Banks

BoE stress tests: all you need to know

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Economy

Draghi: Eurozone will decline without vital productivity growth

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Currencies

Asia markets tentative ahead of Opec meeting

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

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Banks

Barclays: life in the old dog yet

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Categorized | Insurance

Partnership first-half sales disappoint


Posted on August 29, 2013

Partnership Assurance has become the latest recently floated company to publish disappointing debut results after the specialist retirement group missed first-half sales forecasts, pushing the shares down as much as 9 per cent.

The assurer, whose backers Cinven fetched about £350m when the private equity house reduced its stake in the listing three months ago, on Thursday cautioned that recent regulatory reforms had “disrupted” annuities business.

    Partnership, which focuses on offering higher pensions to retirees with low life expectancies, wrote £631m worth of new business in the six months to June 30.

    Although up by 12 per cent from a year ago, that was 5 per cent shy of the number pencilled in by analysts at Bank of America Merrill Lynch, which brought the company to market along with Morgan Stanley.

    Investors including the Government of Singapore Investment Corporation, were lured to the listing of what was one of Britain’s fastest-growing private companies.

    However, the sell-off on Thursday pushed shares in Partnership, whose board is headed by London Stock Exchange chairman Chris Gibson-Smith, down 27p to 435p.

    Unlike motor insurer Esure – which also floated this year but lost more than a fifth of its market capitalisation when it paid a smaller than expected interim dividend – shares in Partnership remain at more than their listing price, of 385p.

    Alan Devlin, analyst at Barclays, described the first-half as “disappointing” but added that if the factors Partnership cited were “genuinely one-off” then the “investment thesis is on track.”

    Steve Groves, chief executive, said fresh EU rules to prevent insurers using consumers’ gender to help determine premiums had prompted men to buy annuities before the reforms took effect at the end of the year.

    Meanwhile, he maintained, some financial advisers who bring it business had been distracted by a regulatory shake-up to their industry, including a ban on receiving commission.

    “We are slightly behind where we expected,” Mr Groves acknowledged. But he added: “We’re not dealing with major variances.”

    “The impact of the disruption I think was fully disclosed” to investors in advance of the stock market launch, he added.

    Partnership said it remained on track to deliver annual operating profits consistent with City expectations, of about £137m.

    The chief executive added Partnership had outperformed rivals and denied it had been hurt by intensifying competition from mainstream annuity providers such as Legal & General, Friends Life and Scottish Widows.

    The initial public offering cost Partnership £15.6m in fees for advisers and other expenses, contributing to a fall in pre-tax profits from £17.5m to £8.56m.

    Stripping out these and other exceptional items, the company said operating profits rose 31 per cent to £59.3m.

    The company paid no interim dividend but said it expected to make a payout for the second half. Diluted earnings per share fell from 5p to 1p.