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NU pension sales drop 10% after commission cut

Norwich Union has seen pension business fall by 10 per cent since cutting commission last September.

The fall put a dmaper on generally positive results for the firm, which last year saw life and pension sales increase by 9 per cent to £2.55bn from £2.37bn in 2003 on an annual-premium equivalent basis.

For the first time, more than half of Aviva’s business came from outside the UK, with the bulk of the business coming from Europe. Sales of UK inv-estment and savings products rose by 18 per cent to £16.7bn from £14.4bn.

Inflows through the bancassurance channels rose by 17 per cent to just over £4bn. With-profits sales were one of the group’s few weak spots.

UK chief executive Gary Withers says he is confident that with-profits sales will recover in the long term once investors return to logical investment decisions.

Withers says he is adamant that the current lull in with-profits sales is an emotional res-ponse to recent problems following the 2000/02 bear market rather than a rational investment decision.

Industry with-profits bond sales have fallen from £15bn in 2000 to around £1bn last year and. Around 20 per cent of NU’s new business flows in 2003 came from withprofits.

Withers says: “The fall in with-profits sales is an emotional response and they remain a very good investment vehicle. Over time, emotions will subside and logic will reinforce that it is a valuable product and people will come back to it.”

Hornbuckle Mitchell adviser Viv Belcher says: “What has happened in the markets over the last five years has exposed the weakness of withg-profits. Life offices need to push with-profits because, other than for protection, why would you use them?”•NU cuts bonus rates, p9


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