Zurich Life has blamed a drop in its bond business on the impact of the Retail Distribution Review (RDR) - as it reveals a 42% fall in operating profits.
Zurich Life's Annual Premium Equivalent (APE) - where sales are estimated by taking the value of regular premiums - shrank by 14% to £651m due to the negative impact of the RDR on the firm's retail bond business, it said.
The closure of Zurich's Unitised Fixed Rate Bond (UFRB) product also played a part, although the performance was better than expected as the APE was boosted by its Corporate Savings (ZCS) business attracting new schemes in the second half of 2013.
Underlying profitability remained strong, Zurich said, due to the positive impact of year on year expense savings and the recovery of financial markets.
The value of new business was down 13% at £107m but exceeded expectations due to strong growth in the protection business.
The new business margin remained stable at 16.4%, which reflected the insurer's business mix with increased levels of higher margin corporate and retail protection business compared to the same time last year.
Zurich UK Life CEO Gary Shaughnessy said: "2013 was a year of successful transformation for Zurich UK Life following the regulatory reforms of the market [and] we are pleased with how our insurance businesses are growing and their underlying profitability.
"In particular, our core Protection businesses have grown rapidly.
"Along with our ease-of-business, our focus on protection and strong distribution partnerships, I believe a key factor in our growth has been a ‘flight to quality' with advisers and consumers aiming to invest in policies with companies that have advanced products and strong balance sheets to pay claims."
Zurich Life paid out more than £531m in claims in 2013 and accepted 94% of claims for both retail income protection and critical illness policies.
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From 6 April 2019