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Sales slump as standard and friends put focus on profits

Life and pension business dropped significantly at Standard Life and Friends Provident last year.

Total UK life and pension sales for Standard fell to £929m last year from £957m in 2003 on an annual premium equivalent basis. This equates to a 13 per cent drop as 2004 figures cover 13.5 months because of a change to Standard’s accounting date from November 15 to December 31.

Standard has cut annual bonus rates across the majority of its with-profits policies despite a 10.4 per cent calendar year return on its with-profits fund. The life with-profits bonus has been cut from 2.5 to 2 per cent. Conventional life and pension with-profits ann-ual bonuses have been cut from 0.5 and 0.75 per cent to 0.25 per cent on both. Standard says 93 per cent of its mortgage endowment policyholders are on red warning letters, the same figure as last year.

Chief executive Sandy Crombie says the company has cut back on less profitable life and pension business such as stakeholder to focus on more lucrative contracts such as Sipps. Standard cut commission on regular-premium pension business and stakeholder in the third quarter, further hitting sales.

Crombie says: “As inten-ded, we have written less life and pension business in the UK than in the previous year but we have identified a number of opportunities for profitable growth in the Sipp, investment and protection markets.”

Gross sales at Standard Life Investments rose by 12 per cent to £3.7bn.

Friends Provident’s pension business fell by 7 per cent to £227.8m from £245.5m. Individual pension business fell by 10 per cent and group business fell by 7 per cent. Managing director Ben Gunn says IFA business was up by 7 per cent but the closure of its direct salesforce and uncertainty ahead of A-Day hit sales.•Bonus background, p49

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