Aviva plans to target the bulk annuities market in response to Government reforms that have led to a sharp decline in demand for individual annuities.
The provider’s interim management statement, published this morning, reveals a 22 per cent slump in the value of new business written by its UK arm during the first quarter of 2014, from £114m in Q1 last year to £89m this year.
This was primarily as a result of a 43 per cent year-on-year drop in the value of new annuity business, from £70m in Q1 2013 to £40m this year.
Aviva says the fall came as a result of “pricing actions” and a strong Q1 performance last year, although some of this was offset by increases in protection and equity release VNB.
“Going forward, we expect our increased focus on mid-size bulk purchase annuity transactions to partially mitigate the impact of the Budget proposals,” Aviva adds.
Chief executive Mark Wilson says: “Aviva still faces challenges both in the external environment and in the business as we progress our turnaround.
“The regulatory environment is constantly changing and soft conditions persist in certain general insurance lines. As a business we remain focused on cash flow, expense efficiency and the clinical allocation of capital to areas where we can maximise returns. There is still much to do.”