Insurance companies are moving deeper into pensions business to diversify their revenues at a time when firms are under growing pressure from historical guarantees on life policies, research suggests.
Cerulli Associates, which carried out the research, said that it was too early to tell whether insurers’ “expansionist tendencies” will broaden or narrow opportunities for independent managers to run pension assets.
However, the firm said that though larger insurers – which tend to own in-house asset managers are generally better placed to expand into pensions provision – governance standards and pension fund internal rules should ensure not all asset management is brought in-house.
Pensions business offers insurers recurring income and an opportunity to diversify their businesses with generally less onerous capital implications than those attached to traditional insurance products.
For example, Dutch insurers have been the earliest adopters of the Algemeen Pensioenfonds (APF), one of the Netherlands’ prominent vehicles for workplace pensions. Aegon won approval from De Nederlandsche Bank for an APF over the summer, and rival insurers aspiring to have their own include Achmea, ASR, Centraal Beheer, Delta Lloyd, and Nationale-Nederlanden, said Cerulli.
In the United Kingdom, Cerulli finds composite insurers are extending their activities in occupational pensions to plug gaps left by a softening of individual life annuity sales since the products stopped being mandatory for retirees in April 2015.
“As long as doing insurance business remains tough, Cerulli expects Europe’s €8.4 trillion industry to see workplace pensions as a useful ‘Plan B’ to run in parallel to its mainstay,” said Justina Deveikyte, senior analyst at the firm.
©2016 funds europe
