Prudential and Standard Life have decided to delay the launch of their new variable annuity products. Standard Life delayed its third-way annuity product last week putting its summer launch back to the end of the year and Prudential promised to deliver next year despite a 2008 date previously being set.
A conclusion: the variable annuity market will become much more significant in due course but it may take a while to educate the customers. There isn’t much downside to delaying a little and getting things right.
Variable annuity provider Lincoln has said it was disappointed at Standard Life’s decision to delay the launch and welcomed more products and further challenges to traditional retirement products.
The arrival of variable annuities suffered a further blow after a £150 million hedging mistake which meant 40% of the guarantee was not covered hit Old Mutual’s profits. The South African insurer had to increase capital reserves to cover the error but still managed profit increases of 3% to £745 million on an IFRS basis in the six months to 30 June.