Friends Prov UK life and pensions sales down 3% in Q1

Friends Provident's protection and group pensions sales were down in Q1 but there was a stronger showing for annuities and its international business.

In total, new life and pensions business was £178m for Q1 on an APE basis, up 19% on the same period in 2009.

However, the rise was powered by the group's International business which rose 49% and Lombard up 62% while the UK fell 3% to £88m.

The group says market conditions within the UK life insurance industry "remain difficult with little prospect of significant economic growth in the short term".

It says: "We have maintained pricing discipline and are focused on cash generation. We are investing to maintain the competitive position of our key individual protection and group pensions businesses, while providing annuity policies for retiring pensions customers."

The group's annuity sales, up 37% year-on-year, were the main driver of the 12% overall sales growth in UK individual sales.

Friends Prov highlighted the one-off impact of customers aged between 50 and 55 wishing to retire before 4 April, when regulations changed to increase the minimum early retirement age to 55.

However, individual protection sales were down 4% as a result of a weakened housing market and the group says the UK market will remain "challenging" overall for the remainder of 2010.

Meanwhile, group pensions sales were £66m, down 5% on Q1 2009. Friends Prov says increments to existing schemes are the largest component of new APE but remain subdued due to the economic conditions.

It also reported FUM for unit-linked group and individual pensions on its New Generation Pensions corporate platform at the end of March were £10.4bn, up from £9.7bn at 31 December 2009.

Today's results also show its adviser arm Sesame Bankhall traded profitably in the first quarter and the integration of the Sesame and Bankhall operations is now largely complete.

Trevor Matthews, CEO of Friends Provident Group, says: "I am pleased to report sales up by 19% overall in the first quarter of 2010. Our international business is performing very well, especially in Asia and the Middle East where we are seeing some investor confidence return compared to early 2009.

"In the UK, our key priorities are in individual protection and group pensions. While we are working to drive forward our new tied distribution deals, individual protection sales have been constrained so far this year by the sluggish housing market.

"In the UK group pensions market economic conditions mean that reported new business remains slow but we exceeded the £10bn mark for funds on the platform in the first quarter and the launch of our Corporate Investment Platform means we are looking forward with confidence."