Europe's largest mutual life insurer Standard Life said today third quarter insurance revenues fell 7 per cent and it expected price competition to continue to hit sales of pensions.
The Edinburgh-based society, expected to list on the London Stock Exchange next year, said worldwide sales in the third quarter were £250 million ($434 million) compared with £268 million in the same period last year.
Sales in the UK fell 6 per cent as stiff price competition in the group pensions and traditional pensions market overshadowed strong sales of Standard's new self-invested pension and good demand for investment products.
"Although we expect many of our chosen markets such as group and individual pensions to remain competitive, the results for this third quarter demonstrate our continued progress in establishing a sound base from which to grow the business," chief executive Sandy Crombie said in a statement.
Although demand is reviving in Britain's savings market, margins are under pressure amid tough competition.
"There is weakness in a number of lines but what we are seeing is strong growth for self-invested personal pensions. They are doing really well there," said Johnny Vo, analyst with Fox-Pitt, Kelton.
Standard Life, expected to enter the FTSE 100 index of shares next year with a value of between 4 billion and 6 billion pounds, has cut commissions to distributors and is turning away unprofitable business as it seeks to woo prospective investors.
Some analysts believe the group is purposely cutting sales this year so that it will be able to produce strong sales growth as a listed company in 2006.
In total, Standard Life Investments manages £112.5 billion of funds. Standard Life's health insurance business saw sales fall 31 per cent to £5 million in the third quarter.