Norwich Union has thrown down the gauntlet to the fund management community, saying its with-profits product will take on all comers in the fight for long-term business.
NU Life chief executive Gary Withers told IFAs at last week's Money Marketing Live conference that he sees fund managers' attempts to offer products that aim to mimic with-profits as a compliment to his business.
He said he takes heart from fund managers who do not offer with-profits but are trying to create something like it.
But Withers also said ill-informed media perceptions of with-profits must change and the public must be educated about the product which he said was now better managed, more transparent and able to offer investment flexibility and guarantees.
But Hargreaves Lansdown head of pension research Tom McPhail says insurance companies are pushing with-profits because it is the only option in the investment market that investors cannot get elsewhere.
McPhail says insurance companies are adopting the wrong strategy by pinning their hopes to with-profits because they will not make any profit out of it and inv-estors will look elsewhere.
Withers said: “I am sitting on a huge with-profits fund and have no issue with someone without one trying to create something that looks like it. It is a backhanded compliment. If fund mana-gers create a synthesised with-profits fund, we will compete with our with-profits fund. I question whether what they create will work in other economic environments than the current one.”
McPhail says: “I do not see it in investors' interests going into with-profits or ins-urance companies' pinning their hopes on finding with-profits investors. These days, the insurance companies do not have much that investors can't get elsewhere and with-profits is their unique selling proposition which is why they are pushing it.”