Posted on 10/08/2017 by
Since 2010 the growth in longevity has halved with a one-year increase now taking 10 years for women and six years for men
Legal & General has released millions of pounds it had put aside for pension payments after the rise in life expectancy stalled for the first time in 100 years.
The average age of death has been increasing each year since the First World War, but recently slowed due to an increase in dementia cases, growing pressure on health services, rising social inequality and unhealthy lifestyles.
Having reviewed UK pensioners' mortality rates, Legal & General said that it had released £126m in reserves which would have been used for customers' pensions.
"Death and taxes are the only two things certain in life, and the UK life insurance sector is benefiting from longevity trends not being as onerous as once expected," Barclays' analyst Alan Devlin said, adding the insurer could release a further £250m in the next year and a half depending on future reviews into life expectancy.
The group saw its pre-tax profits rocket 41pc to £1.2bn in the six months to June 30, boosted by a 40pc jump in profits within its retirement unit to £566m.
The ageing population is a key focus for the insurer, which last week stepped into the retirement housing market for the first time by paying £40m for Inspired Villages, previously known as English Care Villages.
Its fund management business was the next best performer, with assets under management up 13pc on a year ago to £951bn as £21.7bn of net inflows poured into its funds, up from £9.6bn a year ago.
Chief executive Nigel Wilson said the business would not be following in the footsteps of rival Standard Life, which is set to merge with Aberdeen Asset Management next week.
"None of these big consolidations have been huge successes so far. We wish them luck of course but actually [in financial services] there's not many great successes," he said. "We're not interested in big M&A."
Mr Wilson said he had very little to worry about going forward, adding that businesses in Britain had been stepping up since the Brexit vote and the company hopes to invest in more start-ups around the country.
However he acknowledged the various uncertainties in the UK, adding that the company could look to replicate its success in the country by expanding in the US.
The firm boosted its half year dividend by 7.4pc to 4.3p a share off the back of the results. Its shares dipped 1.5pc on Wednesday.