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.