Aegon UK to quit writing annuities, passes clients to L&G

Added 28th July 2016

The UK arm of Dutch insurer Aegon is to stop writing new annuities from the fourth quarter of this year, and has agreed to pass clients seeking the product onto Legal & General.

Aegon UK to quit writing annuities, passes clients to L&G

Where Aegon’s pension customers have a guaranteed annuity rate or guaranteed minimum pension, these will continue to be honoured but with an annuity set up by Legal & General instead of Aegon, the life insurer said in a statement on Wednesday.

The moves follow Aegon’s decision to sell its £9bn ($11.8bn, €10.7bn) annuity portfolio in two separate deals to Rothesay Life and Legal & General earlier this year.

Aegon has not been an active player in the UK annuity market since 2010 and has said the sale of its portfolio of existing annuities was in order to focus on its platform and protections business.

In announcing the L&G deal, Aegon UK’s chief executive Adrian Grace reiterated the strategy. “Not having been an active player in the annuity market for some time, it made perfect sense to sell our £9bn annuity portfolio, and concentrate on accelerating the growth of our platform and protection businesses," he said.

The moves come as the annuity business in the UK is going through a major upheaval as a result of the government’s pension reforms which granted savers unrestricted access to pension pots, scrapping the need for people to buy an annuity. The changes have brought about a sharp fall in annuity sales.

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Richard Hubbard

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Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.

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