Insurer Legal & General sees new business surge 20%

Insurer Legal & General today hailed a return of consumer confidence in financial products as it reported a marked rise in new business growth in the UK.

The group said new business volumes in the second quarter of the year were more than 20% above both the first quarter of this year and the second quarter of last year.

That figure was expected to be significantly above market expectations, it added.

The London-based group said most product areas had shown growth.

However, the progress was particularly strong in group protection business - such as health insurance cover provided by companies for their staff – and unit-linked bonds, with unit trusts showing a recovery from the first quarter.

Chief executive David Prosser said the group believed the acceleration in new business growth in the second quarter reflected “a return of consumer confidence in financial products” backed by companies’ financial strength, operating efficiency and good value for money.

“These factors underline Legal & General’s strong market position,” he said.

Legal & General has 4.5 million customers and employs more than 8,800 staff.

It has been benefiting from the strength of its distribution network, which has seen the company sell its savings products through a series of alliances with banks including Sainsbury’s.

In April, the company said its business remained very strong under a new accounting regime, with 4.7 times the capital it needed to cover its liabilities under the Financial Services Authority’s new “realistic” system.

Today, the group said the growth in sales of its unit-linked bonds reflected “a continuing switch by consumers away from with-profit bonds”.

The amount of bulk purchase annuity pension business that the group had attracted had improved, but was lower than that in the first half of 2003.

Term assurance volumes continued to be good and it was anticipated that Legal would remain the market leader in group protection business, it said.