Scot Widows vows to grow despite product sales fall

  • Story by: Stefanie Ives
  • Magazine: FinancialAdviser
  • Published Thursday , August 07, 2008

Edingburgh-based company puts 53% fall in sales down to challenging conditions, CGT changes

Advertising

Scottish Widows has vowed to grow its market share in the IFA sector as sales of saving and investment products through intermediaries have plummeted by 53 per cent.

Following the reporting of interim results for the six months to the end of June, Scottish Widows blamed challenging conditions and changes to capital gains tax for falls in sales of saving and investment products.

Overall sales through IFAs fell by 5 per cent reflecting a general reduction in IFA sales across the market.

Andy Briggs, managing director for marketing and distribution for Scottish Widows, said the Edinburgh-based life assurer still remained committed to the intermediary sector stating it wished to take a larger share of the investment market.

He said: "IFAs are key to our strategy and we want to take a great share of the investment sector through this channel."

However, on a positive note, Scottish Widows announced core business profits of £298m, representing a rise of 15 per cent. Profits also held steady at Scottish Widows Investment Partnership as the fund management business posted figures of £20m.

Despite this, assets under management for Swip decreased by £7.6bn to £90.2bn, largely reflecting the impact of lower equity, bond and property market values.

Table: Scottish Widows Interim Results

Continuing business, excluding volatility and profit on sale of businesses Half-year to 30 June 2008 (£m) Half-year to 30 June 2007 (£m) Change (%) Half-year to 31 December 2007 (£m)
Net interest income -33 -56 41 -50
Other income 846 833 2 908
Total income 813 777 5 858
Insurance claims -90 -152 41 -150
Total income, net of insurance claims 723 625 16 708
Operating expenses -302 -307 2 -304
Insurance grossing adjustment 10 12 n/a 14
Profit before tax 431 330 31 418

Source: Scottish Widows

Looking at pensions, the provider recorded impressive results with sales of corporate pensions and individual pensions through the IFA channel rising by 32 per cent and 12 per cent respectively.

Overall, life and pensions new business profit rose 55 per cent to £124m.

Mr Briggs said this would remain a crucial part of Scottish Widow's proposition as it looked to the retirement market to keep sales buoyant.

He said: "Pensions proved to be strong and we will look to expand on this."

Referring to protection sales, Mr Briggs said there were many opportunities to grow this area thanks to their parent company, Lloyds TSB.

He said: "Protection sales are a huge sector of potential growth due to lending capacity of Lloyds TSB and we would consider introducing this to the IFA market."

The news comes as Lloyds TSB reports a 70 per cent slump in pre-tax profits to £599m after taking a £585m hit from risky assets exposed to the global credit crunch.

Analysis:

The fact that Scottish Widows have managed to post any profit in the current climate is a bonus. Investments continue to be hit but this is to be expected when volatility is brought into the equation. Pensions will remain key to Scottish Widow's future although it remains to be seen whether the losses of the parent company, Lloyds TSB will have impact.



LV= revolution luxury break prize draw

LV= is offering FTAdviser readers a monthly prize of a luxury break for two, in a city destination that has a revolutionary connection.

Click here to find out more

FTAdviser  Jobs  RSS

More positions