Insurers suffer grim Budget day over fears about loss of annuity business while investment platform firms prosper

19th March 2014

The Budget has seen the share price of UK insurers plummet while specialist Isa providers have seen their shares rise. Generally those insurers which have suffered most are those with a large annuity book.

Specialist insurer Just Retirement lost around 30% falling to 174p falling 93.50p. At time of writing Legal & General had fallen by 199.50p or around 13.5%. Resolution, which owns Friends Life had lost 306.60p or around 12.5%. Standard Life fell to 345.50p or around 5.45% and Aviva fell to 485.60p or around 7%.

Adrian Walker, retirement planning manager at Skandia, part of Old Mutual Wealth says: “A quarter of annuity sales are under threat as a result of changes to single pot triviality rules. Today’s budget announcement confirmed that consumers with pension pots of up to £10,000 are able to access their savings without having to buy an annuity. Our analysis of ABI data suggests that around 25% of annuity sales are currently for pension pots of less than £10,000.”

Both Standard and Aviva have significant investment platform business which may compensate for the possible loss of annuity business.

Standard Life’s share price had fallen by 3.7 per cent, Aviva’s share price had fallen by 7.4 per cent, and Prudential had fallen by 2.6 per cent. Shares in Friends Life parent Resultion Limited fell by 7.3 per cent late on Wednesday afternoon.

But the Budget brought good news for specialist Isa platforms. One of the biggest risers on the FTSE is Isa specialist and fund platform Hargreaves Lansdown which has jumped by 108p to around 1,410.00p.

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