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'Pit pony' bank talking up lame life insurance arm

Date: Thu, 15 Dec 2005

LloydsTSB is struggling to meet market forecasts and has attempted to boost the profile of its troubled life insurance arm.

The bank's life insurance operation, Scottish Widows, according to the latest trading update is in a "much stronger state than it was" and LloydsTSB are hoping to repatriate around £800 million from the arm this year. This is in addition to the £200 million dividend paid in March.

The fact that people are living longer has undermined the bank's life insurance division and added increasing pressure to Scottish Widows' operations. Customers are also struggling with debt levels and are therefore potentially cutting back on "extra" financial safeguards such as life insurance cover.

"Against the backdrop of slower growth in consumer lending, the retail bank has experienced lower levels of growth in unsecured consumer lending together with some further deterioration in credit quality as more customers, with higher levels of indebtedness, have experienced repayment difficulties," said the bank's latest trading statement.

Many industry experts are already predicting that LloydsTSB may be forced to sell the life insurance arm in order to cut costs and focus on the company's main operations if the market remains below par.


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Endsleigh Insurance Services Limited. Company No: 856706 registered in England at Shurdington Road, Cheltenham Spa, Gloucestershire GL51 4UE.