L&G annuity sales jump 13 per cent

17 February 2010 7:41 am | By Helen Pow

The firm cites increased product and pricing sophistication as well as new distribution opportunities for the rise.

But the overall annuity figure was dragged down by a 55 per cent drop in business, on an annual premium equivalent basis, in pension buyouts to £88m, down from £194m in 2008.

Individual pension sales fell 17 per cent to £272m in 2009 compared with £327m the previous year.

But the firm says its strategy of reducing volumes in traditional capital intensive life and pensions products in favour of more capital efficient Sipps and Unit Trusts is continuing to drive growth.

Gross new business from corporate pensions clients was £29bn during 2009, up from £27.6bn in 2008.

L&G says individual protection outperformed the falls in housing market transactions reflecting platform leadership and breadth of distribution. But protection business was down 13 per cent to £180m from £207m in 2008.

LGIM increased 1 per cent to £33.3bn last year, from £33.1bn in 2008. Retail investments sales rose 64 per cent on an APE basis to £375m with substantial growth across unit trust, structured products and Isas.

At the end of 2009, the estimated capital surplus at the firm was £3.1bn, up from £1.9bn at year end 2008. Throughout the year, L&G made cost reductions of £65m and generated net cash of £650m.

Group chief executive Tim Breedon (pictured) says: “Legal & General’s strategy of increasing efficiency and concentrating new business activity in the markets we consider to be most attractive in terms of growth potential and return on capital is delivering.

“The cost savings target was exceeded and we will continue to pursue further expense reductions across the Group.

“In 2009 I set a target to deliver £450m of net cash from our UK businesses.

“Ongoing changes to product mix and design, cost reductions, favourable pricing conditions in the annuity market and substantial growth in assets under management have delivered results well ahead of expectations, with in excess of £650m of net cash generated in 2009.

“We are making good progress internationally. LGIM has won its first mandates in the US and we successfully launched our joint ventures in the Gulf and India.”

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