreased £126.0m or 10.3% for similar reasons.
The following analysis shows the components of the movement in AuA during the period:
| | Three months ended |
| Year ended | ||
| | 30 June |
| 30 June | ||
| | 2022 | 2021 |
| 2022 | 2021 |
|
| £m | £m |
| £m | £m |
| Deposits to investment contracts - regular premiums | 21.3 | 21.7 |
| 86.2 | 85.0 |
| Deposits to investment contracts - single premiums | 7.6 | 16.1 |
| 43.8 | 63.8 |
| Withdrawals from contracts and charges | (36.2) | (50.6) |
| (158.2) | (167.2) |
| Effect of market and currency movements | (66.2) | 55.9 |
| (97.8) | 162.1 |
| (Decrease) / increase in period | (73.5) | 43.1 |
| (126.0) | 143.7 |
| Opening balance | 1,171.7 | 1,181.1 |
| 1,224.2 | 1,080.5 |
| Assets under Administration at 30 June | 1,098.2 | 1,224.2 |
| 1,098.2 | 1,224.2 |
The movement in AuA is split as follows between Hansard International (incorporating business reinsured from Hansard Worldwide) and Hansard Europe:
| |
|
| Year ended | ||
| |
|
| 30 June | ||
| |
|
|
| 2022 | 2021 |
|
|
|
|
| £m | £m |
| Hansard International |
| |
| (105.3) | 148.3 |
| Hansard Europe |
| |
| (20.7) | (4.6) |
| (Decrease) / increase in period |
| |
| (126.0) | 143.7 |
Results for the year ENDing 30 JUNE 2022
Full trading results for the year are scheduled to be announced on 22 September 2022.
OUTLOOK
The external global environment and the ability for our Independent Financial Advisor ("IFA") distribution network to grow new long-term savings business continue to be challenging. We have invested in additional experienced sales management executives and embarked upon a wide range of initiatives to improve new business for the 2023 financial year.
While our Japanese product is now expected to take longer to launch into the market, we remain confident that the development work that has taken place can be deployed across a number of different distribution channels and we are fully focussed on capitalising on what we continue to believe to be a significant commercial opportunity.
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 via 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 scalable.
· The principal geographic markets in which the Group currently services contract holders and financial advisors are the Middle East & Africa, the Far East and Latin America. These markets are served by Hansard International Limited and Hansard Worldwide Limited.
· Hansard Europe dac previously operated in Western Europe but 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 scalability 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.
This announcement contains inside information which is disclosed in accordance with the Market Abuse Regime.
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