Widows says capital position strong but reports falling IFA sales

Scottish Widows proved one of the more resilient parts of Lloyds Banking Group in 2008 but nevertheless reported slipping sales in the intermediary market.

The insurer's strongest figures came in the form of new business sales which grew by some 46%. It put the strong growth down to bagging a greater share of the protection market and new investment bonds sales. Yet the success in new business profit was offset by a fall of some 12% in profit from its existing business. It put the fall down to changes in assumptions on lapse rates triggered by falling markets.

The insurers sales to the intermediary market fell some 8% over the year, reflecting a widespread contraction. The strongest area of its intermediary business was corporate pensions which posted a 19% rise in sales. The individual pension badged as the 'Retirement account' also posted strong numbers, increasing sales by 75%.

The group defended the strength of its capital position, following a series of results from its peers which showed they were moving to prop up their reserves to deal with bond defaults. It did however make a veiled reference to moves to seek 'further opportunities to improve its capital position'.

In the insurers' asset management division, Scottish Widows Investment Partnership assets under management fell to some £83 billion, from £97.6 billion in 2007. Yet this was attributable to market falls as it actually achieved a net inflow of new business of some £1.2 billion.