Partnership saw operating profit slip to £18m for the first half of the year, compared to £33m during the same period in 2014, as total new business premiums almost halved year-on-year from £409m to £231m.
The group’s results for the six months to 30 June 2015, published today (11 August), showed that individually underwritten annuities fell from £334m to £128m year-on-year, however defined benefit bulk annuities grew from £37m to £68m over the same period.
The company argued that individual annuity sales are starting to recover following the implementation of the pension freedoms in April, with second quarter sales up by over a third compared with the first quarter, as advisers and customers started to return to the market.
Partnership’s £33m of care annuities sold during the first half was marginally down from the £36m sold in the first half of 2013, while protection sales remained static at £2m.
The group outlined a continued focus on developing innovative products and enhancing existing propositions, with the new retirement account set for a second half launch.
Quote levels for individual annuities continue to increase gradually, but customer behaviour and conversion trends have not yet stabilised, according to the results. “Whilst it is too early to be certain, based on current activity levels, we continue to expect individual annuity sales volumes to grow in H2 15 relative to H2 14 and H1 15.”
The DB annuity market had a slow start to 2015, but market feedback points to trustee and employee benefit consultants activity growing into the second half, stated the report, adding that completions “remain lumpy”.
Steve Groves, Partnership’s chief executive, pointed out that during the first half of this year, they completed the largest individually underwritten DB whole of scheme transaction to date.
“Greater awareness of medical underwriting for bulk annuities among employee benefit consultants and trustees, recent market activity, and our pipeline provide confidence in our ability to achieve our target of at least £200m of DB sales in 2015.
“We remain focused on our clear three-pronged strategy to diversify and grow our business based on the recovery in the core retail market, growth in defined benefits and US care, and opportunities to leverage our intellectual property in product innovation.”
The boards of Just Retirement Group and Partnership Assurance Group also announced today that they have reached agreement on the terms of a recommended all-share merger to create JRP Group.
Chris Gibson-Smith, chairman of Partnership, commented: “Both businesses have at their core a focus on using outstanding intellectual property and underwriting expertise to deliver better value products and improved customer outcomes within defined benefit, UK retail retirement income and international markets.
“This transaction represents a unique opportunity to accelerate the existing strategy of both businesses, which we believe will allow us to deliver better returns to both policyholders and shareholders.”
peter.walker@ft.com
