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)