Friends Life has reported flat sales in its UK division during the first nine months of 2013, with the profitability of new business written increasing by 41 per cent.
Friends Life’s third quarter interim management statement, published today, reveals total sales for the first nine months of the year increased 2 per cent, from £513m in the first nine months of 2012 to £521m during the same period this year.
This was driven by a 79 per cent surge in retirement income sales during the period, from £28m to £50m, while protection sales fell from £65m to £63m.
Corporate benefits sales dropped 3 per cent, from £420m to £408m, although the value of new corporate business increased 36 per cent, from £14m to £19m.
Friends Life says it has seen a larger number of employers auto-enrolling workers at the legislative minimum than it had anticipated.
It says: “The profile of the auto-enrolment business written to date has seen a larger proportion of employers than expected enrolling on minimum contributions and with qualifying earnings – which has an adverse impact on new business margins.
“However, as employer and employee contributions increase in line with the statutory minimum levels from 2 per cent to 8 per cent in aggregate in 2018, the group expects to see incremental asset flows which would substantially increase the value and profitability of these schemes.”
The value of all new business written in the UK during the period rose by 41 per cent, from £94m to £133m.
Friends Life group chief executive Andy Briggs (pictured) says: “The group has performed strongly during the third quarter.
“Our consistent strategy and focus on value is delivering and we are continuing to build on the momentum established in the first half of the year.
“In the UK value of new business grew 41 per cent, underpinned by rigorous financial discipline.
“We have continued to make progress on cost reduction and have already reached our full year cost savings targets for 2013. Our scale businesses, competitive advantage in growth markets and the improving economy mean that we remain well placed to continue to generate cash and enhance shareholder value.”