Insurance Companies

What is the future for life insurance companies that don’t do insurance?

More than 50 life companies have come and gone since I joined the industry, along with, I guess, about 150,000 direct sales people. And those companies that are still around don’t do much, or even any, insurance nowadays. What’s more, most outsource their distribution and their investment propositions.  So what is their role in life?  Well the role of Phoenix Assurance and other “closed book consolidators” is clear – use economies of scale, smart financial engineering, and customer retention to provide a decent yield to shareholders. Quilter (Old Mutual, previously Skandia – keep up! ) and Aberdeen Standard (Previously Standard Life) have recently transferred their administration to Phoenix – including my SIPP. It would have been nice to have been informed!

I could go on. But the life companies that interest me are those that still take on risk. I’m thinking L&G, Aviva, and Royal London, plus some of the niche players. And of this bunch it seems to me that Royal London are punching above their weight. Of course they have a platform but I don’t know how central it is to their long term strategy. My guess is that they will sell it in due course. More important, they have excellent protection propositions and are an important player in the pensions and drawdown markets. L&G are also interesting, they have now launched their advice proposition  and I think their brand will resonate positively with the “retirement” market.

The drawdown market, in particular, is massive. And there is scope for imaginative propositions. For example, the Royal London Governed Retirement Income Portfolio  (GRIP) and PruFund. Think risk mitigation if not guarantees. It’s what clients in drawdown need – even if they don’t know it. I just hope the advisers understand these products work!

I think Equity Release to provide income rather than release capital is another opportunity. No coincidence that L&G now have a product.