UK pensions shake-up throws insurance industry into turmoil

By Chris Vellacott and Jemima Kelly LONDON (Reuters) – Britain's insurers will lose control of a market worth 15 billion pounds ($25 billion) a year under a surprise pension reform announced by the government, and will struggle to make up the hit to profits any time soon, according to analysts. This dismantles a captive market for annuity providers such as Legal & General and Resolution, which will now have to compete for pensions business against other investment products. Their shares dropped sharply on Wednesday, and analysts see little prospect of a rapid recovery. "This radical piece of legislation will destroy profitability in the highly lucrative annuity market, in our view," said RBC Capital Markets insurance analyst Gordon Aitken.