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Dominic Grinstead, strategic development and marketing director for MetLife, said the Federal Reserve had stress-tested 19 financial services organisations, including MetLife.

MetLife was tested to see if it had sufficient capital to withstand a further deterioration and it received a clean bill of health, according to Mr Grinstead.

He said: "That is important in terms of tangible evidence of a commitment to the UK, if you look at the Hartford its capital position meant that it had to withdraw.

"Metlife has sufficient capital to grow our business in the UK and Europe."

Mr Grinstead said as volatility within equity markets eased and interest rates stabilised, hedging would become more affordable for providers and he expected more UK providers to start to compete with MetLife.

He said: "The main reason why other UK companies have not come into the variable annuity market is because of increasing equity and interest rate volatility has made hedging very expensive.

"Because this is not a new product category for us, we are already in a market and want to stay there and we can take a long-term view. You will find volatility will coming down in 2010 and long-term interest rates are increasing to ease hedging costs.

"I expect new entrants to come in 2010 from the traditional UK providers. We would like more people in the market and we welcome competition. It makes us sharper."

Standard Life is understood to have shelved plans to a launch a product in the space but other providers were looking at the market with interest, according to Tom McPhail, head of pensions research at Bristol-based IFA Hargreaves Lansdown.

He said: "Providers are looking at pricing and consumer demand. The number of players in the variable annuity space in 2010 will depend on market conditions."

MetLife is also launching a new product at the end of the year.

Mr Grinstead said: "We are looking at our product portfolio. We need to make sure our pricing is prudent and sales continue to be strong and we are looking at our next generation of products.

"We are looking to expand the tax wrappers that we have and we are going to launch an offshore bond product at the back end of this year, which will be domiciled in Dublin."