Partnership plunge shows market skittish on annuities

Annuities provider Partnership saw its shares plunge 21 per cent yesterday to 325 pence per share, leaving the company trading below the level of its June IPO and highlighting market nerves towards annuity firms.

Partnership’s are now trading some 16 per cent below the 385 pence per share initial listing price, meaning it is now valued at £200m less than the £1.5bn market capitalisation at the time of its float.

Rival firm Just Retirement is also not yet reaping the benefits of its recent initial public offering after its market debut on Tuesday.

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On its first day of trading its share price dropped 5 per cent to 213p, meaning the market capitalisation of the business had fallen from £1.13bn to £1.07bn.

Yesterday, share prices closed at 197.25p, dropping by a further 7 per cent compared to the previous day. It is now valued at 12 per cent less at £988m compared to its initial trading price.

Partnership’s fall followed its announcement that annuity sales in the three months to the end of December 2013 will fall a massive £160m short of analyst Morgan Stanley’s forecast.

In a Morgan Stanley research document published yesterday, the analyst said it is “disappointing” that annuity sales will not show year-on-year growth, considering it had predicted £541m of sales for the final quarter of 2013. Last year fourth quarter sales were £380m.

However, Partnership did deliver a 31 per cent increase in total operating profits during the first half of 2013.