CBI presents insurers with mixed picture for 2010
Activity in the UK financial services sector increased slightly over the past three months, but the Confederation of British Industry (CBI) warns that growth was below expectation, and firms expect volumes of business to fall in the coming quarter.
Asked how their business volumes fared in the final quarter of 2009, 32% said that volumes rose, while 28% said they fell; the resulting balance of +4% was lower than September’s +7%, and well below the +16% expected.
In its latest Financial Services Survey, undertaken with PricewaterhouseCoopers, firms also told the CBI that they did not anticipate improving profitability in the first thee months of 2010, despite further cost reductions.
Turning to the insurance sector, during the three months to the end of December, life insurance companies saw a rise in new business values for the first time in over two years, although other income values fell unexpectedly resulting in a sharp reduction in profitability.
The report states: “Business volumes fell sharply across the board, with the exception of overseas customers … although average spreads rose by the greatest extent on record, average fees, commissions and premiums also fell at a record rate.”
The reduction in profitability that was, therefore, more pronounced than had been expected.
Meanwhile, optimism in the general insurance market rose for a fifth successive quarter, despite further falls in business volumes, values and profitability.
According to the research, the declines were, “broadly as expected with the exception of interest, investment or trading incomes which suffered a much heavier fall than anticipated”.
Finally, for insurance brokers, business confidence rose at its fastest rate since September 1993, as business volumes didn’t fall as expected and profitability rose much faster than had been anticipated.
While the decline in employment gathered pace during the latest quarter, “a reversal is predicted in early 2010 with positive expectations recorded for the first time in almost two years”.
Category: Employment News, Financials, Insurance News
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