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Insurers AIG
and Aegon have announced that they are entering the UK bulk annuity
market, threatening Prudential and Legal & General’s dominant
positions in the marketplace.
Dutch
insurer Aegon announced that it would launch in the market in the
fourth quarter of this year and specialise in small and medium-sized
annuity deals. Otto Thoresen, chief executive of Aegon’s UK
business, said it would focus on bulk annuity deals with liabilities
of about £50m to £200m. This new line of business is
expected to help the provider reach its target of achieving a 20%
margin on new business by 2010.
Thoresen added that its group annuity capability would “very
importantly” bring greater choice to corporate customers in
a market currently
dominated by just a few players. “We are optimistic about
what we
can achieve in this growing market,” he said.
In a separate move, AIG Life is extending the experience it has
acquired in bulk annuity provision in markets worldwide to the UK.
It has teamed up with specialists Higham Group and Pensions Management
Limited to deliver its new offering. Higham is providing behind
the scenes technical support while Pensions Management Limited will
help ensure the smooth and efficient long-term administration of
the insurer’s immediate and deferred bulk annuities.
The move into the business of bulk annuities is considered potentially
lucrative and is not being restricted to insurance companies. Synesis
Life, a provider of bespoke solutions to the pension and annuity
liabilities market-place, has just announced it has secured backing
from JPMorgan, Royal Bank of Scotland and global private equity
firm Warburg Pincus. This, it said, will enable it to accept
£7-10bn worth of liabilities over the medium-term.
The new insurer, which was set up by three former senior Prudential
executives Isabel Hudson, Mark Duffy and Jay Shah, intends to establish
itself as a leading acquirer of medium to large annuity portfolios
from UK insurance companies and pension funds. Initially, it will
target insurance annuities as it believes this segment of the market
offers the most immediate oppor-tunities for growth.
As the bulk annuities market expands the interest in this line of
business is likely to see more players follow suit.
- Pensions
Age May 2006
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