St James’s Place: Q4 new business

7:51 a.m. Thu 19 Jan 2006

St James’s Place, the wealth management and life assurance group announced strong new business figures for the period to December 2005. On an APE basis new business volumes grew 25% for the year and 39% for the quarter. In common with the trend seen throughout this year, strong growth in investment and pensions sales offset declines in protection sales.

Protection sales declined by 3% in Q4, and 5% for the year. Strong growth in investment products (up 50% in Q4, up 31% for the year) and pensions (up 41% in Q4, up 27% for the year) more than offset the decline in protection sales. Gross fees from wealth management services rose 33% to £28.3m.

The underlying trends that have been driving growth are a return of public confidence to the long-term insurance industry and the slow down in the housing market, which is a popular alternative form of long term investment. These trends look set to continue in the medium term and will benefit the long-term insurance industry as a whole.

St James’s Place, with its well deserved reputation for prudence (it was unaffected by the problems that plagued a number of its peers) and is well positioned to benefit from the change in trend. The company is positioned to cater to the upper segment of the market, where emphasis on service is high and margins wider than some of its peers at the more competitive bottom end of the market.

Medium term prospects look good, the share trades at 282.5p, on a prospective PE (2006 earnings) of 15.4x, at the upper end of the sector range with a yield of 1%.