Insurance giant Legal & General (L&G) has seen its individual annuity sales grow by 22 per cent to almost £1bn in 2019, despite the market being rocked by the lowest ever annuity rates last year.
L&G’s full year results for the period ended December 31, 2019, published today (March 4), showed the company’s annuity sales were up 22 per cent to £970m in 2019, compared with £795m at year end in 2018, and are expected to grow a further 15 per cent in 2020 due its introducer arrangement with provider Prudential.
In September 2019, L&G’s retirement division agreed a deal with Prudential to provide annuities to its customers with guaranteed rates.
The deal means that all guaranteed annuities will be underwritten by Prudential but will be distributed by L&G.
This was the fourth introducer agreement in the annuities market for L&G, following similar deals with Aegon, ReAssure and Sun Life Financial of Canada.
Due to this L&G is now one of the leading players in the UK's individual annuity market and has almost tripled its market share since 2016 (6.5 per cent), with a current market share of 17.2 per cent.
Individual annuities account for approximately one quarter of the insurer’s total annuity assets.
This comes despite annuity rates reaching record lows last year, according to data from Moneyfacts.co.uk.
Income from an average annual standard level without guarantee annuity hit £410 on September 10, 2019, a decline of 10.2 per cent from January 1, 2019.
This was based on income received by a 65-year old with a £10,000 pension pot buying a single life annuity.
This drop meant the average annuity income was 1.2 per cent lower than its previous all-time low recorded in September 2016, following the impact of the EU referendum result.
Before Prudential exited the annuity market in 2016, and Just and Partnership merged, there were more than 10 annuity providers quoting annuities on the open market but now there are only six; Aviva, Canada Life, Hodge, Just, Legal & General and Scottish Widows.
During 2019, L&G looked at making purchasing an annuity easier for savers, which led to the development of Annuity Ready, a whole-of-market retail annuity comparison service.
It also acquired MyFutureNow, a platform which allows savers to trace their lost or forgotten pension pots and provides a single dashboard view of an individual's pension savings portfolio.
L&G saw growth decline in its defined contribution (DC) business with total net inflows of £7.3bn (2018: £8.4bn), driven by its workplace savings business which provides administration and investment services to DC pension plans.
Total assets under management in its UK DC business increased by 33 per cent to £94.3bn (2018: £70.8bn).
The company has seen a 14 per cent increase in customers on its workplace pension platform, with the number of members now at 3.5m.
L&G expects total UK DC assets expected to more than double by 2028 to hit £955bn.
amy.austin@ft.com
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