Resolution chief executive Andy Briggs says Friends Life’s corporate business suffered during 2012 as rivals slashed prices to “unprofitable” levels in order to win automatic enrolment business.
Last week Resolution, the parent company of Friends Life, reported an 18 per cent drop in UK sales in the first quarter, from £173m last year to £142m in 2013.
The company said this was largely due to a 25 per cent fall in corporate benefits sales, from £146m in Q1 last year to £109m this year.
Briggs says the firm did not compete “aggressively” for new corporate pensions business because pricing was “unattractive” during 2012.
He says: “The new mandates last year were focused in two areas – one was initial commission, which we do not offer, and the other was the very largest schemes looking to get lower terms prior to auto-enrolment.
“We were involved in all the major tenders. I have worked in corporate pensions for 25 years now and I know that you do not make money at the prices those schemes were going at, so we gave them a miss.
“As a consequence we won less new schemes in the first quarter of 2013 compared to 2012.”
Retirement income sales were up 67 per cent in Q1, from £9m to £15m, while protection sales were unchanged at £18m.
In the UK, the value of new business written in Q1 increased 30 per cent, from £27m last year to £35m this year.
Chase de Vere head of communications Patrick Connolly says: “Automatic enrolment has increased competition in the corporate market, which in turn has driven down prices. That has to be a good thing for consumers.”