More on St James Place
St James’s Place
Life insurer St James’s Place reported 37% growth in pre-tax profits to £142.3m in 2004. It seems to be a conservatively managed company with lower exposure to key down side risks than its peers.
St James’ Place reported that new business from long-term savings and investment (measured on the industry basis of annual premiums plus one tenth of single premiums) was up 19% over the year. All classes of business have experienced growth with new single premiums of £1.2bn, inclusive of a 32% increase in unit trust business and a 40% increase in single premium pensions business. Gross fees from other wealth management services rose by 2% to £21.2m (2003: £20.8m)
The life business operating profit( which made up 45% of pre-tax profits) for the year was £62.9m (+43%)as a result of higher new business profit for the year, which at £23.7m was 76% higher than in 2003. Better new business volumes was also the driver of the increased operating profits in the unit trust business (up 52% to £29.5m). The disposal of the a holding of 22.7% of the shares of Life Assurance Holding Corporation Limited realised an exceptional profit of £28m.
St James’s Place has no exposure to “with profit” policies and no defined benefit pension schemes indicative of conservative management. The company’s new business figures have been improving steadily since September 2003, this is the sixth consecutive quarter of steady growth. Although the company is sound and has avoided the problems facing much of the life assurance industry, it has suffered from the general decline in the industry. There is no doubt that the outlook for the UK life assurance market has improved and with it, the fortunes of the company: the latest new business figures are the best since 2001.
St James’ Place is well placed to benefit from the recovery in the industry and while growth may not be as spectacular as in some of its peers (who are recovering from a far worse position) the downside risks are lower and justify the high prospective PE of 17× (at the current price of 242p). The yield is poor at 1.1%.
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