Legal & General affected by property slowdown

New business volumes have fallen in the last quarter at Legal & General as the slowdown in the property market had an impact on sales of insurance linked to mortgages.

Third-quarter new life assurance and pensions sales declined to £361 million compared to £398 million 12 months ago.

Shares in the group have lost 16% this year, making it the worst in its sector apart from Friends Provident.

The group said the credit squeeze has affected consumer’s confidence when it came to making investments.

A slowdown in the property market, a tightening in lending and volatility in equities and bonds haven’t made investment decisions any easier for our customers said Tim Breedon, Chief Executive of L&G.

He added that the cooling of the property market has affected sales of the protection policies people buy when they sign up for mortgages. The number of mortgages approved by banks in September was over 25% down compared with 12 months.

L&G’s sales in the UK, which make up over 90% of its business, were below analysts’ forecasts. Down 9% to £1.1 billion, the division was also affected by slower sales of unit trusts and a slowdown in its core annuities business.

It was expected that the group’s annuities business would be affected as the government’s temporary suspension of annuity sales to collapsed pension schemes fell during the quarter. A 9-month freeze has been imposed by the government while it decides what to do with the assets held by such schemes.

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