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Pru UK sales hit by RDR and annuity reforms

Prudential’s UK arm has reported a 12 per cent slump in sales during 2013, from £617m in the first nine months of 2012 to £540m this year, as the industry continues to feel the effects of the RDR and annuity shopping around reforms.

The provider’s interim management statement, published this morning, also reveals new business profit has fallen 10 per cent during the first nine months of 2013, from £227m to £204m.

Prudential’s UK retail sales were down 9 per cent in the first nine months of the year, from £577m in 2012 to £525m in 2013. The provider says this was mainly due to a reduction a reduction of sales of with-profits bonds following the RDR and lower corporate pensions sales.

Sales of individual annuities dropped 3 per cent, from £166m to £161m, primarily as a result of a 6 per cent fall in internal vesting sales, from £104m to £98m.

With-profit annuities sales were stronger during the period, increasing 15 per cent from £57m to £66m.

However, onshore bond sales were down 22 per cent in the first nine months of 2013, from £143m to £126m, driven by a 25 per cent reduction in with-profits bond sales.

Prudential says: “The anticipated reduction in with-profits bond sales followed the implementation of the requirements of RDR at the beginning of 2013 and is mainly attributable to the subsequent contraction in adviser numbers, particularly within banks which were previously major distributors of bonds.

“Sales through financial advisers remained strong, despite disruption caused by the transition to the new distribution landscape.”

Corporate pensions sales were down 7 per cent, from £148m to £138m, which the provider puts down to lower incremental sales and fewer additional members joining public sector schemes.

Prudential says sales of “other products”, which includes individual pensions, PruProtect, PruHealth and offshore bonds, were £100m, in line with the first nine months of 2012.

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  1. The recent changes to the T&Cs of their With Profits fund may well also have a further negative impact on new business streams…..

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