Sales in Prudential’s UK business are up 8 per cent year-on-year as bonds, personal pensions and drawdown products offset the loss of annuities, the firm’s quarterly results show.
UK retail sales, on an annual premium equivalent basis, hit £169m in the three months to March, compared to £157m to the same quarter last year, a rise of 8 per cent. Prudential says this was driven by drawdown sales nearly trebling, from £5m to £14m, and individual pension sales growing by 125 per cent, from £21.6m to £27m.
Bond sales increased by 21 per cent in the quarter, from £63m to £76m.
But individual annuity sales fell by 61 per cent year-on-year, from £36m in the first quarter of 2014, down to £14m.
In addition, the firm did not complete any bulk annuity transactions in the quarter, compared to sales of £73m in same period in 2014.
Corporate pension sales were also down, from £40m in the first quarter of 2014 to £33m this year. The firm says the 2014 peak was caused by larger employers hitting auto-enrolment staging dates.
Profits on new retail business fell by 11 per cent, from £38m to £34m, “primarily due to the reduction in annuity sales and the impact of lower interest rates”, Prudential says.
Group chief executive Tidjane Thiam says: “Our focus in the life market remains on providing investment and retirement solutions to an ageing but wealthy customer base. Our flagship with-profits product, PruFund, is at the heart of our product offerings.”
He adds: “Overall, we believe our strategy is working well in the new environment as demonstrated by the encouraging signs of progress so far.”
Thiam is set to be replaced by Mike Wells from 1 June 2015.