Axa says it is increasingly concerned that life companies are “just writing cheques to each other” to win new business.
Executive director Paul Evans says that although the industry is seeing sustained growth in personal pension business, surrender levels remain stubbornly high, resulting in a lot of money simply washing round the industry.
Axa’s first-half life and savings business has increased by 26 per cent to £553m from £438m in the same period last year on an annual premium equivalent basis.
Underlying earnings, excluding Thinc, rose by 76 per cent to £97m from £55m although underlying earnings from its general and health insurance divisions fell by 33 per cent to £83m from £124m due to claims from the January storms and June flooding totalling £115m.
Evans says: “Although we are seeing sustained growth in personal pensions, we are also seeing a sustained level in surrenders. There are substantial outflows of with-profits and personal pension business across the industry. I am getting increasingly concerned that the life companies are just writing cheques to each other. Retention of business is becoming increasingly important.”