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Total new asset management new business has slumped by nearly 50 per cent as Aegon UK is relying on its life and pensions arm for support, results for the first quarter have revealed.

Overall new business volumes remained stable rising 3 per cent on the previous corresponding period. This was primarily supported by individual annuities and protection, with increases in new business sales of 13 per cent and 17 per cent respectively as the sector was buoyed by distribution deals with HSBC and Barclays.

However, market volatility impacted on the asset management sector with institutional new business plummeting by 63 per cent to 35.3m from £95.6m and retail falling by 40 per cent to 105.9m from 175.5m since the same period in 2007.

Blaming market sentiment Mark Laidlow, UK finance director for Aegon UK, said clients were holding back from investing due to market jitters.

He said: "The falls are considerable but you need to remember the underlying value of our assets is strong. Our core fund performance has been strong and these figures will bounce back again.

"Asset management is important to us but our core business is very much life and pensions."

Overall life and pensions new business remained static at £288m, however, individual pensions fell by 13 per cent to £198 single premium. Retirement drawdown did not escape unscathed either with product sales plummeting by 39 per cent to £259m single premium.

Corporate pensions business rose by just over a fifth on the first three months of 2007, as a result of an increase in the number of new group personal pensions.

Results 1 January until 31 March

Source: Aegon UK

Mr Laidlow said demand for drawdown products still remained although consumer nerves surrounding equity remained.

He said: "This is not a market on the decline and 2007 was an exceptionally good year for this area. However, there is a lot of uncertainty around equity yet we have confidence as is shown by the launch of our new product, which is half drawdown and half annuity. It has guarantees in place and we predict it will receive interest from the market."

Mr Laidlow stressed product diversification remained paramount however IFAs would stay key to Aegon's offering.

He said: "We have concentrated on the IFA channel and will continue to do so. They remain very important to us particularly in the coming months."