At the Marketforce future of life assurance conference last week, Cazalet said insurers are almost out of the woods, having been through “extremely testing times”. He said: “The regulator has been strikingly pragmatic and I think deserves a big pat on the back. It has all been done very quietly compared with the fuss in the US.
“There has been an awful lot of uncertainty and that has shown through in the valuations and the dividend announcements and the capital assessments at year-end. There were no right answers as we have never been at these levels before but the FSA has handled it well.”
Cazalet added that visibility over corporate performance has helped the industry get back on track. He said: “The smoke is clearing as market volatility is easing but it has been a real what do we do situation for life companies. We have come through it because of visibility over corporate performance.
“The news may not be good but it does not matter because we have the news. We had the unknown unknowns at one point, then we had the known unknowns and it is that visibility of where we are that is helping things steady down.”
He said market volatility has also affected providers’ ability to give consumers the products they want, particularly guarantees. He said: “Volatility has also been an issue for product design, for example, guarantees have become far more expensive and firms have pulled products. Life offices’ ability to offer consumers what they want has been impaired as well as the impact on capital so it has been a two-way hit.”