Bad publicity hits UK life insurers

Two of Britain's biggest insurers yesterday provided confirmation of the damage wrought on the industry by the pensions transfer furore and the bad publicity over the value of endowment policies.

Legal & General reported a drop in new life and pensions business from £319m to £293m last year.

But growth in overseas sales helped shield Prudential, Britain's biggest insurer, from the troubled domestic market. Although UK sales dropped in line with the industry, single premium sales at Jackson National Life, the Pru's American subsidiary, leapt by almost a third to just over $2bn.

At home, annual premium life and pensions sales fell 7 per cent to £266m, while single premium business plunged 20 per cent to under £2bn. But the Pru said it had seen a marked improvement in sales in the second half.

Stephen Dias, insurance analyst at Goldman Sachs, said recovery in the second half was encouraging. The overall decline in sales was in line with the rest of the insurance industry in Britain after bad publicity over pension transfers and the value of endowment policies. "But Prudential is bolstered by its position as a global player, with strong sales growth in the US and the Pacific markets, which leaves it better placed than most to cope with the difficulties."

Another insurer, London and Manchester, also reported new business figures. Single premium sales fell 13.7 per cent but corporate pensions business jumped 39 per cent and annual premiums rose 4.3 per cent.