Aegon says reviewing U.K. annuities business

(Reuters) — Dutch insurer Aegon N.V. said it was reviewing its U.K. annuities business after British pension reform has led to a halving in annuity sales.

Pension changes announced last year and introduced in April mean over-55s no longer need to use their pension pots to buy an annuity, which gives a fixed income for life.

"As part of our on-going review of our portfolio of businesses, and our focus on drawdown and guaranteed products, we have initiated a review of our annuity portfolio in the U.K.," Aegon U.K. Chief Executive Adrian Grace said in an internal memo seen by Reuters.

Providers of more flexible drawdown pensions have reported an increase in demand since the reforms, while specialist annuity providers Just Retirement Group P.L.C. and Partnership Assurance Group P.L.C. agreed to merge last month.

Annuities are also a capital-intensive business under new Solvency II capital rules due to come into force in January, insurance specialists say.

Aegon's shares have fallen more than 20% after the firm said last month it expected a dip in its solvency ratio under the new rules.

Aegon's shares were down 1.7% at 1030 GMT, underperforming a 0.5% drop in European insurance stocks.