Profits at the firm increased by 58% to £210m in 2022 despite the AUM decline.

The company said the fall in AUM was driven by negative market movements across equity and bond asset classes.

It blamed the global economic slowdown, rising inflationary pressures and the geopolitical impacts of the war in Ukraine.

But the company said it offset the problems by a continuing focus on cost control, growing the annuity portfolio, and consolidating or simplifying closed funds.

Barry O’Dwyer, chief executive, said: “In 2022 we concluded our programme to simplify our business.

“As a direct result, Royal London has been able to increase the value of our long-standing customers’ policies by £675m in total through the consolidation of closed with-profits funds. “We have also successfully modernised many elements of our business.”

He said the business spent £71m on technology during 2022 .

He said the firm introduced more efficient digital services for more than four million customers whose policies have been moved onto enhanced systems.

It has also consolidated a further two closed with-profits funds, simplifying their services and corporate fund structure.

Net inflows during 2022 were £3.7bn, down from 2021’s £5.3bn.

However, the company’s flagship Governed Range attracted net inflows of £3.4bn, with AUM reaching a record high of £53bn.

Life and pensions new business sales were up 12% at £10.8bn compared to 2021’s figure of £9.6bn.

That reflected the post-pandemic increase in both individual and workplace pension flows, a strong UK employment market, and the relative performance of Royal London’s Governed Range of funds.