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Warning that life firms could lose over 5bn

Morgan Stanley warns that 5.5bn of life insurers’ investment bond and pension business is under threat due to the growth of wrap platforms.

Leaked internal research says Norwich Union, Friends Provident and Prudential are likely to be the worst hit, with Transact, Old Mutual through Skandia/Selestia, Standard Life and Legal & General through Cofunds the best positioned.

Morgan Stanley says the 5.5bn figure could rise as both existing assets and future business is increasingly moved onto platforms. This figure assumes a tax rate of 30 per cent and a new business pro-fit multiple of 30 per cent and does not include the effect of existing policies left to lapse so new policies can be taken out through a platform.

Morgan Stanley says NU’s lifetime wrap lacks the functionality and breadth of many of its rivals, Friends has a strong service and systems reputation but no traditional strength in the key investment arena and Pru has no clear strategy at present.

The report cites Transact as the benchmark for new entrants into wrap as it is both profitable and proven.

Morgan Stanley says Standard and L&G are the best positioned insurers. It says although Standard’s platform is new, it has the benefit of newgeneration technology and an enviable reputation for service among advisers while L&G is the biggest stakeholder in Cofunds, which has 10bn in assets already.

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