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Commission hike boosts NU pension sales by 22%

Norwich Union saw individual pension sales grow by 22 per cent quarter on quarter after it boosted commission in July.

The company admits it has sacrificed some margin to maintain market share because of aggressive pricing from competitors on stakeholder and personal pensions.

Chief executive Gary Withers says he was uncomfortable raising commission in July after slashing it the previous November but in the longer term he expects a reversion to more sustainable pricing levels.

He says a similar situation exists in the protection mar- ket but he believes that NU has the scale to compete at the low margin levels which have already seen rivals such as Prudential back away.

Third-quarter UK personal pension sales were up by 22 per cent from 539.76m to 692m.

However, total life and pension business fell to 6.6bn in the nine months to the end of September 2004 from6.8bn in the same period last year.

Protection sales rose by 7 per cent from 231m to 247m quarter on quarter but margins slid from 3.2 per cent to 2.7 per cent.

Investment sales also saw healthy growth, up by 11 per cent to 2.68bn in Q3 from 2.38bn in Q2.

Withers says: “Some competitors have been pricing at loss-making levels and grabbing market share and we could not allow that to happen. It is leading to firms reappraising their plans and perhaps being more realistic about volume growth. Margins have eased back but we are writing business above the cost of capital.

“Pension sales dropped back in the first half of the year but are coming back in the second and our long-term aspiration is to get higher pricing.”

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