Standard Life has reported a 20 per cent drop in new policy sales in 2003. This was due to uncertain market conditions, it said.

The group, which employs 250 people in the Republic, said yesterday its total annual premium equivalent, the industry measure of new business income, had fallen to €60 million.

Annual premium policy sales fell 12 per cent during the year while single premium investments dropped 29 per cent.

Standard Life's sales and marketing director, Mr Nigel Dunne, said yesterday the decision not to offer products with guaranteed returns for customers had made it difficult to expand business.

"Consumers had been particularly risk averse," he said while cautioning that investors needed to be careful about the price they paid for guaranteed products.

"Given the volatility of equity markets over the last three years we understand the consumer desire for investment products that contain guarantees.

However, guarantees are extremely expensive to provide and we do not believe that consumers fully appreciate the drag on performance that is inevitable with these types of product," he said yesterday.