Sun Life & Provincial profits leap as merger savings beat expectations

SUN LIFE & Provincial Holdings, the French-controlled insurer formed from the merger of Sun Life and Axa Equity & Law, yesterday unveiled a 54 per cent jump in pre-tax profits in the year of the merger, writes Andrew Verity.

The group, which is the third largest insurer in the UK, also surprised the City by revealing that savings from the merger were 10 per cent higher than it had hoped.

Shares in the company rose 20p to 580p, valuing it at pounds 4.54bn. Earnings per share jumped by half to 26.8p.

Pre-tax profits rose to pounds 337.7m, 54 per cent more than both groups before the merger. Operating profits, which exclude gains from the sale of its Irish operations, also grew by 14 per cent.

However, the group warned that while its businesses had done well, the value of new business would be difficult to sustain because of competitive market conditions.

Mark Wood, chief executive of Axa, said: "We don't think that our competitors' pricing is sustainable. What we are saying is that we need to get a balance between margin and volume. We are going for margin rather than volume."

Sun Life & Provincial shares closed at 580p, up 20p.