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Skandia challenges firms on net figures

Skandia is calling on other life companies to publish their net sales figures, saying they are the key measure of the success of a product provider.

The firm’s interim results show a small rise in net cash inflows to £2.4bn for the first half compared with £2.3bn in the first half of 2006.

Skandia believes too many life companies are just focusing on new business figures without taking into account the business they are losing.

It says net sales figures give a better picture of which firms are doing well because they capture both the success of attracting new business and measure how well the company is retaining customers.

The firm also says funds under management are a key driver of profitability. Skandia UK’s funds under management rose by 13 per cent to £41bn from £36bn.

Operating profits were up by 10 per cent from £73m to £80m while gross new business are up by 14 per cent to £529m on an annual premium equivalent basis.

Skandia UK chief executive Nick Poyntz-Wright says: “The amount of new business that a provider attracts is obviously important but it does not give a clear picture of the overall success of the business.

“If a provider is losing lots of business at the same time as writing new business, its overall growth will be limited. Net client cashflows or net sales figures give a much better indication of which companies are actually growing relative to their peers.”

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