Legal & General will write all new Aegon annuity business from October as part of a five year agreement.
The move comes after Aegon agreed to sell its £9 billion annuity portfolio to Rothesay Life and Legal & General earlier this year. Legal & General said the deal is expected to generate £190 million of individual annuities within the first 12 months.
Legal & General acquired the £2.9 billion annuity portfolio from Aegon in May, covering approximately 27,000 of in-payment policyholders.
Adrian Grace, Aegon UK chief executive, said: “Not having been an active player in the annuity market for some time, it made perfect sense to sell our £9 billion annuity portfolio and concentrate on accelerating the growth of our platform and protection businesses.
“The deal supports our strategy of focussing on platform growth and providing choice for our customers.”
Stephen Griffiths, commercial director, individual retirement said: “It’s excellent news Aegon have chosen us as their annuity partner, and I look forward to providing Aegon’s customers with great value annuities and excellent customer service.”
Where pension customers have a future annuity guarantee (Guaranteed Annuity rate or Guaranteed Minimum Pension), Aegon said these will continue to be honoured with the annuity being set up by Legal & General instead of Aegon.
The company stated that pension customers without a guarantee will be able to receive an annuity quote from Legal & General as Aegon’s preferred supplier when considering their retirement options.
Legal & General Retirement sales year to date across bulk annuities, individual annuities and lifetime mortgages were £4.75 billion, (£4 billion in H1 2016 compared to £1.36 billion in H1 2015).
In July it announced a £750 million pension risk transfer deal with the ICI Pension Fund, and a 5 year agreement to offer lifetime mortgages to Santander customers.