Legal & General saw its retail protection new business drop 19% in the first half of the year as its predictions of a shrinking protection market appear to be coming true.
Back in March, L&G warned it expected the UK protection market to shrink this year after it reported record retail sales in 2021 driven by the busy housing market.
In its results for the first six months of 2022, the insurer revealed retail protection new business annual premiums fell 19% from £105m in H1 2021 to £85m in H1 2022.
And it reiterated its warning that it expected the total protection market to be slightly smaller in 2022 as the market benefited from the UK housing stamp duty relief in 2021.
However group protection new business rose by almost 15% to £63m from £55m and its US term assurance operation reported a 5% rise to $62m from $59m during the same period last year.
As a result the group saw protection new business annual premiums fall from £203m in H1 2021 to £196m in H1 2022.
It is not the only insurer being hit by the current market as last week Royal London announced it had seen a 43% drop in protection sales over the same period.
Gross protection income up
Overall Legal & General saw gross protection premium income, which includes all in-force policies, rise 6% year-on-year to £1,605m, up from £1,500m in the same period last year.
UK retail protection gross premium income increased to £740m from £714m while group protection premium income rose 6% to £291m.
L&G added its group protection business had performed well in line with its five-year ambition and it is targeting mid-single digit growth in revenues across its UK protection businesses.
“L&G leads the UK protection market with a market share of 22%, delivering a point of sale decision for more than 80% of our customers,” it said.
On its group protection business it continued: “Our online quote and apply platform for smaller schemes launched last year and we are seeing strong growth in this part of the market. Group protection supported 1,574 members of income protection schemes to return to work during the first half of the year.”
US protection (LGIA) gross written premiums increased 5% (up 12% on a sterling basis, benefiting from FX movements) to $746m (£574m) and Legal & General Mortgage Club facilitated £50bn of mortgages, up 6% from £47bn in H1 2021.
Pre-tax profits up
Across the group L&G reported profit after tax of £1,153m up from £1,065m on H1 2021.
Sir Nigel Wilson, group chief executive at Legal & General, (pictured) said the business had made a good start to the year.
“We have delivered for our institutional clients and retail customers, while generating good volumes and margins in a buoyant PRT market and continuing to scale LGC at pace – both in the UK and now also in the US – originating assets for our own business and for third parties, whilst also delivering a positive outcome for the economies where we invest.
“Our balance sheet is strong and highly resilient, with a solvency ratio of 212% and with 100% of cash flows received from our direct investments.
“We are committed to providing financial security for our customers and colleagues in a tough economic climate and remain confident in our ability to grow profits sustainably and at attractive returns over the long-term.”