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A lumpy ride for sales at Friends

Friends Provident’s UK new life and pension sales in the first three quarters of this year have risen by 11 per cent compared with the same period in 2004 but life and pension sales have fallen sharply compared with the second quarter.

Domestic life and pension sales fell by 20 per cent in the third quarter compared with the second quarter, broadly matching Prudential’s per- formance.

Norwich Union’s decision in June to raise commission across its individual pension range accounted for much of this drop as the UK’s biggest insurer saw its life and pension sales surge by 22 per cent over the period.

Friends head of UK distribution Simon Clamp says the “lumpy” nature of corporate pension business was also significant.

Overall, group life and pension business rose by 31 per cent to 424.5m on an APE basis for the first nine months of 2005 from 323.4m for the same period last year while total UK new life and pension business rose by 11 per cent from 269.5m to 299.9m.

Protection business fell by 11 per cent over the period from 56m to 50m but investment sales rose by 14 per cent from 43m to 49m.

Clamp expects protection strength to come back in 2006 on the back of distribution deals it is tying up. Although margins remain tight, Clamp says Friends can continue to compete in this market at current pricing levels because its protection sales process is largely electronic and its processes more streamlined than most of its rivals.

He says: “Our underlying business growth is strong and we increased our market share by 0.5 per cent in the first half of this year. On the pens- ion side, we do a lot of group pensions, which can be lumpy business.”

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