UK Variable Annuity Launches Hit Snag
August 16, 2008
Both Prudential plc and Standard Life have delayed their planned variable annuity products, although it is unclear why the launch dates have been pushed back, a UK business news service reported.
Prudential plc (not related to Prudential, the U.S. financial services firm) had previously said it would introduce a variable annuity into the European marketplace this year, but is now saying it won’t happen until 2009. Meanwhile, Standard Life said it would launch its “third-way” annuity product at the end of the year, despite having set a launch date for this summer.
David Prowse, senior director in the insurance division at Fitch Ratings, said the delays weren’t cause for concern, according to Citywire. “I would expect the variable annuity market to become much more significant in due course but it may take a while to educate the customers,” he said.
The market for variable annuities with lifetime income benefits has been slow to develop in the UK. Aegon became the first European insurer to launch an American-style VA in 2006, when it came out with its 5 for Life contract.
Aegon’s UK unit announced a new U.S.-style variable annuity in May called “Income for Life” that offers the so-called third way: an income product with more liquidity than an income annuity and less risk than a systematic withdrawal plan.
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