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Your support makes all the difference.Life is not so sweet for the life insurance industry these days. Yesterday's new-business figures from Prudential - by far the biggest player in the sector - confirmed the trend of falling sales of life and pensions products across the industry.
In the UK, total regular contributions were 14 per cent lower at £74m. Single-contribution sales fell overall by 21 per cent to £579m, with life and pensions falling by 18 per cent to £558m and investment products declining by 56 per cent to £21m.
Behind this grim picture lies the torrent of bad publicity that the insurance industry has suffered as a result of the pensions transfer scandal, and the effects of the tough new regulatory regime that requires companies to disclose the charges and commissions to customers taking out policies.
The optimistic scenario says that the growing realisation that the state will not provide adequate pensions will drive people back towards personal provision, as the adverse publicity surrounding transfers and opt-outs fades.
Meanwhile, the Pru says disclosure is not in itself putting customers off - rather that it adds an administrative burden that slows sales. The company says that sales rates are recovering as the sales force gets used to the new regime.
Prudential in any case has been at pains in recent years to diversify away from its dependence on its home market, and is seeing a stream of good results from its Jackson subsidiary in the US and its fledgeling operations in Asia.
The arrival of Peter Davis as its new chief executive is likely to lead to further strategic moves, perhaps into Europe.
The Pru, representing 47 per cent of the capitalisation of the quoted life company sector, remains a fairly safe bet for investors, although Goldman Sachs, for one, argues that it is overvalued on an embedded value basis.
A problem for the smaller players is that they do not have the critical mass to compete in this new environment, and are likely to be swallowed up in the industry rationalisation that is inevitable.
That could provide attractive merger premiums, although it is more likely that the mutuals rather than the quoted companies will be first in the frame. Valuation arguments are further complicated by the likely realisation of so-called "orphan estates" after United Friendly's agreement with the Department of Trade and Industry over the distribution of surplus assets in its long-term life fund.
For investors, policies with some of the smaller, poorly performing mutuals may offer more exciting returns as they are taken over, rather than straight investments in the quoted companies.
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