Norwich Union has seen individual pension sales slump following a repricing last year and admits it may have to cut its charges if it wants to maintain market share.
Parent group Aviva’s int-erim results show that worldwide sales rose by 25 per cent to £19.2bn in the first six months of 2007 compared with £15.6bn in the same per-iod last year although profits fell by 8 per cent to £1.5bn from £1.6bn due to a flood claims bill of £400m.
UK sales of individual pensions plummeted by 17 per cent to £1.8bn from £2.1bn on a present value of new business premiums’ basis although margins did improve.
NU chief executive Mark Hodges says the firm last year increased charges on its individual pensions from 1 per cent to 1.5 per cent but several rivals have been slower to follow suit than anticipated.
Hodges says: “We can afford to write less pension business and make less money if it is higher-margin business because we want to attract sustainable and profitable business. The question we have to ask is do we persist with the 1.5 per cent product or do we move back to the 1 per cent product?”
NU repriced its stakeholder range two years ago after a charge rise led to sales dropping by more than 10 per cent.
Life operating profit increased by 24 per cent from to £1.2bn from £1bn on a European embedded value basis while UK sales overall rose by 7 per cent to £7.4bn.
Aviva says it will bring all its investment arms under the Aviva Global Investors brand after recruiting new Morley chief Alain Dromer to head the operation. Hodges says no decision has been made on the future of the NU and Morley investment brands.