L&G warns of difficult year ahead as sales rise

Published on Wednesday 13 May 2009 21:39

INSURANCE giant Legal & General yesterday reported first-quarter sales ahead of expectations despite difficult market conditions.

The group said worldwide sales increased by 3 per cent during the three months to the end of March to 382 million, ahead of consensus forecasts of 319m.

But it warned that 2009 was likely to be a difficult year for the insurance industry, and growth opportunities would be limited.

The group's figures were boosted by a 6 per cent rise in new savings business, with unit trust and Isa sales soaring by 43 per cent to 60m during the period.

L&G credited the rise to its tie-up with Nationwide Building Society, which sells its investment products through its branches, as well as increased marketing to specialist independent financial advisers and an expansion of direct sales.

But it warned that it did not expect total industry sales to grow this year due to the current investment volatility.

But it does expect people's appetite for these products to increase over time as consumers move their money back into the stock market, and make use of the increased Isa allowance announced in the Budget.

The rise in unit trust and Isa sales was partially offset by a 55 per cent drop in sales of unit linked bonds to 18m.

The group attributed the fall to a combination of stock market volatility, changes to the capital gains tax regime and a reluctance among consumers to lock up their money.

It warned that it expected further reductions in this area of sales during 2009 as it prioritised "profit over volume" and cut the commission it paid to intermediaries.