Scottish Widows’ corporate pensions sales surged 29 per cent in the first half of 2013, from £2.86bn to £3.69bn, driven by pre-RDR commission-based business.
Lloyds Banking Group, the parent company of Scottish Widows, today published its half year results for 2013.
The bank’s insurance division, which includes Widows, posted underlying pre-tax profit of £564m, up 12 per cent from the £502m figure recorded in the first six months of 2012. Underlying profit excludes “exceptional items”, such as PPI redress payments.
Corporate pensions sales increased 29 per cent, from £2.86bn to £3.69bn. However, individual pensions sales dropped 19 per cent, from £911m to £738m.
Retirement income sales rose 1 per cent, from £369m last year to £374m this year.
Total sales across insurance were down 1 per cent, from £5.63bn to £5.55bn.
A spokesman for Widows says the provider’s half year results were heavily impacted by automatic enrolment. He says the strong corporate pensions sales figure reflects an increase in commission-based business in the build up to the RDR deadline.
He says: “The growth in corporate pensions sales is built around the pipeline generated in the run-up to the implementation of the RDR. That is business written on a commission basis.
“Going forward we have more work to do getting ourselves in a more fee-based, nil commission space. The pipeline for that is looking very encouraging.”
Advisers provided the primary source of insurance sales growth for Widows, with the firm’s intermediary channel delivering 15 per cent year-on-year sales growth, from £3.89bn to £4.46bn.
Direct sales rose 26 per cent, from £348m to £437m. However, sales through Widows’ bancassurance channel slumped 53 per cent, from £1.39bn to £651m.
A Widows spokesman says the drop in bancassurance sales relates directly to Lloyds’ decision to withdraw providing investment advice in its branch network.
In addition, the insurance division paid a dividend of £1.6bn to Lloyds Banking Group earlier this year.
Lloyds chief executive António Horta-Osório says the bank will continue to invest in Widows’ direct to consumer business.
He says: “We are investing in the capability of our direct channel with a focus on meeting the needs of customers who may no longer have access to independent financial advice, following the implementation of the Retail Distribution Review.”