The life and pension sector will continue to be a hotbed of merger and acquisition activity, according to Cazalet Consulting's Life 2003 report.
In a round-up of major life offices, principal Ned Cazalet says now could be a good time for Skandia to sell its UK business. He says establishing Skandia Investment Management to provide manager of manager services was well timed to “surf the sea-change” in the IFA business model in favour of outsourcing manager selection.
Cazalet says AMP's HHG arm will start with “very thin solvency cover” and suggests that a radical solution would be to isolate the life business, converting in-force with-profits contracts to unit-linked and floating or selling Henderson Global Investors, including its Australian operations. HHG will include Pearl and NPI and is based on Henderson Global Investors.
He also believes that Abbey is tiptoeing away from product manufacturing and looking more like an administration services provider by sourcing funds and products from outside. He asks whether more of its life companies will stop writing new business and speculates on the future of Abbey National Asset Managers.
Cazalet says Scottish Widows' manager of managers activity is a sensible proposition but says encouraging IFAs to outsource fund manager selection begs questions as to Swip's purpose in the group.
He also considers that Zurich faces decisions over the future viability of Eagle Star as a life office capable of writing new business and predicts more changes for Zurich UK's corporate structure.
Cazalet says: “I see the life and pension sector continuing to be a hotbed of M&A, much activity arising from restructuring, with more companies set to close to new business.”