It is no secret that many of the quoted life offices saw their stock plummet when news of pension freedoms broke. Legal & General was no exception.
According to Chris Knight, chief executive of L&G's retail retirement division, the company was forecasting a 75 per cent drop in its annuity business. Mr Knight said: "That's what happened to us. [We went] from £1.2bn [in a] full year before pension freedoms to £300m last year."
What is perhaps more surprising is that this part of the market is starting to grow again. Mr Knight said: "This year in the first half results we were 96 per cent up on last year. We thought the market might disappear altogether, like other companies. We hung around to see what happened.
"It's been a rollercoaster, we're in the upswing at the moment. There are 15m people in retirement and 1m people coming in – there's a lot of demand for it."
Like many, Mr Knight sees annuities as still having a place in retirement, but as part of an overall plan.
He said: "As an example, of all the annuities we set up in 1997, 78 per cent of those are still paying; 20 years later, the vast majority of people are still receiving income. Our oldest customer is 107. That's a level of recurring income for a long time.
"Going forward, the state pension is not really enough to give you an enjoyable retirement. People should be thinking about the minimum they would like as an income when they're old, and when they're not too old to do anything about it.
"If you're 80, there's no way way you can go and work in McDonalds. [The question to think of is:] 'Would I like two times state pension to purchase that minimum, where I don't need to worry?' Buy one or two times state pension income and then you can relax and really enjoy the rest of your money.
"So we're using the annuities to provide that guarantee for yourself and using drawdown for the rest, which is money for the family and some money for treats."
Annuities have been particularly unpopular for pensioners in the past few years, due to low conversion rates and an inability to change one's mind once the initial decision has been taken. Because of this, Mr Knight is encouraging people to take out fixed-term annuities. This is a rapidly growing sector of the business, although from a lower starting point.
Mr Knight said: "One of the things that people worry [about] is you can't change your mind. The thing about fixed-term annuities is you get a capital sum at the end of it and, for example, at 65 or 70, you'll get a small income for the next five years."
As an alternative to annuities, L&G is getting into equity release. In 2015 it bought equity release provider New Life and sales have grown from £200m to £600m in 2016. The equity release market is growing from £1.5bn in 2015 to £2bn in 2016 and is forecast to be £3bn in 2017. L&G's sales in the first half of 2017 are double the same period 12 months earlier.