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Legal & General to sell annuities to Prudential pensions savers

Legal & General to sell annuities to Prudential pensions savers
FILE PHOTO: The logo of Legal & General insurance company is seen at their office in central London, Britain, March 17, 2008. REUTERS/Alessia Pierdomenico/File Photo -
Alessia Pierdomenico(Reuters)
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LONDON (Reuters) – British insurer Legal & General <LGEN.L> will offer annuities to Prudential <PRU.L> pension savers in a deal it expects will increase its 2020 annuity sales by 15%, L&G said on Friday.

Legal & General is one of the biggest players in annuities in Britain which offer pensioners a fixed income for life. Prudential pulled out of the annuity market in early 2017.

Prudential pension policyholders who had been promised a guaranteed annuity rate will from Nov. 1 be “introduced” to Legal & General, who will take over the obligation of providing their annuities, L&G said.

This follows similar deals between L&G and Aegon <AEGN.AS>, Swiss Re <SRENH.S> unit ReAssure and Sun Life Financial of Canada <SLF.TO>.

The market for individual annuities has been in decline since the British government gave pensioners more choice about how to use their pension pots in 2015.

But L&G said its individual annuity sales had risen by 47% in the first half of 2019, to 497 million pounds.

Britain’s markets watchdog has previously flagged concern about mis-selling of annuities, particularly to people with a reduced life expectancy.

L&G will “compare to whole market to see if the rate can be improved on, assisting customers to obtain a better rate if one is available”, it said.

L&G is also a big player in bulk annuities, which involve taking on the risk of company defined benefit, or final salary pension schemes.

It agreed a 930 million pound bulk annuity deal with Tate & Lyle <TATE.L> this week.

(Reporting by Carolyn Cohn; editng by Emelia Sithole-Matarise)

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