ANALYSIS: Investors will be pleased at Irish Life and Permanent's performance in 2002 and have been given fair warning that the picture may not be as rosy this year.

Chief executive, Mr David Went, said yesterday that the outlook had deteriorated since its last trading statement when it indicated that life and pensions sales would be flat in 2003.

And while he is not ready just yet to concede that this target will not be achieved, the weak investment markets and the global uncertainty will make it difficult to sell equity-based products.

He has emphasised the group's strong position, which will allow it to capitalise on the opportunities to grow its business in the Irish economy. The demographics should underpin continued strong demand for mortgages, protection insurance and general banking products while the Government-backed personal retirement savings accounts should also provide a welcome sales boost.

Its commitment to maintaining a dividend payment of at least 47.5 cents has impressed the market, given the difficulties being experienced by other insurers at the moment. The group's solvency ratio is 1.7 times the minimum requirement, in line with its targets. This provides comfort that it does not face concerns about its ability to meet future claims.

The analysts all admit to some initial confusion about the 2002 figures, following the switch to reporting pre-tax profit figures, but all seem satisfied that the underlying performance last year was ahead of expectations.

The key headline figures benefited from actuarial reassumptions to reflect the inclement investment climate and were helped by exceptional contributions from the sale of its industrial branch business and some branch properties during the year.

Most analysts have signalled that they will be marginally adjusting their profit forecasts for the group to reflect the greater uncertainty.

Irish Life and Permanent has finalised a deal to sell its last remaining business in the US market, Guarantee Reserve, even though it was forced to sell for €121 million, some €55 million below its book value. The business had been underperforming and was a drain on the group.

Mr Went says he is focused on achieving growth in its Irish operations and would consider potential acquisitions in the life and banking sector.

He said the group would take a look at Scottish Provident's Irish operations, which have been put on the market by its parent Abbey National.

However, he stressed he would be concentrating on achieving organic growth across its banking and insurance businesses this year.