Bancassurance bright spot for CGNU

INSURANCE giant CGNU, soon to be called to Aviva, has reported a 10% rise in underlying sales to £629m for the first three months of this year. The result, which was at the lower end of market expectations, reflected the 15% growth in sales of life and pension products in Britain, taking the total to £339m.

But CGNU, which will adopt its controversial new name on 1 July, was held back by its performance on the Continent, where overall sales rose just 6% to £220m.

Sales of life and pension products dropped 10% in France to £58m and were 18% lower in the Netherlands at £13m. The figures were also hit by lacklustre ISA sales as the weak share market prompted investors to stay away from equity-related products.

Chief executive Richard Harvey said that sales from the group's so-called bancassurance arrangements had leapt 90% to £540m in the quarter. 'These results demonstrate continued momentum as we build on the strong foundations laid in 2001,' he said.

Commerzbank analyst Roman Cizdyn, who had forecast an underlying sales figure of £670m, said the group's bancassurance deals, such as its joint venture with Royal Bank of Scotland, would bear more fruit this year. 'CGNU is one of the best-placed life companies in the UK since it has scale and diverse distribution,' he said.

CGNU directors came under fire from shareholders at the insurer's recent annual meeting over plans to slash the dividend by 40% and change its name to Aviva, which many believe will be confused with bus company Arriva.

Investors also queued to complain about the group's decision to cut the payout at the same time as awarding directors significant pay rises.

CGNU's arch-rival Prudential cheered the City last week with a better-than-expected rise of 26% in underlying sales for the first three months of the year. It overcame a 20% fall in ISA sales with strong demand for its withprofit policies, individual annuities and pensions.