Despite the drop, the news provides some reassurance to the sector that the impact of the Budget on insurance companies could be less than many feared.
But Standard Life chief executive David Nish criticised the way the Government communicated the changes that effectively mean pensioners will no longer be forced to use their savings pots to buy an annuity that provides an annual income. The change takes effect next April.
Mr Nish said: "There was a reduction in annuity sales of up to 50% in the weeks after the announcement."
He played down the likely hit to the group, noting that annuities contributed just 6% of operating profits last year.
"The impact on our overall profitability will be small," he said.
The company calculates that £45m of last year's £750m of operating profit came from annuity sales.
Mr Nish insisted he favoured the reforms.
But he added: "If there was anything that was disappointing, how the communication was done post the Budget gave you a sense that annuities were not products that would exist in the future which is very much not the case. They are very valuable products for people in many circumstances."
He said the industry was still uncertain about the long-term impact of the changes. Rivals such as Prudential, Legal & General and Aviva are more heavily involved in annuities than Standard Life.
Paul Matthews, chief executive for the UK and Europe at Standard Life said that many customers are deferring decisions until next year when the reforms come into effect.
Edward Houghton, analyst at Bernstein Research, said that Standard Life is well-positioned to pick up money from those being brought into the pensions system by auto-enrolment and, with annuities reform, could keep them for longer.
"With a large in-force pension book, the group has a good chance of retaining these flows now that all pensioners are able to choose how to deploy their pension pots at retirement," he wrote in a note for clients.
Andrew Sinclair, analyst at Bank of America-Merrill Lynch, said: "Standard Life is well-placed to retain pension assets and capture savings flows as a result of the changes announced in the recent Budget."
Standard Life said that its assets under administration grew 1.5% in the first quarter of the year to £247.8 billion, driven by net inflows of £2.4bn.
The flow of assets was down 14% on the same period last year although Standard Life pointed out that this was at a time when Standard Life Investments was taking £1bn a month for its popular multi-asset GARS offering.
SLI took £2bn of third party net inflows, of which 80% were from overseas. It is preparing to take over Glasgow-based Ignis Asset Management once regulators approve the £390m deal.
Mr Nish said: "The acquisition of Ignis enhances our strategic positioning through deepening our investment capabilities and broadening our third party client base."
Mr Nish said the company is benefiting from the roll-out of pension changes that require employees to opt out of workplace schemes, having picked up 400 schemes since December.
Mr Nish said: "We are seeing continued demand from larger employers and strong interest from the significant number of SME (small and medium-sized enterprises) businesses who will implement pension schemes over the next few months under auto enrolment."
Ben Bathurst, analyst at Nomura, said: "We regard Standard Life as being well positioned to deliver growth in assets and earnings, particularly through SLI and UK new retail."
But investors responded cautiously, sending Standard Life's shares down 3.8p or 1% to 382.2p.