Aviva UK group pension sales plunge 55%
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Aviva’s UK group pensions business has plunged by 55 per cent in 2009 to £462m from over £1bn in 2008.
The insurer blames factors such as lower consumer confidence, limited salary increases and unemployment as well as fewer large scheme wins for the drop.
In today’s fourth quarter new business figures, Aviva also reports a 39 per cent drop in bond sales over the same period from £3.3bn to £2bn, which it attributes to its strategy of reducing commission as well as its withdrawal of the income protection guarantee option.
Investment sales were down 29 per cent from £1.5bn to £1bn.
Total UK life and pension sales were down 25 per cent in the UK during 2009 at £8.9bn compared to £11.9bn in 2008.
The news comes as this week’s Money Marketing reveals Aviva is cutting stakeholder commission by almost a quarter.
Annuity sales were down 22 per cent at £1.9bn compared to £2.4bn in 2008, while individual pensions sales were down 12 per cent from £3.7bn to £3.3bn.
Protection business was down 14 per cent from £1.1bn to £965m but equity release business was up 10 per cent from £250m to £276m as Aviva profited from the exit of other players such as Prudential.
Bancassurance sales through Aviva’s venture with Royal Bank of Scotland were up 3 per cent to £1.25bn from £1.2bn.
Aviva has more than doubled its capital surplus over the year from £2bn to £4.5bn.
Aviva UK chief executive Mark Hodges says that at least half of the year on year declines were as a result of strategic decisions to target “margin and profitability over volumes”.
Aviva group chief executive Andrew Moss has dismissed rumours that the life company could be looking to offload its UK business as “just speculation”.
He says: “We start 2010 in a strong position. Our focus remains on growing our business profitably and improving our operational efficiency so that we can fully benefit as our major markets return to economic growth.”
Worldwide, Aviva saw total life and pensions sales drop 12 per cent over the year from £36bn to £32bn.
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Readers' comments (16)
How funny!! | 4 Feb 2010 9:12 am
... or could it be that their GPP (and PP) proposition aint up to sratch vs other providers AND that their admin/customer service is (based on my personal experience) 'awful' to say the least??
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Duncan Jones | 4 Feb 2010 9:18 am
Clearly neither Mr Hodges nor Mr Moss are aware of a the most significant reason for plunging life and pension sales which is the appalling 'service' they affford to IFA's.They have obviously not yet heard of the regulatory initiative known as TCF which impacts on the whole advice chain and not just IFAs. Contrast Aviva's results with those of Standard LIfe and you quickly realise the board are providing excuses not reasons for these results.
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Anonymous | 4 Feb 2010 9:29 am
To be fair, their crap admin and customer service is no worse than any other life office. Those that were any good are now awful thanks to contracting work out to Asia.
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Andy mcCarthy | 4 Feb 2010 9:43 am
Our experience over the lasy 2 years is the exact opposite. Your perception of humour is strangely sardonic
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snooks | 4 Feb 2010 9:44 am
Yes I agree. Our experience is such that we wont go out of our way to put anything new in AVIVA and we are gradually taking clients out.
It's not just their appalling state of disorganisation it's the attitude. IFA's who have built the mighty hulk that AVIVA is through giving AVIVA their clients' money are treated by AVIVA as simpletons. AVIVA treat the IFA's clients as if they are AVIVA's. AVIVA may be right we certainly have been simpletons-we have stoked up these might insuers' coffers with our clients' money and they don't have the decency now to speak to us as if we know and unedratsnd the market that WE deal with, and to offer us a good service for our clients. Time to move away from insurers to non insurer wraps
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Steve Wickens | 4 Feb 2010 10:09 am
Most likely reason for the drop in business, is that the cat is out of the bag about how Aviva really treats it's customers;
insurance that does not pay out
investments that go down, even when the market goes up
huge up front charges that are not properly explained
MVR's at the whim of the company and not in line with the markets
I could go on, but you get the picture.
In reality word is spreading and people do not like to be bitten twice. Trust is the biggest issue in the finiancial services industry and it looks like Aviva are right out of it. the only way for them to do business now is to hide behind other peoples brands.
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Anonymous | 4 Feb 2010 10:30 am
It comes as no real suprise to me. I think the demise of the traditional 'jack of all trades' life insurer was written some time ago. They are bloated, poor value and disingenuous. Come on, why would you really need to use a company like Aviva anyway? Maybe a bit of term assurance? Think they are a poor result of a few too many mergers.
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Anonymous | 4 Feb 2010 10:58 am
Life offices are in denial of the fact that their parasitic existences must come to an end when they have bled their hosts dry and scared off the rest.
They move on to pastures new like India and China where it takes a while before they twig that what happened in the UK is heading their way like a cancer.
Blaming 'demanding' IFAs for their downfall spawned the resurrected and damaging RDR.
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michael brayne | 4 Feb 2010 10:59 am
Perhaps AVIVA's Stephen Gay (head of distribution) will now concentrate on putting his own house in order instead of promoting the RDR.
Is his love of the RDR costing AVIVA business? I think yes. "As you sow, so shall you reap".
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Andy McCarthy | 4 Feb 2010 11:19 am
I should say my earlier comment was in response to "How funny" and that our experience relates to GPPs.We have set a number of significant schemes with Aviva and the overall experience has been very good!
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