Legal & General, the UK life insurer, reported a better-than-expected 31 per cent rise in third-quarter new business yesterday, spurred on by a stabilisation in the housing market and a growing confidence among private investors.
Sales of Isas and unit trusts leapt 160 per cent compared with the same period last year, as retail and institutional investors piled into L&G's tracker and bond funds.
Strong growth in the individual pensions market was offset by a 14 per cent fall in protection sales. However, Sir David Prosser, the group's outgoing chief executive, said sales of mortgage-related life insurance products were now growing due to a stabilisation in house prices. L&G also saw a sharp fall in the sale of individual annuities, as it held back from writing business in the face of increased price competition from a small number of competitors in the market. Sales of bulk annuities to pension funds nearly doubled, however.
The group's overall share of the life and pensions market has grown by almost 2 percentage points over the past year to 11.3 per cent. Sir David said the company had stolen business from the likes of Standard Life, Aviva and a number of smaller companies.
International sales were down slightly compared with the same quarter last year, principally due to a poor performance in the US, where competition intensified. Earlier this month, L&G warned investors that it could take a one-off hit of £500m after the Government surprised the life assurance industry with new tax rules relating to with-profits funds.
But after a statement from HM Revenue & Customs asserting that a figure of £500m would be out by a factor of 10 - not just for L&G but for the industry as a whole - the company said yesterday it was more comfortable that the hit would be smaller.
"We're still in discussions with the Revenue about this," Sir David said. "I've got to take [what the Revenue said] at face value - that it's not going to be what we thought it would be on our reasoning. They understood our arithmetic, and why we had to use it, but clearly if that public statement is right, that's not what they intended."Reuse content