LV will in the next couple of months announce additions to its existing suite of at-retirement products, kick-starting a period of what it is likely to be intense innovation and product competition in the lead up to new pension freedoms coming into force in April.
Speaking to FTAdviser, Richard Rowney, managing director of life and pensions at LV, indicated the firm would come to market before the end of the year with new products “in response to the reforms” announced at the Budget, although he refused to disclose further details.
Mr Rowney said: “We are working incredibly hard on some things within this space that we are incredibly excited about, but it’s too early to announce what those are. I would say that I think you’ll see something from LV in Q4 in response to the reforms.”
This morning the group reported increasing sales across all divisions of its life insurance business from the start of this year to the end of September, including a near 6 per cent increase in annuity sales.
Mr Rowney admitted that the firm’s bucking the downward annuity trend was partly down to sales of its one-year annuities, which were launched soon after the Budget reforms and are actually written under drawdown rules.
He explained: “I put all the fixed term products together, regardless of whether they’re written under drawdown.”
Adding that one-year annuities have “undoubtedly boosted our sales performance on the annuity side”, Mr Rowney stated adviser interest has also focused on the three and five-year fixed term annuities.
“We’re not defying gravity on enhanced annuity sales, we’re seeing those trend down to where others in the market are seeing them; around the 50 per cent mark. But fixed-term annuities is definitely a beneficiary of the advice market.”
Mr Rowney stated that its a similar story on the protection side of things - up to £170m from £146m year on year - where in a fairly flat market a focus of effort on income protection products with new advisers has reaped rewards.
With equity release - up to £84m from £62m - Mr Rowney put performance down to LV’s scale giving it the advantage over smaller providers, which have been squeezed by the drop in annuities volumes.
“I think there is an increasing demand from retirees for equity release and supply will come under more pressure going forward, because that’s inevitable when you see the reductions in annuities which have traditionally been the source of funding for smaller providers.
“We’re a much larger organisation, we’ve got a much larger back book of annuities, we can remain in this market and push quite aggressively forward.”
peter.walker@ft.com
