SWIP reports 24% profits rise as new business flows in

STRONG growth in UK sales especially have driven Scottish Widows Investment Partnership (SWIP) to a 24 per cent rise in interim profits to £21 million, while gross new business was also up sharply, by 58 per cent to £1.4 billion.

But the company has reported a disappointing increase in funds under management to 98bn from 97.3bn a year earlier, which was actually down from 101.7bn reached at the end of December last year.

SWIP put the lack of total funds under management to a decision by Lloyds TSB to move 5.7bn of its pension scheme funds from SWIP to external passive fund management companies.

The company said the increase in profits was helped by its "continuing success" in the UK retail and institutional markets, with the launch of several innovative new funds over the past 14 months.

The head of distribution, Simon Wombwell, said: "Our fund distribution continues to increase, not just in the UK, but across the globe. As a result of this, we are able to announce a healthy level of profit for the group over the half year."

SWIP also pointed to the successful expansion of its international business, with inflows coming from across Europe, the United States and Japan.

The division boasted a 271 per cent increase in gross new business to 467m since June last year, after it won several new mandates in Europe across a number of asset classes. The company gained $500m (247m) in new assets in the US. Take-up of its global emerging market equities, as well as commercial property and fixed interest portfolios, was particularly strong in North America.

Gains were also made in southern Europe and in Japan, where SWIP has been operating in partnership with Mizuho Asset Management since 2000.

SWIP's success in providing fund management products to other divisions within the Lloyds TSB group also expanded, with the fund manager now looking after more than 6bn for Lloyds TSB Private Bank, up 61 per cent on June 2006.

SWIP will also manage the assets of Abbey Life for the next ten years after the closed life insurance business was sold to Deutsche Bank for 977m. Strong investment performance has driven SWIP's third-party retail sales in the first half of the year, with gross new business increasing by 116 per cent to 280m.

The company lowered its minimum investment on its range of open-ended investment companies 18 months ago and established a dedicated retail sales team to focus its funds at the retail market.

The hunt for a new chief executive for SWIP is expected to draw to a close in the next few months.

The company has been without a chief executive for some time, after its former head, Chris Phillips, died while on holiday in the Pyrenees in April.