Worldwide long-term savings new business – nine months to 30 September 2006
Aviva UK:
A record nine months for Norwich Union with total sales, including investments, up 39% to £10,464 million (2005: £7,541 million). Sales of collective investments were particularly strong at £1,673 million, almost double those achieved in the same period last year (2005: £855 million). Sales momentum continued in the third quarter, with discrete total sales up 31% to £3,565 million (2005: £2,716 million). Total sales in the first nine months of 2006 are already ahead of the £10,345 million achieved in the whole of 2005.
Norwich Union maintained the new business margin at 2.9%, in line with the full year 2005 figure of 2.9%. This reflects the company’s disciplined focus on managing margin and volumes across the product range.
Norwich Union’s overall market share at the half year was 12.1%, 1.5 percentage points higher than the corresponding 2005 figure (2005: 10.6%). The company has also improved its market share position within the year, moving from 12.0% in the first quarter of 2006 to 12.2% in the second quarter of 2006.
Individual pension sales, which include group personal pensions, were exceptional, up 71% to £3,200 million (2005: £1,867 million). Group pension sales were also strong at £840 million, 16% ahead of last year (2005: £727 million). High levels of activity have continued following A-Day as advisers continue to look for ways to enhance their clients’ pension arrangements under new tax rules. Self-invested personal pension (SIPP) sales, through Norwich Union’s Lifetime wrap platform totalled £101 million1.
Norwich Union anticipates the A-Day effect will continue, albeit at a slower rate for the remainder of 2006 and into 2007, particularly as the charging structure changes take effect.
Rising equity markets benefited sales of bonds and collective investments with investor confidence remaining robust. Bond sales for the nine months increased substantially by 36% to £2,532 million (2005: £1,860 million). Norwich Union’s RPI guaranteed bond continued to prove popular, resulting in a 54% growth in with-profit bond sales to £552 million. Unit-linked bond sales performed strongly, increasing by 29% to £1,808 million.
Norwich Union’s collective investment performance remained exceptional, with sales year to date increasing by 96% to £1,673 million (2005: £855 million). Our property offering from Morley Fund Management continued to be popular with investors. The growth in sales underlines the success of Norwich Union’s strategy of widening its collective investment range and strengthening its consumer offerings.
Protection sales year to date totalled £823 million, an increase of 15% on 2005 (2005: £714 million). In September, the company launched a new simplified life product aimed at growing the direct to consumer market. Norwich Union believes that simplified protection products are essential to increasing consumer understanding and accessibility.
Total annuity sales of £1,161 million were lower by 6% (2005: £1,240 million) as the company continued to price for profit rather than volume. While Norwich Union is now actively quoting in the bulk purchase annuity market, entry into this market is focused on generating an increase in levels of value and the company will not participate in areas where it is unable to achieve adequate levels of return.
Sales of equity release products were 16% lower at £235 million (2005: £278 million) as the market remained subdued. Norwich Union continues to be a leading player and is confident that the market for equity release products will grow as the benefits as a retirement funding opportunity are realised.
Norwich Union’s bancassurance partnership with RBSG delivered significant growth in the nine months with total sales of £1,236 million, 62% ahead of 2005 (2005: £763 million). Norwich Union’s share was £879 million, up 69% (2005: £521 million). This continuing strong performance reflects the ongoing investment and commitment to the bancassurance operation by both RBSG and Norwich Union. Both partners are confident that the increase in sales advisers from the current levels of around 700 to 850 by the end of 2007 will continue to underpin further good growth.
Norwich Union continued to perform very strongly in the Independent Financial Adviser (IFA) market with a market share at the half year of 13.5% - significantly ahead of the half-year 2005 figure of 12.3%. Norwich Union is also the leading provider to the top four networks and service providers in the UK. The company believes that its improvements in service levels for advisers in 2006 are a major contributor to this performance. Norwich Union continues to achieve its service level targets on all standard new business applications for protection, investment bond, annuity and individual pension products, and is committed to delivering further service improvements in 2006 and into 2007.
Economic growth in the UK has continued to revive and has become more broadly based as consumer spending remains robust, supported by employment growth and renewed strength in the housing market. Norwich Union expects double-digit growth for the market in 2006 and anticipates more modest growth in 2007.
