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RNS Number : 2709N

Royal London

23 September 2019

MONDAY 23 SEPTEMBER 2019

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

INTERNAL MODEL APPLICATION APPROVAL

The Royal London Mutual Insurance Society Limited ("Royal London" and, together with its subsidiaries, the "Group") announces that the Prudential Regulation Authority ("PRA") has approved its Group and solo partial internal model (the "Solvency II Internal Model") application under Solvency II.

The Solvency II Internal Model will be used for the calculation of the consolidated Group solvency capital requirement ("SCR") as well as for the solo entity SCR of Royal London. The approval is for a partial internal model for both the solo entity and the Group. Royal London and the Group expect to commence using the Solvency II Internal Model with effect from 1 October 2019.

Further detail

In common with many in the industry, since the inception of Solvency II in January 2016, Royal London has used the prescribed "Standard Formula" approach to calculating its solvency capital requirement for public disclosures. We have managed the business on our internal model capital basis for some years.

Solvency Capital Requirement

Royal London intends to continue to report two key metrics going forward: an 'investor view' for analysts and investors in its subordinated debt, which in the case of Royal London does not restrict the surplus in the closed funds, and a 'regulatory view' where the closed funds' surplus in excess of the SCR is excluded from total own funds and treated as a liability, which is known as the closed funds restriction.

On a regulatory view, at 1 January 2019, on an Internal Model basis, Royal London had a solo cover ratio of 162 per cent and a Group cover ratio of 154 per cent.

On an investor basis, at 1 January 2019, Royal London had a solo cover ratio of 239 per cent and a Group cover ratio of 228 per cent. The large difference between the regulatory and investor basis reflects the relative strength of the closed funds within Royal London.

Basis of preparation

The previously reported capital position as at 31 December 2018 of Royal London and the Group was based on the Standard Formula approach (which will remain applicable until 1 October 2019) as set out in the Royal London Solvency and Financial Condition Report 2018 which is available from the Royal London website.

This announcement is released by RL Finance Bonds No. 2 plc and RL Finance Bonds No. 3 plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 and has been announced in accordance with their respective obligations under Article 17 of that Regulation. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Royal London Management Services Limited, company secretary of each issuer.

- ENDS -

For further information please contact:

 
 Mona Patel                                0203 2725133 
  Group Head of External Communications     07919 171964 
  Mona.patel@royallondon.com 
 

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of GBP130 billion, 8.8 million policies in force and 4,046 employees. Figures quoted are as at June 2019.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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September 23, 2019 04:52 ET (08:52 GMT)

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