Annuity 

Legal & General hits £10bn annuity sales record

Legal & General hits £10bn annuity sales record

Legal & General achieved a record in annuity sales of £10bn in 2018, due to an increase in individual sales and bulk deals.

According to a market update, the provider's annuity sales increased by 18 per cent to £795m in 2018 - which L&G attributes to a strong second half of the year, due to significant improvements to its enhanced annuity proposition and the expanded capabilities of its sales and marketing teams.

The provider stated it is one of the top three companies in the UK individual annuity market and it has nearly tripled its market share to 19 per cent since 2016.

In the institutional market, as defined benefit pension funds are reaching maturity, there is an increasing demand for risk transfer to insurers, with the market breaking the £20bn mark in bulk annuity sales for the first time.

In 2018, L&G completed £9.1bn of bulk annuities across 40 deals globally – which compares to almost £4bn in 2017 - and one £287m longevity insurance transaction.

FTAdviser reported in September that British Airways agreed a £4.4bn buy-in deal with L&G for one of its DB schemes, the largest bulk annuity transaction ever made in the UK market.

In the equity release segment, L&G made lifetime mortgage advances of £1.2bn in 2018, an increase of 19 per cent when compared to the previous year.

The provider stated that despite the market uncertainty raised by the Prudential Regulation Authority's publication of CP13/18 – which sets out new rules for equity release mortgages – the market grew by 26 per cent to £3.9bn.

L&G has now got a 30 per cent market share, due to its “strong distribution partnerships and relationships”.

Overall, the provider's operating profit reached £1.9bn last year, up 10 per cent when compared to the previous period.

However, L&G’s profit after tax dropped 3 per cent to £1.8bn, from £1.9bn in 2017, when it had a one-off US tax benefit of £246m.

Nigel Wilson, group chief executive at L&G, said the provider’s consistent strategy, market leading businesses, balance sheet strength and high quality people has enabled the company to deliver eight years of compound annual profit growth of over 10 percent.

He said: "2018 saw political uncertainty, asset market declines and slowing economic growth, but we are resilient and performed strongly. We became the UK's first £1trn investment manager, executed a record £9bn of pension risk transfer deals and invested billions in the UK's future infrastructure and cities.

"Abroad, we grew US protection new business annual premiums by 12 per cent and increased international assets by 13 per cent to £258bn.

"We are a globally trusted brand. Our strategy positions us well despite the broader environment, our current trading is strong and we expect this momentum to continue in 2019."

maria.espadinha@ft.com