GlobalData figures show that Aviva is already the dominant market leader in a range of key life insurance products in the UK, including critical illness, whole of life, and income protection, and it is set to increase its prominence further following the purchase of AIG Life for £460m ($564m).
GlobalData’s 2022 UK Insurance Consumer Survey found that Aviva was the market leader for whole-of-life products with a market share of 27.0%. Its closest competitor was Legal & General, which had a share of 12.8%. AIG Life was the 10th-largest player in this market with a share of 2.1%. The story is very similar for both critical illness and income protection, where Aviva had shares of 26.6% and 31.0%, respectively, in 2022. In both cases, the second-largest player in the market was considerably smaller (12.8% and 12.7%, respectively). Therefore, this substantial deal will only increase the dominance that Aviva holds in the UK life insurance market.
This highlights Aviva’s recent repositioning to focus on its stronghold markets in the UK, Ireland, and Canada and move away from Eastern Europe, where it has been gradually pulling away in recent years. It also highlights the difficulty facing the smaller players in the market. AIG Life is a very established player within the UK life insurance market; it was the tenth-biggest player in the whole-of-life market and 13th in critical illness in 2022, according to GlobalData.
GlobalData found the number of life insurance contracts declined by 23.4% and the value of premiums by 11.7% in 2022. The difficult environment, combined with the ongoing cost-of-living crisis and inflation, makes this a difficult market in which to operate and make a profit at present. This is emphasised by Aegon UK and Canada Life also exiting the UK life market in April and May 2023, respectively.
Aviva’s dominance in the market allows it to hold a lot more capital and get through tougher periods, though it seems as though the market will get less competitive in the short term.
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