Achi news desk-
The financial services organization highlighted strong protection sales, as people sought to protect their income and family members. However, it reported a fall in sales of individual savings accounts (Isas) and junior Isas as higher interest rates persuaded customers to save in cash rather than invest in stocks and share products.
Scottish Friendly currently administers around two million policies.
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Chief executive Stephen McGee told The Herald: “I think we’ve been on a pretty good journey over the last few years, and we still have a lot more we want to do and achieve.
“What we have definitely seen through the sales figures is that the pressures of inflation and the cost of living are still affecting people, but in reality their determination to save for themselves and their families is still there .
“So, we’re seeing our member numbers increase, which is very positive. People’s tendency to save is very strong and holding up well. [But] their ability to [save] and how much they can save is where we’ve seen the impact.”
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When asked if there were any signs that the outlook was improving, he said that “blue shoots” began to appear at the end of 2023 and were evident at the beginning of this year. He noted that the economic background remains challenging, but he expressed confidence that people are “a little more optimistic”.
“We are cautiously optimistic, but with some [signs of] green shoots,” he added.
“We hope we are in a good position as people start to become more optimistic about the future.”
Mr McGee, who has been chief executive of Scottish Friendly since April 2022, expressed the view that interest rates will start to fall from the current 5.25% this year, but said that could be later than originally thought.
“[We are] definitely expect a reduction in the interest rate in the coming year, [but] that expectation could be tempered by the fact that inflation has not fallen as much as some people expected recently,” said Mr McGee.
“I think there’s a real question around [whether an inflation target of] Is 2% really a credible, long-term, sustainable target, or do they need to consider revisiting that benchmark. I’m not thinking of a huge increase, but maybe increase it to 2.5% or 3%. That’s pure speculation on my part.”
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Scottish Friendly has used acquisitions in recent years to increase its membership, the breadth of products it offers and its technological capability. In 2019, it closed a “transformational” deal to acquire a huge book of life and pension policies from Canada Life’s UK operation. The deal brought a huge boost to membership and assets under management, as well as expertise in areas such as risk, actuarial and IT.
Asked if acquisitions were on the agenda, Mr McGee said: “Certainly, that is still a key part of our growth strategy. We look at opportunities through different lenses.
“Because we’ve been so successful in those acquisitions in the past, we’ll still look at those types of acquisitions, but the ones we’re really attracted to right now are the ones that will will accelerate our strategy, add products and services, add capacity and give us more tools to help our members.”
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Scottish Friendly has moved to mitigate the move to cash savings by introducing a guarantee on its Jisas policy for investors with a profit, where a minimum is paid out on maturity of the product on the child’s 18th birthday.
Mr McGee said the proposal was “very popular” and “allowed people to participate with some confidence”.
He added: “Cash has always been attractive in the UK, and it became much more attractive as interest rates rose. We are already starting to see those short term interest rates drop quite significantly and soften. We think that will bring us back towards where we have been in the long term.”
