L&G ‘committed’ to life insurance business

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L&G ‘committed’ to life insurance business

Legal & General will continue building on its life insurance business despite some rivals’ decisions to sell up.

The provider, which runs an insurance as well as investment business said it would not follow the likes of Standard Life Aberdeen, which announced the sale of its insurance arm to focus on asset management in February.

L&G's latest results showed annuity sales had jumped 78 per cent last year with individual annuity single premiums growing from £378m in 2016 to £671m in 2017.

This was partly due to a deal with Aegon, which sees L&G wake up packs presented to clients when they reach retirement age.

The firm is also on Prudential’s panel of annuity providers which it refers existing clients to after pulling out of the annuity market entirely in 2017.

But L&G Investment Management’s (LGIM) assets were also up 10 per cent last year, at £983.3bn.

Chris Knight, chief executive of L&G retail retirement, said: "We have decided after a couple of years stepping back a little that we would invest [in this side of our business] so we did the Aegon deal in 2016 and introduced more competitive rates. Now we are back and running.

"Our target market is not rich people with lots of money, other people are focused on that. In between there is a mass of people that need both [asset management and guaranteed income]."

He added: "The two halves of our business really work together, there is a synergy there which other people are not choosing to have in their group."

L&G believes the annuity market will grow again, having already started to recover from its post-pension freedom crash.

Mr Knight said: "Money that used to come to annuities has gone into cash or drawdown or was just left where it was.

"We believe there is latent demand there. Some people will think at last some of their money has to come back to a guaranteed income."

But he added: "There is a trust issue and it’s up to us to bring that trust back over a long period of time."

Mr Knight said L&G was supporting the economy by having its funds invest in things like infrastructure and other direct investments.

He added the firm was looking for opportunities to grow going forward but any potential acquisitions would need to come "at the right price".

It has been rumoured Prudential is looking to sell some £10bn of its annuities backbook.

carmen.reichman@ft.com