L&G beats the Isa sales blues
LEGAL & General has spectacularly shrugged off the Isa famine besetting its rivals, reporting a 77% surge in sales to £435m in the first quarter.
Chief executive David Prosser called it 'an outstanding achievement' and predicted that L&G would prove to have overtaken Scottish Widows this year to be the biggest Isa provider. L&G's Isa market share had soared from between 7% and 8% last year to 'well into double figures', he said.
Industry-wide Isa sales have been poor this year as potential customers nurse huge losses from buying share ISAs one and two years ago. No full figures are available yet, but anecdotally sales have slumped by as much as 40%.
Prosser said L&G had a broad spread of Isa products. As well as conventional stock market tracker products, it offered two bond Isas and a capital-protected share Isa, which were especially popular with bruised investors. The distribution tie-ups with Barclays, Alliance & Leicester and Northern Rock also boosted Isa sales.
These banks exclusively offer L&G savings products in their branches. Isas have been a key earner for the savings industry and are heavily promoted in the last few months of the tax year, which ended on 5 April.
The good news on Isas was contained within L&G's overall new business figures for the first three months of the year, which also pleased the market.
Total new business - as measured by the widely recognised Annual Premium Equivalent (APE) method - surged by 34% to £233m, well above the £200m to £220m forecast by analysts.
Prosser said the distribution agreements were all working well. 'We think it's pretty good and they think it's pretty good,' he said. But further deals were unlikely until the Financial Services Authority clarified the new polarisation rules.
One disappointment was continental Europe, where APE sales fell from e22m to e16m. Trading conditions in France were difficult, and the Netherlands business fell back after an exceptional prior quarter last year.
L&G continued to win fund management business from institutional investors. It gained £3bn of new mandates, lifting its funds under management to £122bn, compared with £110bn a year ago.
