Legal & General has announced £4bn of retirement new business sales in the first half of 2016, as lifetime mortgage sales overtake annuity sales.
Legal & General Group said its retirement division had experienced strong new business sales in the first half of 2016, with minimal disruption caused by uncertainties over the outcome of the EU referendum.
New bulk annuity transactions totalling roughly £250m were executed in June.
Following the £2.9bn Aegon back-book transaction in May, this brings bulk annuity business executed in the first half of 2016 to £3.6bn, £1bn ahead of the full-year bulk annuity sales figure of £2.4bn for 2015.
In the first half of 2016, lifetime mortgage sales exceeded £200m, meaning these too have surpassed the full-year comparator for 2015, as well as being greater than the firm’s individual annuity sales in the first half of 2016.
In total, sales of £4bn have been achieved in the period across bulk annuities, individual annuities and lifetime mortgages.
Kerrigan Procter, managing director of Legal & General retirement, said political and market uncertainty around the EU referendum did not get in the way of business, as companies or individuals will always need to manage their employees’ or their own retirement.
Bernie Hickman, chief executive of Legal & General Home Finance, said: “Individual annuities still have their place, but customers want more choice in how they fund their retirement, with accessing housing wealth being an attractive option for asset rich, income poor pensioners.”
Danny Cox, chartered financial planner at Bristol-based Hargreaves Lansdown, said: “Brexit dominates the headlines, but L&G says the referendum did not get in the way of business, with minimal disruption to sales.
“The pattern of sales is changing though, with investors and pension providers reacting to both the rock-bottom level of interest and annuity rates and the new choices available under pension freedoms.
“The fall in annuity rates is leading to more and more asset-rich but income-poor pensioners looking to access their housing equity to fund their retirement. For Legal & General, that’s showing up in booming lifetime mortgage sales, which overtook individual annuity sales for the first time in the first half of the year.
Last Wednesday Legal & General cut annuity rates by an average of just under 2 per cent.