L&G reveals sales upturn in face of crisis

The banking crisis means a tough year for insurers as banks sell fewer mortgages and increase their rates on deposits, Legal & General said yesterday.

Tim Breedon, the insurer's chief executive, said that sales of protection insurance had been hit by the slowing mortgage market and would probably fall by up to 10 per cent this year. Savings products such as pensions were also suffering because people were opting to keep their money in cash, he added.

"Things have been bloody in the housing market and the remortgage market... banks are offering very attractive [savings] rates," Mr Breedon said.

Legal & General's beat expectations for first-quarter sales, which were up by 1 per cent to £372m. Mr Breedon said L&G would perform well in more difficult markets, helped by its bulk annuities business, which takes on the pension liabilities of companies.

But the company's shares fell by 4.9 per cent to 124.5p because of concern that it was relying too heavily on the bulk business, which is unpredictable. Mr Breedon reiterated guidance that bulk annuity volumes in the first half would match or exceed those in the fourth quarter of last year. He said that though it was difficult to predict volumes in the second half of the year, companies' appetite for transferring risk would be at least as strong.

"In spite of the doom and gloom around the housing market, the economy and competition, this is a resilient set of results," Mr Breedon said.

Legal & General, the most domestic of Britain's large insurers, was the first to report first-quarter numbers. Prudential, with its booming Asian business, reports sales figures today.