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Partnership turns to Rothschild as annuity sales slump

Partnership turns to Rothschild as annuity sales slump

Partnership Assurance has formed an alliance with Rothschild as annuity sales came under pressure in the wake of the Budget.

The investment management agreement signed with Rothschild involves an investment of £150 million in commercial mortgages, which Partnership said further diversifies the investment portfolio.

‘Partnership will benefit from Rothschild's extensive experience of managing this asset class and Rothschild will co-invest alongside Partnership,’ the group told the stockmarket.

There has been pressure on Partnership to broaden its business model  since chancellor George Osborne scrapped the requirement to buy an annuity on retirement in his March Budget.

The impact of this on Partnership was evident in its half-year numbers as annuity sales slumped to £334 million in the six months to June, versus £590 million for the corresponding period in 2013.

The group has undertaken a major cost-cutting initiative, which is expected to generate savings of £21 million in 2015.

Partnership chief executive Steve Groves (pictured) said: ‘We continue to see significant disruption in the individual annuity market as a result of the Budget, however, despite this uncertainty, we are continuing to focus on a long term strategy, based around our core competencies, which is intended to deliver a stronger and more diversified business over time.

He added: ‘We have taken decisive action to manage our cost base in light of the disruption and will continue to maintain pricing discipline and only write business that is economically attractive.

‘Significant uncertainty remains regarding the long term impact of the Budget proposals, but I believe our strategy will help ensure Partnership is well-positioned for the evolving retirement market.’

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