Legal & General has played down the impact of the Budget changes, saying it expects its growth in its bulk transfer annuity business to more than offset the reduction in individual policy sales.
In its first quarter results, the company unveiled record net cash, annuity and protection sales. This included bulk purchase annuity premiums surging to £3.05 billion on the back of its £3 billion deal for the ICI pension fund, up from £357 million in the same period last year. Individual annuity sales fell by 40% from £405 million to £244 million, which included £15 million of cancellations immediately after the Budget. L&G said it expects the market to halve this year and next as its colours to the bulk annuities mast. Overall, total annuity assets rose by 15% to £38.3 billion.
Total net cash generation was up 21% at £301 million with operational cash generation up 6% to £297 million.
The insurer also welcomed the government’s capping of charges on auto-enrolment default funds at 75 basis points, saying it expects to benefit as it already run schemes with a cap of 50bps.
Elsewhere, Legal & General Investment Management (LGIM) saw its assets under management rise to an all-time high of £463 billion on net inflows of £3.8 billion.
Group chief executive Nigel Wilson (pictured) said: ‘We already benefit from favourable demographic trends; we have economically and socially useful products for customers; and with our LGIM economists forecasting 3% plus economic growth in the UK and US, we are excited about the prospects for our business.
‘There is strong demand for our pension de-risking and protection products in both markets - the £1.8 trillion of UK DB liabilities will provide substantial future business. We believe the UK DC market will grow from around £250 billion today to £3 trillion by 2030. LGIM's recent agreement to acquire Global Index Advisors (GIA), a US based DC provider will accelerate our US growth.’