Profits at Prudential’s UK arm have remained flat for 2013 at £706m as the impact of the RDR continued to hit the insurer’s retail investment sales.
Pru UK has posted a pre-tax profit of £706m for its life business for the year, compared to £703m for 2012. The insurer’s asset management business M&G posted a 23 per cent rise in operating profit to £395m, despite seeing net outflows of £700m during the year. Pru says the level of net outflows reflect its decision in 2012 to slow flows into two UK corporate bond funds to protect investment performance.
Overall UK sales have fallen 12 per cent from £795m to £697m, with onshore bond sales down 23 per cent to £176m.
Pru says: “The onset of the RDR has significantly impacted the timing of sales volumes in the UK retail investments markets over the last two years. For Prudential, this resulted in very strong sales of onshore bonds in 2012, due to heightened activity prior to RDR, while in 2013 volumes returned to levels consistent with 2011, the last ‘undisturbed’ year.”
Individual annuity sales fell 14 per cent during 2013, which Pru attributes to a strong previous year ahead of the introduction of gender neutral pricing and the RDR. Internal annuity sales fell 10 per cent as more customers chose to defer their retirement date.
Bulk annuity sales fell 32 per cent from £48m to £28m, which Pru says is due to “selective participation” in the bulk annuities market based on its returns criteria.
Pru’s direct advice arm, Prudential Financial Planning had 196 advisers as at the end of 2013. The insurer began rolling out its face-to-face advice service in February 2012, and had 129 advisers at the end of 2012, against a target of 120 advisers.
Pru group chief executive Tidjane Thiam says: “The UK achieved a resilient performance as industry sales volumes remain negatively affected by the implementation of the requirements of the RDR. We believe the strength of our products and brand will position us well once distributors have adjusted to the new environment.“