Shares in enhanced annuity specialist Partnership Assurance (PA.) slumped nearly 56 per cent on the day these figures appeared - although that really reflected the Chancellor's decision on the same day to effectively scrap the compulsory purchase of annuities by those with defined contribution pensions. Nevertheless, the results were underwhelming and fourth-quarter new business sales fell 27 per cent year on year.
This was significantly down to the implementation of both the Retail Distribution Review, which banned commissions, and gender-neutral pricing, which concentrated sales into 2012, making for tough comparatives. The combined effect has had a "deeper and longer" impact on Partnership's annuity markets than originally anticipated, admitted chief executive Steve Groves.
Group operating profit rose 17 per cent to £131m, however. That's largely because profits from the existing (in-force) book rose sharply - by £20m to £34.3m - helped by various efficiency gains. Operating profit from new business fell 9 per cent to £85.7m, although a willingness to sacrifice volume amid competitive market conditions did limit margin pressure; the new business operating margin fell just 40 basis points to 7 per cent.
Estimates could be tweaked downwards but, prior to these figures, broker Keefe, Bruyette & Woods was expecting operating EPS of 28.5p for 2014 and embedded value of 153p.
PARTNERSHIP ASSURANCE (PA.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 140p | MARKET VALUE: | £560m | |
| TOUCH: | 137-140p | 12-MONTH HIGH: | 540p | LOW: 127p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 150p* | EMBEDDED VALUE: | 130p | |
| Year to 31 Dec | Gross life premiums (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010† | 0.59 | 12.2 | na | nil |
| 2011† | 0.89 | 37.9 | na | nil |
| 2012† | 1.47 | 67.5 | 18 | nil |
| 2013 | 1.16 | 82.7 | 17 | 3 |
| % change | -21 | +23 | -6 | - |
Ex-div: 7 May Payment: 30 May *Includes intangible assets of £143m, or 36p a share †Prior to flotation | ||||
