Pensions  

Individual annuity falls for Partnership

Adviser engagement with customers helped Partnership Assurance Group to shore up its medically underwritten bulk annuity business, despite overall falls of individual annuity sales.

Steve Groves, chief executive for Partnership Assurance Group, said advisers’ work with clients had helped clients to engage more with their pensions.

He said: “Key lead indicators including quote volumes and adviser engagement with customers have increased in recent weeks. Widespread market commentary and adviser feedback has been helpful in promoting a strong case for annuities and their role in retirement income planning.”

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His comments came as the group saw its individual annuity sales fall from £200m in the first quarter of 2014 to £54m a year later.

In a trading update for the three months ended 31 March 2015, Partnership also revealed defined bulk annuity sales of £24m, compared to £34m a year before.

The company achieved £99m in total new business for the quarter, down from £254m in the first quarter of 2014.

According to Mr Groves, there is a strong high-quality pipeline, which supports confidence in a previously announced target of at least £200m of medically underwritten bulk annuity sales in 2015.

Analyst

Barrie Cornes, analyst for Panmure Gordon, said: “I am a believer in Partnership. It’s about the valuation, which is low, the shares are at a discount to their embedded value, and while the market envisages individual annuity business to be down at about 75 per cent, the size of the pensions pie is increasing dramatically, with the switch from defined benefit to defined contribution. So while individual sales are low now, I believe it will accelerate.

“Partnership is writing a lot of bulk annuity business and it will not be long before this is greater than individual annuities. Whatever people say about Lamborghinis, we believe people will want an income that covers their basic needs – their lighting, their heating, and to be covered for life. The balance will be used for drawdown.”