CompaniesJul 31 2015

Scottish Widows sees pension sales jump 25%

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Scottish Widows sees pension sales jump 25%

Lloyds Banking Group Insurance, which includes Scottish Widows and the group’s general insurance business, has reported a rise in underlying profit of 27 per cent to £584m, with an increase in life, pension and investment sales of 25 per cent.

Profits reported in the group’s 2015 half year results, published today (31 July) were primarily driven by a £98m bulk annuity transaction with the Scottish Widows with-profits fund, a “key milestone” in plans to participate in the growing and attractive defined benefit pension scheme de-risking market through a bulk annuities offering.

Life, pension and investment sales also rose 25 per cent, boosted by £2.4bn from the with-profits fund annuity transaction.

Operating cash generation increased by £11m to £391m in this period, primarily reflecting benefits from the acquisition of higher yielding assets more than offsetting the initial impact of the bulk annuity transaction with the with-profits fund.

Corporate pensions assets under management increased by £1.4bn to £28.4bn in the first half of the year following continued growth in contributions under auto-enrolment.

In the four months since pension freedoms came into effect, more than 150,000 customers have used Scottish Widows’ new digital retirement planner which informs people about the options and choices available in retirement.

Toby Strauss, group director for insurance and chief executive of Scottish Widows, said: “In a challenging market, against a backdrop of unprecedented industry change, we have simplified our business and continued our 200-year history of helping customers plan for a secure future.

“Throughout the rest of the year, we will focus on improving the way we engage with our customers and continue to invest in the future of the business.”

In the wider group, Lloyds Banking Group saw underlying profit grow 15 per cent, when compared to the same period in 2014, to £4.38bn, however it continued to be weighted down by provisions for payment protection insurance.

The group reported a statutory profit before tax of £1.19bn, up 38 per cent, meaning a statutory return on required equity up 3.7 per cent, despite the additional £1.4bn taken for PPI and the impact of the TSB sale, which amounted to £660m.

António Horta-Osório, group chief executive, said that the additional provision for PPI was disappointing, adding that “it mostly reflects higher than expected reactive complaints with higher associated redress”.

peter.walker@ft.com