St James's Place Q1 sales up 41 percent

LONDON (Reuters) - Wealth manager St James's Place STJ.L saw first-quarter sales climb 41 percent, helped by continued pensions growth, and said it was on track to hit its 2007 targets despite tougher comparatives in coming months.

St James's, which sells life insurance, pensions and investments to over 400,000 affluent clients, saw pension sales almost double, taking total first-quarter sales to 97.8 million pounds, a touch above market forecasts.

The group's 41 percent rise in first-quarter volume is the strongest result in the life sector so far and follows sales growth of almost 60 percent in 2006, when St James's was a key beneficiary of spring pension rule changes that encouraged people to save more for retirement.

The wealth manager said investment sales climbed 22 percent in the first three months but protection sales, which account for less than 5 percent of the total, dipped 14 percent after the departure of mortgage advisers announced last October.

It said comparatives with 2006 would get tougher as the year progressed -- the key pension changes last year were introduced in April -- but said it was on track to meet its sales target.

"Our long-term objective is 15-20 percent and what we're indicating, admittedly at this early stage in the year, is that 41 percent in the first quarter means we are well positioned to achieve that target," Chairman Mike Wilson told Reuters.

"A lot does depend on market conditions, but at the moment things look very good."

The wealth manager, 60 percent owned by bank HBOS HBOS.L, said it was seeing "a colossal amount of interest" in inheritance tax planning, fuelled by rising property prices, and in pension planning, while investors remained optimistic.

"We're in an ideal market -- there's more demand for what we're offering, which is high-quality financial advice, and fortunately there are a lot less advisors around," Wilson said.

He added the group was also better placed to deal with a potential downturn than in 2002 and 2003, when it was over-dependent on equity investment.

St James's surprised investors earlier this year with the departure of its chief executive, but Wednesday's statement gave no details on a possible replacement. Wilson said a replacement could be announced within the next couple of months.

St James's stock, which climbed over 60 percent in 2006, is now trading at multiples of more than 2 times embedded value, compared to a sector average of around 1.4 times.

The shares are up around 7 percent since the start of 2007 and were trading 1.7 percent higher at 468 pence at 8:25 a.m.

"As usual, SJP has exceeded market expectations for first-quarter sales," Cazenove said in a note. "The mix is modestly helpful for margins, given a small decline in the proportion of third party manufactured products."

The broker said 89 percent of St James's sales came from its own-manufactured products, down from 87 percent last year on lower protection sales.