Legal & General to sell annuities to Prudential pensions savers

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.

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

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