CGNU strength calms market nerves

INSURANCE group CGNU has played its part in calming nerves in the life sector, beating market forecasts with strong sales figures for the nine months to 30 September.

Global life and pensions sales grew 18% to take long-term new business to £10.4bn. The figures were bolstered by a 26% rise in UK life and pension sales to £915m based on the industry yardstick of annual premium equivalent.

But volatile equity markets cut the sales of investment products by £900m to £1bn. 'The current level of volatility in investment markets is having an adverse effect on the sales of equity-backed products and this is likely to continue as long as these conditions prevail,' said chief executive Richard Harvey.

The results also highlighted the growing importance to the industry of distribution partnerships, with sales from the group's bancassurance arrangements in Spain and Italy coming in at £900m.

The buoyant figures followed the lead set earlier this month by competitors Legal & General and Prudential, though analysts warned that the effects of 11 September would start to emerge only in the fourth quarter's results. CGNU has estimated its losses from last month's attacks at up to £35m.

Commerzbank analyst Andrew Goodwin said the results were 'a bit better than expected' but would not change his price target of 937p or full-year earnings forecast of 55.6p a share. This puts the shares on a multiple of 16 based on today's price of 880p, down 20p.