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01 Feb, 2008

Published: 14:43 Friday 01 February 2008
By: Daniel Grote, New Model News Reporter

Royal London Group's total new life and pension business dropped by 1% in 2007 to £1.9 billion, new business figures show.

Group pensions slumped by 15% to £489 million because of a fall in single premium and transfer values, according to Royal London.

Royal London chief executive Mike Yardley said the results were satisfactory, arguing they reflected the group's strategy of chasing 'profitable new business' and refusing to compete aggressively in the 'cut throat' group pensions market.

'The group pensions market continues to be characterised by the high initial commissions being paid by some product providers, although there have been increasing signs that this has begun to change,' he said.

'We have made it clear that we will not compete on these terms as we remain focused on writing new business that we believe has good potential for being profitable.

'Much of the apparent market growth for group pensions is, in our view, illusory with existing business being switched among product providers.'

Scottish Life new business was down 1% at £1.42 billion, but Yardley maintained the firm had achieved strong growth in the individual pension market after the launch of new products.

Meanwhile, Scottish Life International recovered from a slow first half to the year to match its 2006 figure of £165 million.

'Legislative uncertainties in the UK and Germany adversely affected new business especially in the early part of the year,' he said.

'However, with improvements made to the product range, to IT capabilities and expansion into the Middle and Far East, we are confident in the outlook for 2008.'

Bright Grey recorded a 12% increase in new business, taking it to £173 million in 2007.

Yardley said Bright Grey's results were impressive set against a downturn in the mortgage market and difficult conditions for the sale of protection products.

Royal London Asset Management saw its new business rocket in 2007, with a 113% increase to £2.62 billion, as the firm launched two new actively managed funds and saw an influx of institutional money from corporate pension funds, local authorities and universities.

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