However UK retail new business profit fell by 11%, which Prudential attributed to the reduction in annuity sales and the impact of lower interest rates. Prudential wrote no new bulk annuity business in Q1.
Prudential's Q1 interim management statement said that the slowdown in individual annuity sales continued from 2014. Annual premium equivalent sales reduced from £36 million in the first quarter of 2014, which pre-dated the impact of pension reforms announced in the 2014 Budget, to £14 million in 2015, 61% lower.
The proportion of customers deferring the decision to convert their pension savings into retirement income continued to be significantly higher than in the same period in 2014, as customers awaited the introduction of the pension changes on 6 April 2015.
The statement also said that despite the UK insurance market continuing to be impacted by the introduction of the pension reforms, retail APE sales rose by 8% in Q1, with increased sales of investment products including onshore and offshore bonds, individual pensions and income drawdown partly offset by reduced sales of individual annuities.
On 26 February 2015 Prudential added the PruFund range of investment funds to the Prudential ISA, generating additional ISA sales of £32 million in the quarter (included within other products) and £95 million to the end of April 2015.
In total, PruFund assets under management have increased 9% to £12.6 billion since the start of the year.
Prudential said that it remains too early to discern any meaningful consumer trends from the increase in requests for valuations of pension funds held after 6 April when the new pensions freedom regulations became effective.
The statement also confirmed the exit of Tidjane Thiam as Chief Executive, with Mike Wells replacing Thiam from the 1st May.
Tidjane Thiam, Group Chief Executive, said:
"In the UK, our focus in the life market remains on providing investment and retirement solutions to an ageing but wealthy customer base. Our flagship with-profits product, PruFund, is at the heart of our product offerings. In the first quarter, our retail life sales grew by 8% due to the growing popularity of PruFund-backed product wrappers such as drawdown, pensions and bonds. Retail new business profit of £34 million was 11% lower primarily reflecting reduced volumes of individual annuities following the 2014 Budget changes. We continue to operate with discipline in the bulk annuity market, writing no transactions during the first quarter and one sizeable transaction immediately after the quarter end. Overall, we believe our strategy is working well in the new environment as demonstrated by the encouraging signs of progress so far.
"We were delighted to announce on 1 May the appointment of Mike Wells to replace me as Chief Executive Officer, with effect from 1 June 2015. Mike has an outstanding track record as Chief Executive of Jackson. I am pleased to be leaving Prudential in the hands of such an experienced leader.
"Our strategy is working well, our execution is good, our teams are strong and I leave the Group confident that Mike will provide strong and effective leadership in the continued delivery of value for our customers and shareholders.
"It has been my pleasure and a privilege to lead Prudential."
