UK pension annuity sales up. We still need best UK pension annuity rates. However… life and pension sales have not held up so well, and, in fact, have slumped somewhat. Sales of UK life and pensions contracts have slumped generally as consumers limit expenditure on insurance and savings to focus their dwindling disposable incomes on debt. Researchers, Fitch Ratings, compared first half-year sales for last year with this year across six UK insurance companies. The present value of overall new business premium fell 24% from around £31bn to £23bn for Aviva (was Norwich Union), Friends Provident, L & G, Lloyds banking Group, Prudential and Standard Life. AXA and AEGON, leading european insurers, which report sales on an annual premium equivalent (APE) calculation, took drops of 17.7% and 22.5%, respectively.
These lower sales figures represent only a part of the picture. While they reflect how much business is coming into an insurance company, they fail to show how much business is leaving. Net flow business numbers published by AXA indicate in the first half of this year, AXA UK had a net outflow of £255m, for example. In spite of this overall drop in sales, companies’ ability to adapt to the new market conditions mean some have fared a great deal better than others as the recession we are witnessing has impacted on different product ranges differently. Many have done well with pension annuity sales.
Pension annuity sales are relatively resilient to the general economy because they are bought by customers with pension funds that have to be converted to annuities on retirement (hopefully with the best pension annuity rates), according to Fitch, with the steady flow of retirees maintaining sales levels for large annuity providers such as Prudential and L & G. Indded, many companies believe the higher yields that were available in the first half of this year on the corporate bonds that they bought to back pension annuity sales will translate into higher profits.
