Aviva annuity sales hit by pensions reform
2nd June, 2014
Market leader Aviva has described its performance as 'calm and stable' despite a slump in annuity shares and a notable decline in its UK life insurance business.
George Osborne's pension shake-up, combined with the insurance firm's decision to sell fewer high-margin products, resulted in a 21 per cent fall in annuity sales for the first quarter of 2014, whilst the new business annuities’ value was 43 per cent lower.
Aviva's chief executive, Mark Wilson, hopes to combat the fallout from the chancellor's reforms allowing retirees to draw on their pension pots by targeting the market for mid-sized bulk purchase annuities. The government's recent pension overhaul removes the need for some clients to compare life insurance quotes as they are no longer obligated to purchase an annuity to access finances.
Mr Wilson announced Aviva’s plans after a sluggish UK performance for the EDP Top 100 company was offset by a strengthening demand overseas. Mr Wilson described how a 'polar vortex' in Canada had dealt a £40 million blow to the general insurance business, and how firms in the UK had paid out £60 million as a result of January and February’s storms and severe flooding.
Aviva's first quarter results saw an operating capital generation of £0.4 billion as the insurer continues with its expenses reduction programme. The firm has called off numerous overseas ventures since March 2014, including disposing of its Turkish insurance business and a South Korean joint venture, as well as embarking on a hugely significant Italian business restructuring.