European insurance giant Aegon became the latest company to announce its intention to launch into the UK's crowded bulk purchase annuity market yesterday, targeting the closed final salary pension funds of small and medium-sized companies.
The news came as Britain's largest life insurer, Aviva, which operates under the Norwich Union brand in the UK, conceded that it had not yet completed a single deal in the market due to the intense pricing competition.
Aviva's executive director, Philip Scott, said the group had begun quoting in the market, but had been unwilling to take on deals unless they met the group's profitability targets.
Earlier this month, Prudential - which until recently had a duopoly with Legal & General in the bulks market - also conceded it was writing less business as a result of the intense competition.
A raft of company's have launched into the market over the past year, including Paternoster and Synesis Life, run by former Prudential executives Mark Wood and Isabel Hudson respectively.
In spite of failing to break into the bulks market, Aviva published a strong set of third-quarter results yesterday, with worldwide sales up 22 per cent for the nine months to the end of September.
Profit margins also increased marginally over the period from 3.9 to 4 per cent.
The results were driven by a particularly strong performance in the UK, which was sparked by changes to the pension regulations in April. Outside the UK, the group struggled in both the Netherlands and Spain, where the savings markets have contracted over the past few months. Nevertheless, total European sales were still up 7 per cent.
Mr Scott said the poor performance in the Netherlands was due to a change in tax rules, while the Spanish savings market has suffered due to the continued runaway growth in the property market.
The group said it is on target to complete its acquisition of US life insurer AmerUS by the end of the year, and said it was now focusing on organic growth.
However, Mr Scott said the company would continue to consider smaller bolt-on acquisitions and seek new distribution agreements.Reuse content