Pru to pull back from annuities over Solvency II


Prudential UK is set to cut its appetite for UK annuities as tough Solvency II capital requirements slash margins.

The Financial Times reports the insurer has found capital requirements for individual UK annuities under Solvency II are up to 50 per cent higher than before the regulation took force.

Prudential wrote £1.7bn of bulk annuities in 2014, while in the first three quarters of 2015 it wrote £1.5bn.

At a Prudential investor day in London, chief financial officer Nic Nicandrou said: “I don’t see us sustaining those volumes going forward.

“It is possible to make it work, but a lot of financial engineering is required.”

The firm says the focus of its UK arm will now be to retain sales in the retirement and long-term savings markets.

The insurer says its latest solvency capital ratio is 190 per cent.

Prudential has also appointed interim UK chief executive John Foley to become full chief executive.

Foley has had the interim role since former UK boss Jackie Hunt left the company last October.