Sovereign said it had seen an 8.6% increase in dividend on the back of these results.
Sovereign announced that its acquisition of Home & Capital during the year was a significant strategic development.
Paul Spencer, chairman of Sovereign said: “Sovereign Reversions is exceptionally well placed in the equity release market as it becomes a mainstream financial planning tool for retirement. We are now able to offer both lifetime mortgages and home reversions.”
The number of new plans written by Home & Capital rose by 12% in the last financial year, according to Sovereign Reversions. By 30 April 2007 Home & Capital had 1,826 properties under management (2006:668), representing nearly 2,400 investments (2006: 780) with an approximate vacant value of £280m (2006: £140m) - making Home & Capital one of the leaders in this sector.
Home & Capital benefited from the early implementation of home reversion regulation by the FSA and has become one of the first regulated providers of home reversion plans. Regulation also created a level playing field across the equity release sector (lifetime mortgages have been regulated since 2004). As well as boosting consumer confidence, regulation will enable financial intermediaries to sell home reversions on an equal footing with lifetime mortgages.
An expected decline in the number of applications in the run up to the introduction of regulation failed to materialise as Home & Capital beat its own forecasts.
ADVISORY ARM
Home & Capital has also launched an equity release advisory arm, Home & Capital Advisers, to offer both lifetime mortgages from third parties and its own home reversion plans. The enhanced coverage has enabled Home & Capital to improve its profile within the sector.
Home reversions accounted for just 7% of all equity release activities in 2006. Consequently Home & Capital’s activity as a provider of home reversion plans gave it only a small presence in the equity release market. The development of an advisory arm enables it to be active across the whole market.
The move into advice also widens the Home & Capital customer base to include younger applicants, who are generally more suited to a lifetime mortgage. Home & Capital is continuing to advise direct customers as well as offering an advisory service to financial intermediaries who are not active in this sector.
Nigel Hare-Scott, sales director of Home & Capital, said: “Home & Capital has been strengthened considerably by the financial backing and expertise of our new parent, Sovereign Reversions – we now have a backer capitalised at over £50 million behind us. Already in the first few months under Sovereign’s ownership, we have seen a broadening of our business base. The next year is looking quite exciting.”
