CGNU benefits from Equitable's downfall

EQUITABLE Life 's troubles have provided a welcome boost to CGNU,helping Britain 's biggest insurer to report record sales for the first half of this year.

New business sales in the UK rose 12%to 4.1 billion,some of which CGNU acknowledged would have been won by Equitable had it not closed to new business earlier this year.

The interim figures,which are the first to be released by one of the big insurers,bode well for CGNU 's competitors,which are also expected to have gained from Equitable 's absence from the market.

Both the insurance industry and the Treasury will also draw some comfort from CGNU 's report of a "pleasing "start to ales of stakeholder pensions,which got under way in April.

It said stakeholder sales of 43 million were in line with its expectations.CGNU sought to tap this market early by offering "pre- stakeholder "products based on the low-cost concept before it was officially launched.

CGNU,which was formed by last year 's merger of CGU and Norwich Union,aims to secure 20%of the market,although a spokeswoman said the lack of sales figures from competitors made it too early to say whether it was on track to reach this target.

The Treasury fears that its stakeholder plans,which are aimed at low-income groups with little or no private pension provision, will be hit by the poor publicity surrounding Equitable.It is known to be particularly worried about the impact of this week 's decision by Equitable to cut 16%off the pension value of one million with- profits policyholders.

However,the Treasury 's concerns about people 's willingness to save for retirement will be eased slightly by figures showing CGNU 's total pensions grew 38%to 1.3 billion in the six months.

CGNU also revealed the first benefits of the so-called bancassurance distribution arrangements it struck in Italy and Spain, which helped lift life and pension sales on the Continent by 29%to 2.4 billion.The results left worldwide life and pension sales 19% higher at 6.3 billion.

The twin effects of Equitable 's closure and the new distribution deal more than offset the impact of poor stock markets,which CGNU said were deterring some people from investing in equity-related products.The net effect of this was a 5%rise in CGNU 's total savings business.

Chief executive Richard Harvey said Isa sales bucked the industry trend with a 7% rise to 600 million.

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