Aviva takes 40% hit to value of annuity business

Aviva UK has reported a 21% drop in the value of new life business it wrote in the first half of the year, mainly due to a steep fall in annuity business.

The value of new business it wrote in the first six months of the year was £177m. This is down from £224m in the first half of last year. Aviva said this was primarily due to a 41% reduction in the value of new annuity business. Value of new business gives an indication of future cash flows. UK insurers are reporting heavy falls in their annuity sales following the government's radical overhaul of pensions announced in the March Budget - which effectively swept away the need for retirees to by an annuity. Overall the insurer's UK life business grew its operating profits by 8%...