The chief executive of Aegon Ireland has said his company is looking to work with platforms to get variable annuities out to more people.
Barry Cudmore acknowledged that the UK’s market in the so-called third way products isn’t as developed as it is in other countries, with only a handful of providers offering them. He noted that the barriers to entry to the variable annuity market are higher than in other, more traditional markets.
Mr Cudmore said: “We manage all the risk for the client and that combination of traditional insurance risk is something that a few providers can take to market, but what we do not want to be is one of only three fish in this pond.
“I think there is strong consumer demand for this, and I am having ongoing discussions with a number of third parties to talk about where our guaranteed solutions can fit into their offerings, such as platforms.
“We are talking about product constructions that work for other institutions where the guarantee is provided by our expertise.”
Aegon is one of three unit-linked guarantees players prominent in the market in the UK, alongside Metlife and Axa.
The guaranteed product, called Secure Retirement Income, was launched in July, and aims to build on the success of Aegon’s variable annuities in the US, where they generate about £7bn a year of new business.
Mr Cudmore said: “The demand has been very strong so far and we are excited about getting into this market.
“We have been dying to get into this market, and the fact that George Osborne changed the pension rules makes it the perfect time.
“The potential for these guaranteed products is big. The demographics are heading towards people needing to look after their own retirement needs, and if people are looking for certainty I think these products are good for that.”
ADVISER VIEW
Lee Waters, chief executive of East Sussex-based Barwells, said: “You might get a situation where a standard annuity is not suitable, and full drawdown is not suitable, and you need something in between, but variable annuities just are not popular.
“If the other big annuity providers came to the market with this then you could compare them, and there would be a more compelling argument for advisers to look at them, rather than with just three players.”
