The report stated that the significant reforms of the pensions industry announced by the UK Government, including removal of the requirement to purchase a pension annuity from April 2015, have resulted in an increasing proportion of customers deferring the decision to convert their pension savings into retirement income.
Pru's retail business saw strong sales across their range of retail investment products, in particular in onshore and offshore bonds, individual pensions and income drawdown, which collectively increased 37%.
These balanced a 47% reduction in individual annuities, reflecting the slowdown in the market following the UK Budget announcement.
Overall retail APE sales of £507 million were only 3% lower than the first nine months of 2013, and increased by 5% in the discrete third quarter on the strength of sales in investment products. Retail new business profit was 22% lower year-to-date, largely due to the reduced sales of individual annuities.
Other retail products including offshore bonds, income drawdown and individual pensions increased by 42% to £142 million. Income drawdown APE sales grew by 128% and individual pensions APE sales increased by 30%.
In total, PruFund assets under management have increased 20% to £10.9 billion since the start of the year.
Corporate pensions APE sales of £117 million were 15% lower, in line with the trend seen this year, mainly due to changes to government sector pension schemes.
Prudential also wrote two additional new bulk annuity deals in the third quarter of 2014, making a total of six in the year-to-date, generating cumulative APE sales of £141 million and new business profit of £88 million in the first nine months.
On 10 November 2014, Prudential Assurance Company Limited announced an agreement to sell its 25% equity stake in the PruHealth and PruProtect joint venture to Discovery Group Europe Limited for £155 million in cash. This transaction created strategic flexibility to participate in the UK protection market.
Tidjane Thiam, Group Chief Executive, said:
“New business profit in our UK life business increased by 28% to £209 million, a strong performance. In our retail business, APE sales are nearly at the same levels as last year, despite the disruption in the individual annuity market, reflecting increased appetite among individual investors for our savings and investments products, particularly our with-profits bonds. Our selective approach to wholesale business has seen us write six bulk annuity transactions in the year-to-date, contributing new business profit of £88 million."
