Market upheaval delays Nationwide life launch

A further blow to the insurance industry's battered morale was dealt yesterday with the news that Nationwide Building Society has postponed the launch of its planned new life company.

Nationwide Life and Nationwide Unit Trust Managers were scheduled to open this summer, but the start date has been put back to 1 January.

The postponement will be seen as further evidence of the difficult year faced by the industry, although Nationwide insisted the delay was for logistical reasons.

"We want to be comfortable that we get it right from day one," a spokesman said, "especially as the market is changing quite rapidly with the new disclosure environment in place."

Insurers have been releasing figures for new business showing a decline in UK sales of life and pensions products as a result of the bad publicity surrounding personal pensions and endowment policies.

Sun Life yesterday said its new business fell by 3.4 per cent last year to £318.2m. Total new premium income fell to £2bn from £2.3bn in 1993.

On Monday, Axa Equity & Law, the UK arm of Axa, the giant French insurer, saw UK total business fall by 8 per cent to £568m. Axa yesterday announced a deal to take a controlling stake in Australia's second-biggest insurer, National Mutual Life, for A$1.1bn (£542m).

Nationwide will continue as a tied agent of Guardian Insurance until the new life company is up and running, although it has dispensed with the insurer's services as a consultant to help it to set up the venture.

The society also announced the appointment of Schroder Investment Management as external fund manager for its unitised life, pensions and unit trust and PEP funds.

n Commercial Union's shares eased 6p to 493p yesterday as the market attempted to assess its exposure to the floods across northern Europe. CU bought the French insurer Groupe Victoire last year. Analysts said the effect on most UK insurers from the floods would be relatively insignificant, and CU said it did not expect claims to affect its profits materially.