Individual annuity sales were £99m compared with £244m in Q1 2014, and bulk annuity sales dropped from £3.1bn to £655m.
L&G had predicted a 50% drop in annuity sales, and have since focused on other products such as equity release and lifetime mortgages to offset losses.
As a result, L&G managed to increase total assets by 17% to £736.8bn in Q1, while operational cash rose 11% to £330m.
Alongside new products developed for the post Budget retirement landscape, in March 2015 L&G acquired Newlife Home Finance Limited, a provider of lifetime mortgages. L&G believes that increasing numbers of customers will seek to supplement their retirement income by releasing some of the equity in their homes, and expect to write over £100m of lifetime mortgages this year.
Nigel Wilson, Group Chief Executive, said:
“Legal & General’s cash generation in Q1 of 2015 was a record, operational cash of £330m was up 11% year on year. Cash is driven by our stock of assets and premiums, which we have grown strongly and consistently across our businesses. LGIM assets increased 17% to £737bn, annuity assets increased 19% to £46bn and direct investment increased 62% to £6.3bn.
"We are constantly developing, evolving and streamlining our business to deliver better value products for customers and better returns for investors. We have set a high bar for management actions and performance including our cost reduction target of £80m this year.
"Our business is aligned to long term macro growth trends. We are adapting well to regulatory and political challenges, for example, managing the switch to 'pension freedom' with a new range of cash and retirement products, which now includes lifetime mortgages. The Group is benefiting as we leverage our leading position in pension de-risking, selectively expand our international footprint in the US and Asia, and invest in the future success of the UK through our partnership in Media City in Salford and entry into the private rental sector in 2015.”
