US annuity sales head for record year…
New life settlements trading platform set for
Standard Life launches green initiative…
Zurich Financial expands Italian reach…
Qatar grants ALICO retail licence…
US annuity sales head for record year
Individual annuity sales in the US are heading for a new annual
record in 2007, predicts LIMRA International. The financial
services association’s optimism is based on sales in the first nine
months of 2007 that came in at $189.4 billion, a 6 percent increase
compared with the corresponding period in 2006. Variable annuities
(VA) set the sales growth pace during the first three quarters of
2007, increasing by 14 percent compared with the first three
quarters of 2006 to $136 billion.
“Variable annuity sales are near certain to come in at record
levels for 2007,” said LIMRA’s annuity research analyst, Dan
Beatrice. Notably, VA sales of $46.4 billion in the third quarter
of 2007 were up 23 percent compared with the same quarter a year
Current equity market volatility and a widening gap between
short-term and long-term interest rates have created a favourable
environment for selling VAs, explained Beatrice.
Contrasting with strong sales of VAs, fixed annuity sales during
the first three quarters of 2007 fell 10 percent to $19.3 billion.
Despite this, Beatrice predicted strong fourth quarter fixed
ING exits reinsurance market
Marking its final exit from the reinsurance market, Netherlands
bancassurer ING Group is to sell its reinsurance unit, Nederlandse
Reassurantie Groep (NRG), to US financial services company
Berkshire Hathaway Group for approximately €300 million ($439
ING indicated that the sale of NRG forms part of its strategy to
focus on its core insurance, banking and asset management
NRG was established in 1968 as a result of the merger of the two
main Dutch reinsurance companies at the time. ING became NRG’s
majority shareholder in 1974 and the sole owner in 1991, following
the acquisition of Victory Reinsurance.
In 1993 ING decided to run off NRG, stopping the underwriting of
new business. Since then, NRG’s life reinsurance subsidiaries have
been sold and a number of the remaining insurance liabilities
ING noted that the sale of NRG will result in a capital loss after
tax of about €100 million in 2007.
New life settlements trading platform set for
A new company, Institutional Life Services (ILS), which will serve
as a trading platform for life settlements in the US, is set for
launch in the first quarter of 2008.
Under development since September 2007, ILS was conceived as a
joint venture by US financial services group Goldman Sachs’s
Longevity Markets Group (LMG) unit and National Financial Partners
(NFP), a national network of independent financial advisers.
In December 2007 a third partner, financial service group Genworth
Financial, came aboard as a minority shareholder when it acquired a
10 percent stake in ILS, leaving the founding partners each holding
45 percent stakes.
In a release announcing its acquisition of a stake in ILS, Genworth
Financial said the new company will bring together high-quality
recognised institutional investors and seller representatives to
engage in life settlements transactions adhering to uniform high
standards of practice, including transparency in the bidding
process, disclosure of all intermediary compensation and protection
of personal identifying information.
LIMRA and LOMA merge into LL Global
On 1 January 2008 two of the world’s largest international
financial industry organisations, LIMRA with 800 members and LOMA
with 1,200 members, merged to form a new not-for-profit
organisation, LL Global, Incorporated. The merger follows a vote by
members in December 2007 in which only six LOMA members opposed the
“I am very pleased at the great strength of member support that
this vote shows,” said Thomas P Donaldson, LOMA’s president and
CEO. “Bringing LOMA and LIMRA together has been a long-term vision
for many in the industry.”
LIMRA and LOMA will remain distinct entities and retain their brand
names. LIMRA will continue to conduct research and benchmarking
related to products, marketing and distribution; LOMA will continue
education programmes to develop member companies’ human
LL Global’s function will be to provide a unified management
structure, headed by Robert A Kerzner, LIMRA’s president and CEO.
All members of LIMRA and LOMA are also members of LL Global.
Standard Life launches green initiative
UK insurer Standard Life has launched an initiative that combines
an environmentally friendly appeal and the potential to be a big
cost saver for the company by encouraging customers to receive
their annual pension statements online instead of in the post.
Backing the initiative, Standard Life has pledged to plant a tree
for each of the first 10,000 people who opt for online
Commenting, the insurer’s customer service director for group
pensions, Garry Morrison, said: “Our recent e-mail and text pilot
with our group pensions customers proved highly successful, so
making annual pension statements available online is a logical
progression. I hope the incentive of planting a tree for the first
10,000 customers choosing this new method will encourage as many
people as possible to change to the new service.”
According to Standard Life, it mails over 3.2 million pension
For its pension statements tree planting initiative, Standard Life
has teamed up with Trees for Life, a charity dedicated to the
regeneration of the Caledonian Forest in Scotland.
Paternoster in record-setting form
Paternoster, a UK insurer specialising in defined benefit pension
scheme buyouts, ended 2007 in fine style, setting two new records
for pension schemes buyouts in the UK.
The first new record involved the acquisition of £150 million ($297
million) of pension scheme assets and liabilities from UK oil
exploration company Eni Lasmo via the biggest yet online auction of
a UK pension scheme. Consultancy Mercer acted as adviser to the
scheme’s trustees and managed the process from an original approach
to insurers, overseeing the scrutiny of their capabilities and
facilitating the online auction.
Commenting, Mercer principal Stuart Faloon said: “This online event
is the largest that has been conducted in the UK to date, and was
one of the most challenging and most productive in terms of savings
produced for the client. The event stimulated a substantial amount
of bidding activity during the negotiation process.”
Rounding off 2007, Paternoster followed up its online success by
acquiring pension liabilities worth about £800 million from
shipping line P&O. This deal represents the largest disclosed
pension scheme buyout in the UK.
UK insurers dragging their feet on Solvency
Insurers that delay preparation for the introduction of the
Solvency II, the European supervisory standard that comes into
force in 2012, could be doing themselves a distinct disservice,
cautions consultancy Watson Wyatt (WW). And judging from findings
of a survey undertaken by WW, many UK insurers qualify as
According to WW, of 30 UK insurers surveyed 40 percent said they
were not actively engaged in preparation for Solvency II but were
instead waiting for requirements to take better shape. WW’s global
head of risk and value management services, Mark Chaplin, noted
that WW has been working with a number of leading European insurers
on the implementation of their economic capital frameworks and is
aware that many other companies are holding back from initiating
Solvency II or economic capital projects.
Insurers delaying preparation work in key areas such as management
information systems to support day-to-day corporate decision making
run the real risk of “nasty surprises” later in the process and may
find themselves at a competitive disadvantage to those taking
earlier action, warned Chaplin.
MERGERS AND ACQUISITIONS
Zurich Financial expands Italian reach
Zurich Investments Life, one of Swiss composite insurer Zurich
Financial Services’ (Zurich) two Italian units, is to acquire
Italian life insurer DWS Vita from a unit of Germany’s Deutsche
Bank for $140 million.
According to Zurich, DWS Vita has technical reserves in excess of
$1.4 billion and achieved net written premium income of about $50
million in the first six months of 2007.
Zurich stressed that the deal would further strengthen its
distribution relationship with Deutsche Bank. For the past five
years, life insurance products of Zurich Investments Life and
Zurich’s other Italian unit, Zurich Life Insurance Italia, have
been distributed in Italy through Deutsche Bank branches in Italy.
A similar distribution arrangement exists between DWS Vita and
Finanza & Futuro Banca, Deutsche Bank’s network of some 900
financial advisers in Italy.
“The acquisition of DWS Vita reinforces our strong global
partnership with Deutsche Bank, and provides an additional
successful distribution channel,” said Zurich’s CEO, global life
insurance, Paul van de Geijn.
EMC speeds things up at Standard Life
Over 1 million items of mail flow through UK insurer Standard
Life’s document services department each year. That mail is now
flowing significantly more quickly and at lower cost following the
installation of a mail automation system supplied by US information
management and storage technology vendor EMC.
The system, EMC Captiva InputAccel document capture and dispatcher,
was selected by Standard Life to reduce the amount of time and
effort required to identify and route mail to the departments at
its primary office, which is located in Edinburgh.
“This [automated] recognition technology will allow us to route a
large proportion of documents, applications and sales orders
automatically instead of staff having to look at the document on
screen and decide where it goes,” said Standard Life’s change
consultant, Gerry Timoney.
He said that this gives staff immediate access to information,
enabling them to make decisions based on up-to-date data.
“The success of this project to-date has inspired us to roll out
additional projects within document scanning and retrieval
services,” added Timoney. According to EMC, this will enable the
insurer to automate up to 90 percent of its business process.
Allianz hails German marketing alliance
A marketing alliance between European insurer Allianz’s insurance
agencies and its subsidiary Dresdner Bank in Germany chalked up
300,000 new customer gains for the bank in 2007, bringing the total
since the alliance was forged in 2005 to 1 million.
“The 1 millionth banking customer stands for the success of our
integrated financial services provider model,” said Andree
Moschner, member of the board of Dresdner Bank responsible for
customers and products. He added that with the assistance of
Allianz, Dresdner Bank’s customer base now stands at almost 6.4
Allianz operates 10,000 agencies in Germany, while Dresdner Bank,
which also markets Allianz’s insurance products, has 900 branches,
the largest branch network of any private bank in Germany. In
addition, in February 2007 Allianz began rolling out banking
agencies staffed by a permanent Dresdner Bank adviser and Allianz
insurance representatives. About 120 of these agencies have so far
“The collaboration is working marvellously,” said Dresdner Bank
board member Andree Moschner. “Our customers see our combined
offerings as an attractive service.”
Qatar grants ALICO retail licence
American Life Insurance Company (ALICO), a unit of composite
insurer American International Group, has been granted a licence by
the Qatar Financial Centre (QFC) Regulatory Authority to operate a
retail life insurance business in the Qatar Financial Centre. ALICO
is the first life insurance company to receive an expanded licence,
which is in addition to a wholesale life insurance licence first
obtained in February 2007.
“We are pleased to have been granted this expanded licence by the
QFC Regulatory Authority,” said Joyce A Phillips, ALICO president
and COO. “The regulatory approval allows ALICO the opportunity to
expand its wholesale and retail life insurance services that are
offered through the vibrant financial hub currently at the heart of
Qatar’s dynamic economic growth.”
ALICO has been operating in the Middle East since 1952, has
regional offices in the Dubai International Financial Centre and
maintains a presence in 14 territories across the region.
INITIAL PUBLIC OFFERS
China Pacific Life debuts in grand style
China Pacific Life (CPL) got off to a flying start on 25 December,
its first day as a listed company on China’s Shanghai Stock
Exchange. According to China’s official news agency, Xinhua, the
Chinese composite insurer’s share price ended the day up 61 percent
compared with the price at which its shares were placed during an
initial public offering (IPO) that raised CNY29 billion ($4
In the IPO, CPL issued 1 billion shares with 300 million shares
available for institutional investors and the remainder for online
subscriptions from individuals. The IPO was priced at CNY30 per
share and attracted applications totalling CNY2.8 trillion.
CPI was founded in 1991 and ranks as China’s third-largest life
insurer, boasting a market share of 9.5 percent in the first half
of 2007, and its second-largest general insurer based on a market
share of 11.6 percent in the first half of 2007.
CPI’s life insurance operation generates about two-thirds of its
total premium income. CPI employs a total of almost 200,000 sales