Partnership lines up care annuity for US market

Partnership is set to enter the US market by launching a ‘point of need’ care annuity, the insurer revealed in its latest trading update.

Published today (26 November), the update said discussions with potential partners regarding the launch are “progressing well” and a reinsurance-based market entry strategy has now been selected.

However, it refused to divulge any further details.

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Meanwhile, the specialist annuity provider said that its fourth quarter performance to date is “in-line” with guidance given at the third quarter announcement, with sales of individual annuities well below 50 per cent of pre-Budget levels.

Partnership said this reflects the “compound effect” of both lower quotes and conversion rates. It added that it is “possible” that deferrals could increase approaching the April 2015 implementation date for the new pension flexibilities.

The defined benefit pipeline is “strong and growing” but quarterly completions are “likely to remain lumpy”, the update said.

In June, Partnership announced it was cutting 100 roles as part of a cost savings programme, which is expected to generate annualised cost savings of £21m in 2015, resulting in anticipated total operating expenses of approximately £80m next year.

Partnership said today that the programme is “tracking well” against the planned 2015 cost base. Headcount was reduced from 566 at 31 March to 445 at 30 September 2014. Restructuring costs are expected to be within previous guidance of £3m.

In May, FTAdviser revealed that Partnership was one of a number of firms looking to launch unit-linked guarantees, following the expected drop-off in individual annuity sales.

Nigel Barlow, director of product development at Partnership, said it is “looking at third way products” and added that he could not “imagine any provider in the market won’t be looking at them”.

Mr Barlow added that as the new rules, to come in next year, haven’t been finalised, “it is too early to say what the final shape of a product will look like”.

Steve Groves, chief executive at the firm, said: “In our presentation to investors and analysts this morning, we will be providing an update on the business and the various initiatives, which we are pursuing to diversify and grow the business, including our defined benefit proposition and the market opportunity for a care annuity in the US.

“Our discussions with potential US partners are progressing well and a reinsurance based market entry strategy has now been selected.”