Britannia Life managing director Des Hudson is sticking to his guns – he has no doubts that the decision to quit the IFA market was the right one.
No amount of retrospective and encouraging figures, such as those above, can change the fact that cut-throat competition had squeezed the life office's margins to unsustainable levels, says Hudson.
Clearly Britannia was making progress – an endorsement of Hudson's strategy to try and differentiate Britannia's IFA sales team. But the overriding issue when Hudson took over in 1996 was getting costs down.
"The way to do that was to derive more value from the business rather than cutting costs," says Hudson.
In many ways, it appears that Britannia ran out of time. Hudson says: "We realised that new products would have to be priced lower.
"The likelihood was that margins and profits would fall even further in 1997/98."
He pulls no punches in laying the blame on aggressive pricing by "big players, with big pockets who you might say are buying market share".
Britannia Life, with an IFA market share of around 1 per cent, had certainly been under pressure. It slumped to a loss of £13.8m in the first six months of 1996 compared with a £10.3m profit in the same period in 1995.
Hudson says: "We had a successful but small team that was punching above its weight. But the business that it could gather was always going to be under pressure. I could not see any likelihood that the business was going to change for the next three to five years and that meant we were unlikely to make a worthwhile profit."
The scale of the problem was underlined when Britannia looked at product launches including a group personal pension planned for late 1997.
Faced with the options of competing on price or offering a premium product, the life office realised it could not win a price war.
Hudson says: "Even if we adopted a second-quartile pricing strategy, that would have been something like 20 per cent below the current cost of manufacturing."
So is Britannia turning its back on the IFA? Hudson says not. He points out that Britannia Investment Managers is still in the market while the parent building society launched a dedicated intermediary arm, Verso, two weeks ago.
"We recognise the IFA has got an important role to provide and we want to do business with the IFA through BIM and Verso. The Britannia Life decision was consistent with that," he says.
Hudson claims the decision should not be seen as leaving IFAs in the lurch, but is a responsible move. "What IFA would thank me for allowing him to sell a personal pension to a client in 1997 and then in 1999, we have to pull out because we are selling at a loss? That would raise questions from the client about the IFA for being sold that product."