Partnership has reported a 24 per cent increase in pre-tax profit from £67m to £83m, despite a dip in retirement annuity business and a 30 per cent fall in care annuity sales.
The enhanced annuity specialist admits trading conditions have been challenging but says pricing discipline and being selective about risks boosted new business profitability in the second half of the year.
New business premiums for retirement annuities fell by 1 per cent from £1.168bn to £1.16bn, including £84m of defined benefit buy in/buy out business.
Partnership says levels of retirment new business are “particiculary encouraging in the context of the disruption seen in the non‑standard annuity market through much of 2013, which saw a fall of 18 per cent in total premiums sold through the open market.”
The provider attributes the slowdown to the introduction gender neutral pricing and the RDR, with annuity sales to brought forward to 2012 and advisers consequently less engaged in annuity sales last year.
New business premiums for care annuities fell 30 per cent from £94m to £66m.
Partnership says: ”Advisers do appear to be returning to the market with quote activity gradually improving in the second half of the year, though the conversion from quote to policy for immediate needs annuities can be lengthy and unpredictable.”
Partnership group chief executive Steve Groves says: ”Trading conditionsin the second half of 2013 remained difficult. The regulatory changes that occurred at the end of 2012 have had a deeper and longer impact on the retirement and care annuity markets than we foresaw. In these challenging conditions we have maintained our pricing discipline, and have chosen only to compete in those segments of the market offering attractive returns to shareholders.
“The initial conclusions from the FCA’s thematic review into the annuity market furtherincreases our confidence that Partnership will have improved access to the retirement annuity market overtime.
“We will continue to build upon our capabilities to position the business for the market’s return to growth.”