Aegon sees UK interest in less risky products

By Denny Thomas

EDINBURGH (Reuters) - British demand for guaranteed pension products is expected to rise as investors turn cautious in the wake of a slump in equities markets, a top executive at the UK arm of Dutch insurer Aegon (AEGN.AS: Quote, Profile, Research) said on Thursday.

"What will happen is people will start coming back into the investment market now that the market has stabilised. We are beginning to see activity pick up in the guaranteed products," Aegon UK's Chief Financial Officer Mark Laidlaw told Reuters.

While he expected the recent stability in stock markets to improve investor sentiment, Laidlaw declined to say whether that would boost the company's second quarter performance.

"Equity market volatility is the single biggest driver of investor confidence. I think we have seen some stability now. I think that will help," said Laidlaw, 41.

Aegon UK competes with Standard Life (SL.L: Quote, Profile, Research), Aviva (AV.L: Quote, Profile, Research), and Legal & General (LGEN.L: Quote, Profile, Research) in the UK's 850 billion pounds pension market which is growing at the rate of about 8 percent annually.

Laidlaw said the share of annuities and protection, which include guaranteed products, would go up to about 15 percent of new business this year, from 10 percent last year.

"When the markets only went up, people were probably happy to take naked investment products. What we have seen recently is people starting to realise that markets don't go up necessarily, and as a result more interest in guaranteed products," Laidlaw said in an interview at Aegon UK's Edinburgh offices.

A conventional annuity usually provides a fixed level of income for life, by locking into gilts and high-quality corporate bonds, when an individual exchanges pension saving for a regular income stream.