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L&G annuity sales down 60% in wake of freedoms

L&G annuity sales down 60% in wake of freedoms

Legal and General has seen a 60 per cent slump in individual annuity sales in the first three months of the year compared to the opening quarter of 2014, its interim results statement has revealed.

Individual annuity sales were £99m compared with £244m in Q1 2014, ahead of the 2014 Budget announcements. Bulk annuity sales were £655m, compared with £3.1bn in Q1 2014

However, the results show total assets have increased 17 per cent to £736.8bn in the first three months of this year.

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Total net inflows were £2.6bn compared to £9bn in Q1 2014, of which external assets under management net flows were £4.3bn compared to £6.6bn. L&G platforms reported gross inflows of £1.9bn, which included Cofunds institutional net flows.

L&G’s platforms now hold £38.8bn of retail assets, a 6 per cent rise from Q1 2014, and £37.2bn of institutional assets, a 28 per cent jump. Cofunds’ assets of £76bn, up 16 per cent on Q1 2014, included net inflows of £700m compared with £1.5bn in Q1 2014.

In February, L&G entered the lifetime mortgage market by acquiring New Life Home Finance for £5m. The mortgage funding will provide another source of direct investment assets to back L&G’s annuity liabilities, the group stated at the time.

The interim statement said: “We believe that increasing numbers of customers will seek to supplement their retirement income by releasing some of the equity in their homes. We expect to write over £100m of lifetime mortgages this year and increasing amounts thereafter.”

Nigel Wilson, group chief executive, said: “We are constantly developing, evolving and streamlining our business to deliver better value products for customers and better returns for investors. We have set a high bar for management actions and performance including our cost reduction target of £80m this year. “

donia.o’loughlin@ft.com