British insurer Standard Life posted a 31 percent rise in first-half sales on Tuesday, boosted by forecast-beating UK growth, and said it expected to report a "significant increase" in sales margins next month.
The former mutual, now the fifth-largest UK-listed life insurer, said world-wide life and pensions sales rose to 8.18 billion pounds ($16.68 billion), above a consensus forecast of 7.87 billion and at the high end of the market's expectations.
UK sales climbed 45 percent to 6.95 billion pounds, as an 82 percent rise in its key individual self-invested personal pension (SIPP) offset a drop in traditional individual pensions sales.
SIPPs, which allow savers to make their own investment decisions but carry higher management fees, have been key to Standard Life's turnaround in the past years as the former mutual turns away from less profitable pension products.
Standard Life had individual SIPP funds under management of 6.3 billion pounds at the end of June, and 36,800 SIPP customers, with an average case size of 172,000 pounds - shy of a UK average which is closer to 240,000 pounds.
UK group pensions, a key area of growth for insurers as UK firms move away from final-salary pensions for staff, rose 49 percent, while annuity sales jumped 53 percent, reflecting lower sales in the first half of 2006, when many policyholders held back ahead of its demutualisation.
The insurer said growing sales of more lucrative products and increased capital efficiency had boosted its keenly watched sales margins, set to be reported next month alongside full first-half earnings, from a proforma 1.4 percent for 2006.
"They have a (UK) margin target of 2 percent by 2008. It would appear that they are well on track," analyst Roman Cizdyn at Oriel Securities said. Analysts said a strong performance against the sector in recent days could limit gains on Tuesday.
Speculation over Standard Life's role in expected UK sector consolidation hit its shares early on Monday, after reports it could be interested in smaller rival Resolution - already planning a merger with insurer Friends Provident.
Analysts say a Standard Life-Resolution deal is unlikely, though the pairing would help Standard to fund its rapid growth. Standard Life declined to comment on Tuesday. Outside the UK, sales in Canada, the insurer's largest overseas business, fell a worse-than-expected 37 percent in constant currency - 43 percent including the effect of the strong pound - as it pulls out of loss-making activities.
"We have been deliberately slimming down the business, refocusing, and now what we're going to be focusing on is building growth back in," Finance Director David Nish told reporters on a conference call. "We are expecting the bigger case activity will come in the second-half of the year."
European sales were 54 percent higher, boosted by Ireland, where it introduced self-investment options. Standard Life Investments saw net inflows up 61 percent to 5.02 billion pounds. Total funds under management increased to 140.6 billion, boosted by third party funds.
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