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Profits hit as offices set aside mortality cash

Norwich Union and Legal& General have seen last year&#39s profits dented bec-ause of having to add reserves for changes in annuitant mortality.

NU parent Aviva&#39s profits have fallen at its life operations to £699m from £850m in 2001. The drop reflects a strengthening of its annuity reserves by £123m following guidance from the Continuous Mortality Investigation Bureau.

NU says it already reserved against its mortality assumptions but that the extra reserving was prudent.

L&G profits fell by 7 per cent to £695m from £747m in 2001. The company would have seen profits increase but for the £140m it put aside to reserve for anticipated improvements in annuitant mortality.

L&G&#39s new UK life and pension business grew by 4 per cent to £608m from £584m in 2001. NU&#39s life and pension sales dipped to £1,231m from £1,269m.

NU executive chairman Philip Scott says: “Operating profits fell due to extra reserving for annuitant mortality but our appetite for annuities has not changed.”

L&G group chief executive David Prosser says: “Despite changes to reflect expected improvements in annuitant mortality, operating profits at £695m were only £52m below last year. Setting aside the impact of these changed assumptions, operating profit would have grown by 12 per cent.”

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