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L&G annuity sales plummet 77%

Figures were boosted elsewhere in the business, particularly with a 17 per cent increase in assets at LGIM.


Legal & General remains positive despite this morning issuing figures which show annuity sales sharply falling away in the build up to pensions freedom.

Annuity sales nosedived from £3.3bn in the first three months of 2014 to just £800m in the same period this year, equivalent to a reduction of 77 per cent.

Additionally, bulk annuity new business was sharply down 78 per cent from £3bn in Q1 2014 to £655m, although last year’s figures were distorted by a £3bn deal completed with the ICI Pension Fund in Q1 2014.

At the same time, the volume of bulk annuity policies sold doubled from 7 to 15.

However, despite the reduction in sales, L&G reported annuity assets increased 19 per cent from £38.3bn to £45.6bn, helping to boost operational cash generation from £297m to a record level of £330m, an 11 per cent surge.

The figures were further bolstered by L&G Investment Management, which saw total assets climb 17 per cent from £630.9bn to £736.8bn.

Total net inflows dropped sharply from £9bn to £2.6bn, while external AUM net flows were also heavily down, falling from £6.6bn to £4.3bn

Workplace assets under administration climbed 43 per cent from £9.1bn to £13bn, reflecting successes with large schemes including John Lewis Partnership, as well as smaller schemes reaching staging dates, L&G says.

Increases to minimum contribution levels are expected to lead to a tripling of defined contribution savings in the UK over the next 10 years, the provider adds.

The figures come after the firm predicted a further slump in individual annuity salesat its full year figures in March, forecasting a 50 per cent reduction in sales through 2015.

The provider announced plans to launch fixed term annuity products in late February, and said this morning that alongside new products, it further expects to write over £100m of lifetime mortgages in 2015.

L&G group chief executive Nigel Wilson says the firm is “constantly” developing and streamlining its business to improve results for investors and customers, including an £80m target for cost reductions.

“Our business is aligned to long term macro growth trends. We are adapting well to regulatory and political challenges, for example, managing the switch to pension freedom with a new range of cash and retirement products, which now includes lifetime mortgages,” he says.

Q1 also saw L&G’s UK protection business witness reductions, which the firm attributed to strong performance in 2014. Total UK gross written premiums fell 5 per cent from £353m to £372m, and retail sales tumbled from £42m to £338m.

Similarly, UK group protection sales fell from £20m to £18m, with L&G citing a single large contract boosting 2014’s figures.


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