Aegon has become the second life insurer in as many weeks to report a substantial uptick in profits driven largely by its platform proposition in the wake of Budget reforms that many suggest will presage a flood of money moving away from annuities towards more flexible options.
The Dutch insurer’s UK business reported profits had risen by close to a fifth in the three months to June compared to the first quarter of the year, from £22m to £26m.
The firm said that the new pension flexibilities support its focus on retaining customers into retirement via platforms and a lack of reliance on annuities, as its earnings from its platform service reached 28 per cent.
Aegon said its platform assets under administration have reached £1.9bn and customer acquisition increased compared against Q1 as the business added 49,000 new customers and 600 new auto-enrolment schemes.
In a statement it attributed its strong performance to “improved persistency”, and said it expects to see further growth on the platform following the introduction of new pension flexibilities by the government which were confirmed last month.
Others have also predicted a major surge for other platforms in the market, as consumers make use of new freedoms from next April to build composite retirement income portfolios through platform wrappers.
David Thompson, managing director of Elevate, recently said that Axa Wealth expects the pension changes coming into force next April 2015 will “accelerate flows onto platforms”.
Mr Thompson said this is because platforms allow financial planning advisers and their clients to spread wealth easily over multiple tax wrappers, offer flexible ways of retrieving income and a place to store and invest the money saved.
Last week Swiss life insurer Zurich’s UK arm reported business operating profit was up 10 per cent on last year to £66m and it new business margin was also up at 14.9 per cent, reflecting in large part an increase in retail platform business.
In its first 12 months the platform signed agreements with the likes of Openwork, Lighthouse, SimplyBiz, Bellpenny and the Best Practice network, and amassed more than £7bn worth of assets under administration from over 400 adviser firms.
Adrian Grace, chief executive officer of Aegon UK said: “We are on a mission to get the UK ready for retirement and are helping employers, customers and their advisers to achieve this.
“The full implications of new pension flexibilities are not yet known, but we believe these flexibilities when combined with demographics will have a strong influence on the shape of our industry in the coming years.
“Much of the nation’s wealth is concentrated in the hands of the over 50s and new flexibilities mean these people have a range of options as to what they do with their savings. Aegon is seeking to retain these customers via our platforms and to help them manage their income over their retirement.”
Last year Mr Grace told FTAdviser sister title Financial Adviser that to grow its platform and its at-retirement business, Aegon would be looking to segregate advisers in the same way that advisers have segmented clients post-RDR.
Among its advisory base, Mr Grace said those advisers who operate within its core markets will be given more face-to-face advice.
This followed news in June that Aegon UK was closing six regional sales centres and had entered into consultation with 160 staff, in the latest round of a three-year restructuring across the global business.
