Legal & General’s UK protection new business fell sharply in the first six months of 2023 as the insurer said it expected the softer housing market and cost of living to continue hitting sales.
The insurer saw a 10.6% fall in its new business annual premiums for its UK retail protection business – down to £76m for the first six months of the year compared to £85m for same period of 2022.
UK group protection fell at an even steeper rate, down to £53m from £85m, a fall of 15.9%.
As a result, total UK protection sales fell by 12.8%, down to £129m for the first six months, compared to £148m for the corresponding period last year.
Much of that fall may have been caused by the cost-of-living crisis and lower mortgage sales – something that L&G thought was likely to continue.
“We expect the retail protection market to continue to be impacted by a softer housing market and by affordability considerations for consumers,” L&G said in its interim management report 2023 which was released today.
Earlier this year L&G had signalled that it expected the UK retail protection market to be hit by a softer housing market and cost of living crisis concerns – continuing its bearish outlook for the sector.
Meanwhile, the company has not altered its growth plans.
“Our medium-term ambition remains unchanged. We continue to target mid-single digit growth in revenues across our UK protection businesses to 2025,” L&G said.
However, the US protection business made up for those losses, growing 45.8% to £70m from £48m, taking the insurer’s overall protection new business up by 1.5% to £199m.
But the picture was not all bleak, as Nigel Wilson, group chief executive for L&G, said: “Retail’s performance – while impacted by competition in some areas – was bolstered by growing annuity sales and progress in US protection”.
Gross premiums
And a more positive picture emerged when looking at gross premiums.
UK retail protection gross premiums increased to £752m up from £740m for the 2022 period.
There was also a slight increase for UK group protection gross premiums up to £295m from £291m.
“UK group protection gross premium income increased by 1.0% to £295m for the period, compared to £291m for the corresponding period in 2022 thanks to strong retention and new business annual premiums of £53m,” the insurer said.
“But those premiums were £10m less than the £63m for the first six months of 2022,” L&G said.
The leader for gross premiums though was the US market, with US protection gross premiums up to £633m from £574m.
Overall, total protection gross premiums increased to £1.68bn from £1.605bn.
Company operating profit
For the company as a whole, operating profit from all divisions for the period stood at £1.139bn, down from £1.153bn – a decrease of 1.2%.
“All four of our divisions remain well-positioned to continue to execute on compelling structural market opportunities to deliver further profitable growth over the medium and long-term,” the insurer said.