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Pru UK business up 4 per cent in Q1

Prudential recorded a 4 per cent increase in UK business in the first quarter 2008, clocking £189m.

The firm, which has operations in Asia and the US and owns asset management firm M&G, saw total group insurance sales increase by 13 per cent to £729m compared with the same time last year.

M&G recorded net inflows of £0.6bn which constitutes a 59 per cent decrease. The firm put this down to a significant deterioration of market conditions.

Pru says the growth of the UK operation was driven principally by strong performances in with-profits and offshore bonds as well as equity release completions.

Individual annuity sales in the first quarter of £64m were 3 per cent lower than the first quarter of 2007 and internal vestings of £32m were in line with last year’s figures and contributed 50 per cent of total annuity sales.

The firm sold £12m worth of with-profits annuities up 13 per cent on the first quarter of 2007. Pru’s lifetime mortgage sales continued their upward trend with mortgage drawdowns of £51m making this the highest quarter to date, up 50 per cent on last year.

Performance in the first quarter was underpinned by continued strong sales through intermediaries up 43 per cent to £33m. Sales through Pru’s face-to-face consultants increased by 61 per cent over the same period.

Corporate pension sales of £61m were in line with the same period last year, principally due to continued growth in member uptake and increments on existing schemes. Pru now administers corporate pensions on behalf of approximately 640,000 members.

Pru’s retail with-profits business performed very strongly across a range of products with total sales of £86m up 17 per cent. With-profits bonds continued the strong growth seen in 2007, with first quarter sales of £18m up 112 per cent. The firm says the impressive with-profits sales show consumers in the UK are increasingly keen to protect themselves from market down-turns.

Sales of offshore products (sold within the UK and Europe) were up 36 per cent on 2007 at £19m. There was a particularly strong performance in the UK market where sales increased by 124 per cent.

In the wholesale bulk and insurer back-book market Pru wrote a minimal amount of business in the first quarter of 2008. The firm says this reflects its stance to only write annuity business at rates that are sufficient to meet its return on capital requirements based on its view of future longevity improvements. According to Pru there continues to be a significant pipeline of potential wholesale deals but competition remains intense with a number of market participants competing for business.

PruHealth sales are not included in the total sales numbers but during the first quarter of 2008 PruHealth grew strongly with gross written premiums of £20m up 25 per cent on the same quarter of 2007. This business now covers over 150,000 lives.

Group chief executive Mark Tucker says: ‘The Group has made a very positive start to the year with overall Group new business up 13 per cent. This continues our strong momentum despite an environment characterised by high levels of uncertainty and volatility. This performance confirms the resilience that we derive from our geographic spread across three regions, and particularly the role of Asia as our leading source of new business.”

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