Prudential to sell private medical insurance in Boots stores

The insurance giant Prudential unveiled a tie-up with the high street pharmacy Boots yesterday, giving it the exclusive rights to sell its private medical insurance product through Boots' 1,500 stores.

The deal will allow Boots customers to register for Pru's product over the counter. Pru-health, launched two and a half years ago, gives customers lower premiums for living healthy lifestyle, cutting premiums for those who wrack up points by regularly going to the gym or taking health checks.

Boots is offering half-price premiums for a year, to customers who sign up to Pru-health within the first six months.

The announcement came as Pru published its first quarter results, which came in at the top end of analyst forecasts. Group insurance sales were up 8 per cent to £640m, while the company's retail sales were up some 25 per cent.

Although the company saw a strong performance in its UK retail business, overall sales in the UK fell 23 per cent due to the company's decision to write less business in the bulk purchase annuity market.

The UK wholesale market has become increasingly competitive over the past 18 months after a number of new players have entered the bulk purchase annuity market. Group chief executive Mark Tucker said the group was now focusing on "value not volume", and would only write business which it was certain would be profitable, and would meet its return on equity targets.

Mr Tucker said the sharp drop in sales in the wholesale market had been accentuated by the fact the group had registered several large deals during the first quarter of 2006.

Furthermore, he said while the group had recently agreed to acquire the with-profits annuity book of Equitable Life - a deal which will add £180m to its annual sales - this transaction would not be completed and registered on its books until the fourth quarter.

Outside of the UK, Prudential's businesses continued to enjoy rapid growth. Sales in the US were up 21 per cent on the same period last year, while in Asia sales increased 34 per cent.

The market gave a mixed reaction to yesterday's results, in spite of the fact they came in at the top end of forecasts. Kevin Ryan, an analyst at the Dutch bank ING, said: "The song remains the same: great results from the United States and Asia, underwhelming results from the UK. I don't think there is anything here that we can get bullish or excited about. There are no signs that the UK is perking up."