Pensions  

L&G to write new annuities for Aegon

L&G to write new annuities for Aegon

Aegon will hand all its annuity-writing obligations to Legal & General in October, in a final deal to see the life company exit the annuity market altogether.

The move follows Aegon’s sale of its existing £9m annuity portfolio to Rothesay Life and L&G earlier this year.

Under the new five-year deal, L&G will take over responsibility to set up annuities for Aegon’s pension customers who have a future annuity guarantee - such as a guaranteed annuity rate or guaranteed minimum pension.

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It will also become the “preferred supplier” for those Aegon pension customers who do not have a guarantee. L&G estimated the deal would generate £190m of annuities in the first year.

Aegon confirmed that as a result of the deal, it would stop writing annuities in October.

UK chief executive Adrian Grace said having been an active player in the annuity market for some time, it made “perfect sense” to sell the annuity portfolio and concentrate on accelerating the growth of its platform and protection businesses.

“The deal supports our strategy of focussing on platform growth and providing choice for our customers.”

Ian Gwinnell, a financial adviser and director of All Counties Financial, said Aegon’s decision to exit the annuity market was “probably not a bad move, because they were never competitive within that arena”.

He said L&G was consistently in the “top mix” of annuity providers, making it a good choice.

Mr Gwinnell doubted that other life companies would follow Aegon’s lead in exiting the annuity market, pointing out there was still business to be won, even though demand for annuities was declining.

james.fernyhough@ft.com