L&G in third deal to sell via high street banks

Legal & General's umbrella logo is to appear in Alliance & Leicester branches following the third such deal struck by the insurance group with a high street bank.

The insurer, which once agreed to be taken over by NatWest in a deal which was never completed, also has similar agreements with Barclays and Northern Rock to sell its savings and insurance products to their customers.

Yesterday's announcement came as rival insurance group Prudential hinted that it too might be interested in clinching such agreements with leading banks.

The deals are being put in place ahead of the introduction of stakeholder pensions - which have low management fees and are expected to hurt insurer's profits - in April.

Revealing an 8% rise in operating profit to £840m, Jonathan Bloomer, Pru's chief executive, pointed to sales arrangements with Standard Chartered and Citigroup in Asia as an example of how it might look for other UK deals.

The Pru's profits figures showed the impact of the decision to cut its team of sales staff, which led to a drop of 24% in UK sales during the year. Profits in the UK insurance operation were 25% lower at £230m as sales of its Prudence Bond and unfashionable mortgage endowments fell.

Pru this week hired Mark Wood, the former chief executive of Axa, to run its European and UK business. While Mr Wood was closely associated with the release of Axa's so-called orphan assets and the ensuing payments to policyholders, Mr Bloomer played down any hopes of an early resolution to its vast estate of assets from dead and lost policyholders, estimated by some analysts to be £8bn.

The insurer tried to soften the impact of falling domestic sales by highlighting its "international development" during the year. Pru is to pay a dividend of 24.5p a share. Yesterday its shares fell 8p to 971p.