Worldwide long-term savings new business – twelve months to 31 December 2005
United Kingdom:
Norwich Union delivered a solid performance in 2005 with total sales, including investments, up by 2% to £10,213 million (2004: £10,031 million). Fourth quarter sales of £2,772 million were 7% higher than the fourth quarter in 2004 as well as the highest quarter of the year, reflecting a continued improvement in performance for 2005. In the second half of the year Norwich Union took the appropriate pricing actions in order to generate medium-term, profitable growth. This has allowed the company to further strengthen its market leading position with a market share of 11.6% in the third quarter of 2005.
Individual pension sales for the year, which include group personal pension business, were lower at £2,597 million (2004: £3,115 million) reflecting a withdrawal from writing less profitable business in the first part of the year. However, fourth quarter sales of £730 million were the third consecutive quarter of growth. This increasing sales trend reflects actions taken during the year to improve Norwich Union’s product and price positioning ahead of Pensions Simplification in April 2006. Corporate pensions sales growth was 4% to £1,019 million (2004: £980 million), with a very successful fourth quarter with sales of £292 million. Norwich Union is well-positioned to deliver on the opportunities the pension market offers with a broad product range, which will be further strengthened when a new SIPP product is launched this month.
A very strong full year performance was achieved in annuities with sales of £1,585 million, 24% ahead of 2004 (2004: £1,278 million) reflecting competitive pricing by Norwich Union throughout 2005.
Full year bond sales grew by 10% to £2,483 million (2004: £2,260 million). Norwich Union delivered an excellent fourth quarter performance with sales of £723 million representing the highest sales quarter since the start of 2004. Within this, unit-linked bond sales amounted to £1,879 million, representing an increase of 29% for 2005, with fourth quarter sales of £581 million being the highest of the year. This sales performance was delivered through a broad product range, which includes Norwich Union’s with-profits, property, manager of manager and guaranteed products, assisted by rising stock markets throughout the year.
After a very strong equity performance over the last three years, the with-profits funds are rated financially very strong and Norwich Union is well-positioned to write new with-profits business. To take advantage of this, Norwich Union recently announced the launch of a new with-profits bond offering a guarantee which provides capital protection including retail price inflation guarantees, believed to be the only guarantee of this type in the marketplace.
Collective investment sales performed very well with sales increasing 35% to £1,160 million (2004: £859 million). Norwich Union has continued its focus on collective investments, as a core part of its overall investment proposition, and is looking to significantly increase this with the launch of its new UK growth and value fund which has JP Morgan as the fund manager.
During the fourth quarter Norwich Union launched its unique “protection promise” which gives customers instant life cover during application. This, coupled with the company’s strategy to retain a leadership position in this important market, contributed to quarterly protection sales which were the highest of the year, at £281 million. However sales for the year were lower at £995 million (2004: £1,061 million) reflecting the slow-down of the housing market and associated sales of protection products. Norwich Union priced consistently to ensure a competitive pricing position in the second half of the year and will continue this approach throughout 2006.
Sales of equity release products remained robust in the fourth quarter at £96 million, although full year sales were lower at £374 million (2004: £478 million), reflecting the decline in the overall market. Norwich Union remains the market leader in providing a range of equity release products and is confident that this market will grow over the medium-term.
The joint venture with the Royal Bank of Scotland Group (RBSG) delivered the best sales performance since the venture was formed. Total sales increased by 18% to £1,085 million (2004: £917 million). Norwich Union's share of sales through the joint venture, including investments, increased by 34% to £742 million (2004: £555 million). This performance was a result of the introduction of a full product range and the successful alignment of sales and bank operations. Norwich Union is confident that this momentum will continue in 2006.
Norwich Union further strengthened its multi-distribution footprint during 2005, securing 18 multi-tie agreements, more than any other product provider, with distributors including Sesame, Bankhall and Barclays. In addition, the company signed an agreement with Co-operative Insurance Society (CIS) for the distribution of a unit-linked bond and inheritance tax planning through CIS’s financial advisers.
Norwich Union now wholly owns the Lifetime Group, the wrap1 platform, which is spearheading the development of wraps in the UK. The company expects growth to materialise from Lifetime during 2006 as advisers and investors, who seek greater flexibility and diversity of savings, look to utilise this technology in financial planning and portfolio management.
Further market growth is expected in 2006 as customers’ appetite for investments improves, and in pensions where A-Day is already driving significant levels of advisor activity. The company has built significant sales momentum in the second half of 2005 and expects this to continue into 2006 as a result of actions already undertaken and a strong product pipeline through 2006.
- A wrap is an IT service that allows financial advisers to manage and transact on a range of different client investments.
