Legal & General experienced a 40 per cent fall in individual annuity sales in the first three months of the year, including a £15m hit as customers cancelled their annuity purchases in the wake of the Chancellor’s Budget announcements.
L&G’s interim management statement, which was published last week, shows that individual annuity sales fell from £406m in Q1 2013 to £244m this year.
The insurer says around £15m in losses relate to cancellations during the extended cooling-off period following the new pension freedoms announced in the Budget.
The insurer was boosted by the £3bn bulk annuity deal it agreed with the ICI Pension Fund in March, said to be the largest bulk annuity purchase arrangement by a pension scheme in the UK. Retirement new business premiums rose from £800m to £3.3bn following the contract with ICI.
L&G says it expects to write growing volumes of bulk purchase annuity deals, which should “more than offset individual annuity reductions”.
The provider adds that it is developing low-cost income drawdown products to give customers options on the amount of risk they want to take and the amount they want to
The Cofunds platform, which L&G acquired in May last year, saw net inflows of £1.5bn, giving total assets under administration of £65.6bn.