Prudential and Zurich Financial Services have signed a five-year deal which will see Zurich Advice Network customers being offered a Pru annuity on retirement.
Under the deal, policyholders receiving advice from Zurich's 3,500 strong tied network will be offered a Pru annuity once FSA depolarisation plans are finalised.
IFAs have attacked the deal, saying it undermines the open market option requirement, where providers must tell policyholders to shop around for the best annuity.
Pru says policyholders would still be informed of their Omo rights.
Pru says its expects to take £1bn in new annuity premiums from the venture. The deal is not exclusive and leaves both companies free to arrange other distribution agreements.
Pru and Zurich have also entered into a reinsurance arrangement, allowing Zurich to offer better annuity rates ahead of depolarisation.
Both parties refuse to comment on the financial terms of the agreement but say they are looking to reach similar agreements on other products including Pru's with-profits bond.
Prudential has already signed distribution deals with Abbey National, Bradford & Bingley and Woolwich IFA Services.
Zurich marketing customer and communication director Kevin Ronaldson says: “Zurich is committed to offering our customers choice and a full range of competitive products. This will include gap-fill products from major brands where we choose not to be the product manufacturer.”
Prudential UK partnerships director Andy Briggs says: “We are continuing to develop other opportunities over the coming months as the marketplace evolves.”
Wentworth Rose chief executive Philip Rose says: “This is a retrograde step and goes against the whole thrust of what the FSA has been doing to get a proper open market option.”