Annuity provider Just Retirement has swung into the red as it counted the cost of pension reforms by Chancellor George Osborne.
The group reported a pre-tax loss of £29.6 million for the year to the end of June, down from a profit of £92.8m a year before.
Just Retirement has agreed a £668.5m takeover of rival Partnership Assurance as the businesses look to shore up their positions in an industry that has changed radically after changes announced by the Chancellor last year.
The reforms allow pensioners to retire without having to buy an annuity - which provides a lifelong income - with their pension pot, giving them more flexibility to spend the money elsewhere.
Just Retirement's latest annual results were the first since the pension reforms came into force.
Sales of annuities, which the group describes as Guaranteed Income for Life (GIfL) products, fell by 57 per cent to £478m.
But the group said fourth quarter sales were up "modestly" compared to the third quarter "showing the ongoing customer need for these key retirement planning products".
It offset the fall with a sharp increase in sales of a different type of product called defined benefit scheme de-risking solutions.
These provide continuing payment to pension scheme members in exchange for an insurance premium paid to Just Retirement by scheme trustees. Sales of these products were up more than five-fold to £608.9m.
Total retirement sales were down 9.9 per cent to £1.15 billion while underlying operating profit fell 11 per cent to £86.4m, during a period when margins were squeezed due to price cuts as sales fell after the Budget changes.
The bottom line pre-tax figure fell into the red after a big loss on investments and a £19.4m hit from one-off costs mainly relating to the development of new products in response to the pension reforms.
Chief executive Rodney Cook said: "This is our first full year set of results since the Budget 2014 pension reforms, and I hope our resilient performance will not be forgotten amid the excitement of the proposed merger with Partnership Assurance.
"Our response to the pension reforms has largely enabled us to replace lost individual Guaranteed Income for Life business with DB De-risking premiums."
He said GIfL sales for the quarter ended on September 30 were now expected to be 25 per cent ahead of the prior period and higher than the same quarter last year.
Sales of the growing DB de-risking products were continuing to strengthen and the group revised up expectations for these on the first half from £300m to £400m.
Just Retirement's planned takeover of Partnership Assurance was announced last month. The group said the merger "will accelerate our existing strategy" and deliver at least £40m of cost savings by 2018.
Shore Capital analyst Eamonn Flanagan said underlying operating profits were better than expected.
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