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NU strives for 20% market dominance

Norwich Union will remain the dominant player in life and pensions and will increase its market share to 20 per cent over the next few years, claims the firm’s UK chief executive Gary Withers.

He says the life and pension sector is anomalous in that it is one of the few financial services markets where the biggest player has a market share of only 12 per cent rather than 20 per cent or more. Withers believes NU could achieve a 20 per cent share some time after three years and once uneconomic businesses are forced out of the market.

Withers expects this to be driven by organic growth rather than acquisitions, with increasing consolidation of sales between the top three or four providers helping sustain NU’s 12 per cent new life and pension business growth that it saw last year globally.

He was upbeat after NU parent company Aviva posted operating profits growth of 25 per cent for last year, rising to 2.3bn from 1.9bn in 2003. The group’s overall life profits grew by 9 per cent to 1.6bn from 1.5bn. Aviva’s European business was the key driver of growth in its life business, with the operating return from its UK life business falling from 597m to 551m.

Aviva has bought motoring and insurance group RAC in a 1.1bn deal that will see it target the RAC’s 6.7 million customers.

Withers says: “A 12 per cent growth rate is sustainable over the medium term, particularly after the means-testing world. We will see the life insurance industry end up with three or four big companies with the dominant portion of market share.

“The UK market is not sufficiently consolidated and the market leader should have a 15 to 20 per cent market share and NU should be the first to achieve this.”

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