Prudential is to withdraw from the equity release sector in the first quarter of 2010 after deciding to deploy capital to other parts of its business.
The insurer will stop writing new lifetime mortgage business but it has pledged to continue to service its 14,000 existing customers. It hopes to redeploy the 100 affected staff to other parts of the business.
Prudential is the latest in a long list of equity release providers to pull out of the market. Coventry Building Society, Saffron Building Society and Northern Rock have all withdraw from the sector in recent months. The decision leaves Aviva, Just Retirement, and LV= as the main players in the market.
Barry O'Dwyer, director of retail life and pensions at Prudential, said it believed there were other areas of the retirement savings and income markets where there were attractive returns on capital.
He explained: "We are now placing an even greater emphasis on our disciplined use of capital and cash and playing to the core strengths of our business. For lifetime mortgages, a significant cash expense is incurred up front in acquiring new business and the payback period on capital employed is long. We have concluded that this is not sustainable and that we can deploy cash and capital more effectively across other parts of our business."
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