May 14, 2014 / 9:26 AM / 3 years ago

UK's Partnership Assurance sees individual annuity sales halve

* Q1 New business premiums 254 million pounds

* Underwritten defined benefit bulk annuity sales soar

* Daily individual annuity quote levels half pre-budget level.

LONDON, May 14 (Reuters) - Specialist annuity provider Partnership Assurance has seen its most closely watched indicator of future sales drop by half since the British government announced in March it would stop making annuity purchases compulsory for many pensioners.

In a trading statement on Wednesday, Partnership, which listed last June, said average daily individual quote levels stood at 50 percent of previous levels in the eight weeks since the plans were announced by the government.

The reforms effectively end a captive market for Britain’s life companies selling annuities, which provide an income for life in exchange for a retiree’s pension pot.

Partnership sells annuities to pensioners who are heavy smokers or suffer medical conditions such as diabetes or heart disease, paying out higher rates because they are unlikely to live as long as healthier retirees.

The company said the new policy had caused “significant disruption” to its core business and said it has moved to cut costs while it focuses on developing alternative products.

But while sales of individual annuities have been hit by the reforms, the company said sales of “bulk annuities” which are aimed at pension schemes rather than individuals and were not affected by the reforms, have soared.

The group sold 34 million pounds of underwritten defined benefit bulk annuities in the three months to the end of March, up from 2 million pounds a year earlier. (Reporting by Chris Vellacott; Editing by Greg Mahlich)

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