Partnership Assurance Group Plc froze hiring and slowed capital spending as the U.K. insurer seeks new revenue in the wake of government plans to overhaul the annuities market.
The insurer joined Just Retirement Group Plc and Standard Life Plc in reporting a 50 percent drop in individual annuity sales since the government’s March budget, according to a statement today. This week, it created an annuity product that allows consumers to cash it in if a better option becomes available and cited an “encouraging” number of future deals to manage company pension plans.
“Partnership has taken immediate action to manage its cost base in the short term, including freezing recruitment, removing contractors, where possible and requiring chief financial officer approval for all capital spend,” the London-based insurer said in the statement. “Although we have continued to see meaningful levels of quote volumes for individual annuities, it is too early to predict the eventual impact of the budget.”
Shares of Partnership have slumped 60 percent since Chancellor of the Exchequer George Osborne scrapped rules that pushed retirees to buy annuities with their pension savings. The stock rose 3.1 percent to 128 pence at 9;52 a.m. in London today after the insurer said more than 70 percent of its existing customers continued with their annuity purchases.
Like competitors, including Legal & General Group Plc and Just Retirement, Partnership reported increased revenue from defined-benefit bulk annuities, where they assume pension liabilities for companies. The insurer reported 34 million pounds ($57 million) of such sales in the first quarter, up from 2 million pounds in the year-earlier period.
Just Retirement this week said it’s cutting jobs as part of a 14 million-pound cost-saving initiative.