Wesleyan Assurance is sailing through the financial services market turmoil with a seven per cent rise in new business in the first quarter following a 22 per cent jump in 2007.
The Birmingham-based mutual’s figures compare with four per cent Q1 growth at the much bigger Prudential and one per cent at St James’s Place, which is 60 per cent owned by banking giant HBOS, members will be told at the society’s annual meeting on Friday.
They will also hear that the 167 year-old organisation, which specialises in tailor-made financial products for lawyers, hospital doctors, GPs, dentists and teachers, has steered clear of the financial derivatives based on sub-prime mortgages that have damaged the balance sheets of major banks such as UBS, Citi and Royal Bank of Scotland.
"Members will understandably be concerned about the safety of their investments given the current nervousness in the markets and the general anxiety for prospects over the next 12 months or so," Wesleyan chairman Lowry Maclean will tell the meeting.
"However, against the background of the ongoing credit crunch, members should be reassured by the prudence in our very cautious approach to treasury investments.
"We have not invested in structured investment vehicles, collateralised debt obligations or any of the other investments that have given rise to substantial losses at other institutions.
"In addition the society has no direct or indirect exposure to credit losses arising from the non-performance of US mortgages."
Mr Maclean’s reassurances mark the second occasion in less than ten years that the Wesleyan, which has more than £4 billion under investment, has done well in turbulent markets. By not buying into over-hyped dotcom stocks in the late 1990s boom it was largely unaffected by the three-year bear market that wiped billions off the investment portfolios of some of its competitors.
That meant its with-profits fund was able to maintain a 70 per cent-plus equities rating while the likes of Standard Life was forced to crystallise heavy losses by selling shares at the bottom of the market in order to move money into gilts. Wesleyan was rated first out of 25 life offices in the latest Ernst & Young Financial Strength Survey and for the fourth year running got a maximum ten out of ten rating in the independent Cazalet Consulting survey of with-profits funds.
The society’s 2007 financial statement shows that on 25-year endowments Wesleyan pays out 11 per cent more than its nearest competitor and 43 per cent more than the average while its guaranteed growth bond showed a return of 165 per cent.
Chief executive Craig Errington told The Birmingham Post ahead of the AGM: "Our financial strength provides existing and potential customers with the comfort of knowing that even in the most volatile of market conditions, such as those seen in the early 2000s and over the last few months, we have adequate financial resources to maintain the course we have set."
The Wesleyan is currently expanding its sales force by about 50 per cent and is rolling out its Wesleyan for Lawyers affinity brand out to other parts of the country after a successful pilot scheme in the West Midlands.
It also plans to extend its mutual rewards scheme following its launch last year and has recently been awarded exclusive rights to offer personal loans to 200,000 members to the NASUWT teaching union and to offer general insurance products to 120,000 members of RICS, the chartered surveyors body.
The Wesleyan will also announce that Andrew Doman, an insurance specialist at management consultant McKinsey & Co, will join its board as a non-executive director in July.
The society also recently recruited former KPMG vice-chairman Derek Zissman as a non-exec.