IPM Irish Life&P.Gp

 

TIDMIPM 
 
RNS Number : 9073L 
Irish Life & Permanent Grp HldgsPLC 
14 May 2010 
 

 
Irish Life & Permanent Group Holdings plc 
Interim Management Statement 
Friday 14th May 2010 
7.00am 
 
 
 
Irish Life & Permanent plc (IL&P) issued the following update on the group's 
business. A conference call for analysts will be hosted by management at 9.00am 
today, the details of which are set out at the end of this statement. 
 
The Group's Annual General Meeting takes place today at 11.30am in the RDS in 
Dublin. 
 
 
Group Overview 
 
Recent indications are that the Irish economy has begun to emerge from 
recession. The numbers unemployed fell in 2 of the last 3 months, retail sales 
increased in February and March and the April construction purchasing index 
recorded its highest level for two and a half years. The action taken in 
addressing the fiscal deficit, together with the gains in competitiveness, will 
support the return of sustained economic growth. 
 
The Group's businesses are generally performing in line with expectations. Our 
investment management business is performing strongly while demand in the life 
business is mixed. In the bank, loan demand has fallen further. Mortgage loan 
arrears in Ireland continue to rise, reflecting the higher level of 
unemployment, but early arrears are showing some signs of stabilising. Very 
significant progress has been made in the bank's funding programme in the year 
to date. 
 
 
Insurance & Investment 
 
New business 
Sales of insurance and investment products are in line with budgeted 
expectations. ILIM continues to record strong institutional inflows on the back 
of its investment performance and product offerings. Investment only sales for 
the first quarter were up over 60% on Q1 2009. The life business is seeing 
strong growth in single premium sales - up 39% in the first quarter and up 75% 
including Irish Life International - but recurring premiums were down 30%, 
principally reflecting the impact of reductions in salaries, and in numbers 
employed, on corporate pension schemes. 
 
In-force 
Retail persistency experience in the year to date is better than 2009 with Q1 
lapses running at circa 140% of long-term assumptions (Q1'09: 190%) and Q2 lapse 
experience reducing further. This reflects the wide range of initiatives taken, 
and changes made in products and distribution, to improve business retention. 
Corporate business has seen a marked reduction in lapses since peaking mid-2009 
but premium reductions due to lower salaries are continuing. 
Persistency experience, and progress in returning to our long term assumptions, 
will be closely monitored as we go through the year and reviewed at the year end 
based on the full year experience. 
 
Risk experience - in particular morbidity - continues to be positive and expense 
experience is in line with expectations with the completion of the remaining 
cost reductions targeted in the bancassurance channel. 
 
Embedded value 
The performance of investment markets up to Monday of this week has resulted in 
a positive variance in short-term investment fluctuations (STIFs) in the order 
of EUR40m. This reflects both market returns and the effect of a weaker euro. 
 
The shareholder liquidity support to unit-linked property funds has been unwound 
in full since the year end following the sale of properties by the funds. These 
sales reflect a more positive outlook for the commercial property market. 
 
 
Banking 
 
Funding 
The bank has made significant progress in its funding programme year to date. It 
has completed term debt issuance of EUR4.8bn representing some 75% of the term 
re-financing requirement for the year. Treasury is also carrying excess funding 
to support liquidity management through the year. ECB drawings are currently 
EUR8bn (Dec 2009: EUR9.75bn). 
The bank continues to successfully grow its retail deposit book in a highly 
competitive market and growth in the book is ahead of target, up 7% in the four 
months to the end of April. 
 
Net interest income 
Net interest income for the first half of the year is expected to be in line 
with target. The increased cost of term debt has been partly offset by the 
action taken in re-pricing part of the bank's mortgage loan book in February. 
The recent highly volatile and uncertain conditions in financial markets would, 
if they persist, further increase pressure on funding costs and margins for the 
bank and across the market. 
 
Credit quality 
Arrears (over 90 days) in the Irish residential mortgage book continue to rise 
reflecting the further increase in unemployment through 2009 and into the start 
of 2010. Early arrears (under 90 days) cases have levelled off in the 3 months 
to April which may indicate that they are nearing the peak. Arrears in the 
consumer finance book show signs of levelling off / reducing which would be 
expected given the short duration of the book. Arrears in the UK mortgage book 
continue to trend downward having peaked in the first quarter of 2009. 
 
Costs 
Cost reduction remains a priority given the reduction in volumes and margins 
across the business. In the first quarter 10% of the bank branch network was 
closed and staff numbers reduced by 140 (FTE). A fundamental re-assessment of 
the future cost structure of the bank is currently in progress. 
 
 
Associate - Allianz Ireland 
Economic activity continues to affect premium values. However, claims trends are 
improving and investment returns are favourable year to date. 
 
 
 
Group 
 
Capital 
The group remains strongly capitalised. In March the Financial Regulator ("FR") 
introduced new capital requirements for the banking sector in Ireland and based 
on initial discussions with the FR the Group expects that, as currently 
structured, the current capital resources of the bank are sufficient to meet the 
new regulatory targets. 
 
The proposed raising of additional capital in the life company, secured on the 
in-force book, is still under consideration in the context of recent FSA 
discussion papers on such transactions. 
 
The implementation of changes in the statutory reserving approach for life 
expenses is expected to result in the release of circa EUR50m of capital later 
this year. 
 
Strategy 
All five Irish banks participating in NAMA have prepared, or are preparing, 
viability plans for submission to the EU by end June. The outcomes from this 
process will create a number of opportunities for the Group as the Irish banking 
sector is restructured. 
We are currently engaging with advisors and with rating agencies on how best to 
maximise the various restructuring opportunities. 
 
The Group's Interim results announcement date is scheduled for 25th August 2010. 
 
 
Conference Call & Contact Details 
 
Kevin Murphy, Group CEO and David McCarthy, Group Finance Director, will host a 
conference call for analysts at 9.00am on Friday May 14th 2010. 
 
To join the conference call, please dial in to the relevant number below 5 
minutes before and ask for the Irish Life & Permanent call 
Ireland             (01) 247 7824 
UK                   (0) 20 7075 1520 
Other               +353 1 247 7824 
 
Pass code:      282009# 
 
The conference call will also be available via the LIVE<GO> service on Bloomberg 
and Thomson Reuters www.streetevents.com. 
 
Conference Call Replay 
Replay facility available until midnight 21st May 2010. The telephone numbers 
and access code are: 
 
Ireland             (01) 431 1246 
UK                   (0) 20 3364 5943 
US                   1866 286 6997 
Other               +353 1 431 1246 
 
Pass code:      267370# 
Contact details 
 
David McCarthy, Finance Director 
Tel: +353 1 856 3050 
 
Barry Walsh, Head of Investor Relations 
Tel: +353 1 704 2678 
 
Orla Brannigan, Investor Relations 
Tel: +353 1 7041345 
 
Ray Gordon, Gordon MRM 
Tel: +353 1 665 0450 
 
 
 
 
 
 
 
 
 
 
 
Disclaimer - Forward Looking Statements 
This document may contain forward-looking statements with respect to certain 
plans and current goals and expectations relating to the future financial 
condition, business performance and results of the Irish Life & Permanent group. 
 By their nature, all forward-looking statements involve risk and uncertainty 
because they relate to future events and circumstances that are beyond the 
control of the Irish Life & Permanent group including, amongst other things, 
Irish domestic and global economic and business conditions, market related risks 
such as fluctuations in interest rates and exchange rates, inflation, deflation, 
the impact of competition, changes in customer preferences, risks concerning 
borrower credit quality, delays in implementing proposals, the timing, impact 
and other uncertainties of future acquisitions or other combinations within 
relevant industries, the policies and actions of regulatory authorities, the 
impact of tax or other legislation and other regulations in the jurisdictions in 
which the Irish Life & Permanent group and its affiliates operate.  As a result, 
the Irish Life & Permanent group's actual future financial conditions, business 
performance and results may differ materially from the plans, goals, and 
expectations expressed or implied in these forward-looking statements. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 IMSZMGMKVFNGGZM 
 

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