LIFE AND pension sales at Hibernian fell by 30 per cent in the first quarter of the year, according to its parent, UK group Aviva.

The group, the UK's largest insurer by premiums, reported that increased new life and pensions sales for the first three months rose to £8.17 billion from £7.75 billion a year ago, but it blamed its disappointing Irish sales on a number of factors.

"The slowdown was mainly due to reduced demand for property and investment funds and less buoyant economic conditions," it said in a statement.

"This follows the rapid development of bank assurance distribution through Allied Irish Banks since the establishment of our joint venture and the one-off impact of maturing Special Savings Incentive Account contracts in 2007," the group said. It added that the general insurance market in Ireland was "still being dominated by aggressive competition and rates continue to decline."

Aviva also said that its entry into the healthcare market through the 70 per cent acquisition of Vivas was "expected to present significant growth opportunities for Hibernian in a new market sector".

British market growth will be "constrained" and the company faces a "more challenging year" in continental Europe, where it gets nearly 50 per cent of life assurance sales, chief executive officer Andrew Moss said in the statement.

The company plans to cut £350 million of costs by the end of 2009 and eliminate about 500 jobs in the UK to improve profitability.

"They didn't exactly set the world alight," Julian Chillingworth, chief investment officer at London-based Rathbone Brothers plc, said. "Ireland was a bit of a disappointment and the UK is difficult." Aviva rose 3 pence to 628.5p in London yesterday, but the company has fallen 21 per cent in the past year.- (Bloomberg)