Insurance & Investment
Prospects
In 2008, we expect to build on the operational performance in 2007 which saw strong growth in investment profits, offsetting lower profits in General Insurance, impacted by an exceptional level of weather related claims. Going forward, our objective remains unchanged; to become the UK’s leading personal lines insurance and investment group. We intend to grow profitable market share utilising the core strengths of our existing multi-channel, multi-brand operating model, leveraging the strength of the Group’s brands and customer base.
In General Insurance, we expect the medium term prospects for our combined personal lines businesses to remain strong, subject to a degree of regulatory uncertainty until the Competition Commission Inquiry into PPI reports. We will continue to target further growth in Household Insurance. In Motor Insurance, we will continue to utilise the strength of the esure brand portfolio, alongside our internet infrastructure for profitable growth.
In Investment, stock market volatility is likely to impact on new business volumes and persistency across the investment industry. The Chancellor’s PBR included proposals which could increase the attractiveness of mutual fund products relative to bonds potentially impacting the mix of life bond and mutual fund sales. We believe that our number one position in mutual fund sales gives us a competitive advantage should these proposals form part of the 2008 Budget.
Whilst these market factors are likely to impact our Investment new business volumes in the short term, we believe that the strength of our propositions, our brands and our distribution reach, together with our rigorous focus on cost control, leaves us well placed to succeed even in tougher market conditions. Short term volatility does not change our view of the significant opportunities for our Investment business as demographic trends and increasing wealth point to significant long term growth potential.