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Annuities bouy NU as bond business fall

Business at Norwich Union dipped by 5 per cent in the third quarter this year although with faltering sales of bonds and Isas were substantially made up by increased annuity and group pension sales.

Parent Aviva saw worldwide sales rise by 7 per cent to £1.75bn from £1.62bn in equivalent premium income.

NU refuses to break down sales of with-profits bonds but total sales of bonds overall fell to £2.25bn compared with £2.64bn for the first nine months of 2001.

Last week, rival Prudential announced a tailing-off in demand for with-profits bonds.

NU sales of Isas, unit trust, Oeics and Peps fell by 40 per cent to £429m from £715m for the same period last year.

But sales of annuities soared by 33 per cent to £721m compared with £549m the year before. Sales of pensions rose by 4 per cent to £954 per cent from £915m for the first nine months of 2001.

IFAs continue to have the lion&#39s share of NU business, accounting for £733m of sales compared with £65m through its partnership with Royal Bank of Scotland, an increase of 195 per cent.

Direct sales and other partnerships accounted for £211m.

Aviva group chief executive Richard Harvey says: “These are solid sales in generally tough markets. Our financial strength, broad product range and growing distribution continue to give us competitive advantage. Our bancassurance operations in the UK, Italy and Spain have performed particularly well. As the biggest life and pension provider to Europe, we are strongly positioned to benefit from the increased need for private provision as savings markets recover.

“Our outlook for long-term savings markets for the rest of the year remains cautious as we expect consumer confidence to continue to be affected by economic conditions and turbulent equity markets.”

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