Aviva extends Italian reach with
UAV…
Price comparison websites
under
fire…
Honesty is
the best
policy…

UK
annuity providers must hasten delivery…

Standard Life enters discretionary
market…

MERGERS AND ACQUISITIONS

Aviva extends Italian reach with UAV

Italian bank holding company UBI Banca has agreed to sell Aviva a
50 percent plus one share stake in its wholly owned Italian life
insurer UBI Assicurazioni Vita (UAV) for €65 million ($126
million). The deal will increase the number of Italian units
controlled by the UK insurer to nine – six life insurers and three
general insurers.

UAV currently distributes life insurance products via Banca
Popolare di Ancona, one of nine banks controlled by UBI Banca, and
other channels. According to Aviva, UAV will report life insurance
gross written premiums of at least €310 million for the year ended
31 December 2007 and gross technical reserves of at least €2.8
billion.

For Aviva, the partnership with UBI Banca provides access to the
banking group’s customer base of about 4 million and its 1,920
branches. This will represent a significant boost to Aviva’s life
insurance distribution reach in Italy, which is dominated by
bancassurance partnerships that provide more than 90 percent of its
new business sales through about 4,120 branches.

REGULATORY

Price comparison websites under fire

The British Insurance Brokers’ Association (BIBA) has called on the
UK’s Financial Services Authority (FSA) to review its rules for
electronic introductions as they do not cover internet-based
financial product comparison websites. The broker and intermediary
organisation’s call follows a consumer survey conducted on its
behalf that revealed shortcomings of some comparison
websites.

Among BIBA’s concerns was that 84 percent of insurance buyers said
that details of insurance policies offered via price comparison
websites can be confusing and only 6 percent of insurance
comparison website users believe details of what a policy covers
and does not cover are explained fully. In addition, said BIBA, 93
percent of consumers expect insurance comparison websites to be
regulated in the same way as insurance intermediaries.

Commenting on the findings, BIBA’s CEO, Eric Galbraith, said: “I
believe the regulator should now look again at developing more
appropriate regulations, to ensure that consumers are being
afforded suitable protections.” He added that too many people using
comparison websites make a decision based solely on the price of a
policy rather than the protection it offers them.

DISTRIBUTION

Honesty is the best policy

When it comes to selling protection products to consumers in the
UK, insurers can rely on the vast majority of consumers being
honest, according to a survey undertaken by Friends Provident. Of
respondents to the insurer’s survey, 90 percent replied that they
have always told the truth when completing an insurance application
form and generally have very little sympathy for the dishonest
minority.

More than one-half (54 percent) felt that dishonesty should be
rewarded with a complete rejection of a claim, while of those who
felt there should be some payment of a claim only 8 percent felt it
should be a full payment.

Highlighting the need for agents to ensure that customers are fully
aware of a policy document’s contents, one in five respondents said
they would not read all the terms and conditions before they signed
up.

ANNUITIES

UK annuity providers must hasten delivery

UK annuity product providers must improve service standards or face
regulatory compulsion to do so in a few years’ time, assistant
director of the Association of British Insurers (ABI) Helen White
told members of the Prudential Retirement Income Panel. Convened by
UK insurer Prudential, the panel is made up of experts on
retirement and pensions savings.

One of the major service issues highlighted by the panel was that
many providers fail to comply with the ABI’s voluntary Pension
Maturities Statement of Good Practice, which calls for pension
funds to be sent to external annuity providers within 14 days of a
selected retirement date.

On this issue, the head of retirement services at financial
services firm Origen, Nick Flynn, said: “Clients simply do not
understand why it takes six weeks to get their pension. We write to
clients and tell them it takes six to ten weeks and most of our
complaints come because of that letter.”

INVESTMENT MANAGEMENT

Standard Life enters discretionary market

UK insurer Standard Life has entered the private discretionary
investment management business, targeting clients with at least £2
million ($3.9 million) of investable assets of which a minimum of
£1 million must be liquid assets. The service is housed in a new
unit, Standard Life Wealth (SLW), and markets directly and via
independent financial advisers to individuals, charities and small
or executive pension schemes.

According to Standard Life, its SLW unit will give its clients
access to investment techniques previously available only to
institutional investors in Standard Life Investments funds.
Investment techniques, explained Standard Life, are based on
goals-based absolute return strategies’ focus on more accurate
targeting of client requirements, and the management of their
individually constructed portfolios against an absolute return
benchmark.

SLW’s service is available to UK and overseas nationals resident in
the UK, in sterling, euros and US dollars.

Commenting on the launch of SLW, Standard Life’s group chief
executive, Sandy Crombie, said SLW was an important development in
the insurer’s growth strategy and was expected to make a
“significant contribution to our business”.

SLW’s CEO Richard Charnock was appointed in February 2007. He was
formerly with Willams de Broe, a unit of bancassurer ING.

MERGERS AND ACQUISITIONS

Aviva buys Swiss Life Belgium

Sold to Netherlands bancassurer SNS Reaal in November 2007, Swiss
Life Belgium (SLB) is to change hands yet again, this time the
buyer being Delta Lloyd Life, the Belgian insurance unit of UK
insurer Aviva.

Delta Lloyd will pay €135 million in cash for SLB, which was sold
to SNS Reaal as part of a package deal that included Swiss Life’s
Netherlands unit, Zwitserleven Netherlands. The Swiss Life/SNS
Reaal deal was worth between €1.445 billion and €1.535
billion.

According to Aviva, by combining SLB with Delta Lloyd’s Belgian
unit it would achieve a top five position in the Belgian group life
insurance market. In 2006 SLB reported gross written premium income
of €475 billion (10 percent non-life) and a net profit of €65
million. Delta Lloyd reported gross premium income of €300 million
from its Belgian unit in 2006 and total group premium income of €6
billion.

PENSIONS BUYOUTS

Paternoster reports boom conditions

The UK defined benefit pension scheme buyout boomed in 2007 and
will continue its strong growth trajectory this year, predicts
specialist buyout insurer Paternoster.

“The intense period of quotation preparation last summer [2007] translated into a record fourth quarter for the risk transfer of
defined benefit pension plan obligations,” said Paternoster chief
executive Mark Wood. “Once we see full market statistics for 2007
we expect that the market will be more than double 2006
volumes.”

For Paternoster, which Wood founded in December 2005, last year was
one of significant success that saw total assets transferred to it
at the end of 2007 reach £1.54 billion, up from £406 million at the
end of the third quarter of 2007 and £123 million at the end of
2006.

“There is clear evidence of rapidly growing momentum in this
important market,” said Woods, who believes that total volume could
double again in 2008.

COMPANIES

Allianz suffers from subprime fall-out

Providing insight into its 2007 results due to be announced on 21
February, European banc­assurer Allianz has revealed that its
banking units, by far the largest of which is Dresdner Bank, made
negative valuation adjustments of about €900 million on structured
products in the trading book. This left operating profit from
banking in 2007 at €750 million, down 47 percent compared with
2006.

The setback put the brakes on total group operating profit growth,
which Allianz anticipates will exceed €10.8 billion in 2007, an
increase of about 4 percent and far lower than the 29.8 percent
achieved in 2006. A better showing is predicted for net income,
which is expected to rise 14 percent to €8 billion. In 2006 net
income rose 60 percent.

General insurance remained Allainz’s biggest contributor in 2007,
though operating profit at €6.2 billion was largely unchanged from
2006. Operating profit of €1.3 billion from asset management in
2007 was also largely unchanged. Life and health insurance
operations produced an operating profit of, Allianz said, almost €3
billion, up about 15 percent compared with 2006.

REGULATION

Travel discrimination targeted by US states

The US state of New Jersey is set to join other states that have
prohibited life insurers from discriminating against individuals
based on their past or future foreign travel plans. Sponsored by
Legislation Assemblyman Neil M Cohen, the proposed New Jersey
legislation has parallels in Connecticut, Colorado, Maryland, New
York, Washington, Illinois and California.

According to Cohen, various underwriters use customers’ overseas
travel plans as a primary factor when deciding to accept or deny a
policy or adjust premiums, while some have denied coverage to
consumers based on past travel. Cohen said countries that trigger
insurance company scrutiny include popular travel destinations such
as Israel and Indonesia“

Detrimentally altering people’s life insurance coverage because of
their foreign travel plans is an intolerable insurance underwriting
practice,” Cohen said in a statement. “A person’s legitimate travel
lifestyle must never be exploited by insurance companies as a new
avenue for financial gains.”

COMPANIES

Equitable settles with policyholders

UK mutual insurer Equitable Life has reached an undisclosed
settlement with 407 of its with-profits annuity policyholders. The
settlement follows a court action brought against it in 2004 by the
policyholders in which they alleged they had been mis-sold the
policies. Equitable has been closed to new business since its
near-collapse in 2000.

As part of an ongoing restructuring, Equitable completed the
transfer of its with-profits policies to UK insurer Prudential on 1
January 2008. Valued at £1.7 billion, the book represented about 20
percent of Equitable’s policyholder assets.

Commenting on the transfer, Equitable’s chairman, Vanni Treves,
said it enabled Equitable “to face the future from a position of
strength”. However, he added: “Whether we will run the society off
or pass it to someone who can offer our policyholders something
better, 2008 will decide the future of Equitable Life.”

LIFE SETTLEMENTS

Number crunching the easy way

Recognising the complexities involved in taking a decision to sell
a life insurance policy or retain it, two US companies, financial
advisers The Weinberg Group and software developer Leimberg &
LeClair, have teamed up to assist in the decision-making process.
Their solution is Life Settlement NumberCruncher (LSNC), a product
they claim is the first and only one available to assist
professionals and their clients.

LSNC’s developers explained that the system enables advisers to
compute not only how much a client would net in a sale of existing
life insurance, but also if their family needs the insurance
proceeds and how much the family would lose if the policy is sold
rather than retained. This is advisers’ “ethical and professional
obligation”, they stressed.

In addition, LSNC assists advisers with analysis of alternative
premium sources before a decision is made to sell an existing
policy, assuming it is needed but the client cannot determine how
to finance premium payments.

MERGERS AND ACQUISITIONS

ING closes Latin American deals

Chilean regulatory authorities have approved Netherlands
bancassurer ING’s acquisition of Spanish bank Banco Santander’s
unit in Chile. With this approval, ING has closed the composite
deal with Banco Santander that encompassed the purchase of its
pension and annuity business units in Chile, Mexico, Colombia,
Uruguay and Argentina for $1.6 billion.

With the closing of the transaction, ING has doubled its pension
assets under management in Latin America to more than €35 billion
and expects to double this figure again by 2011. ING’s customer
base in the region has increased to about 22 million.

ING is now the number three pension provider in Mexico, number
three in Chile, number five in Colombia, number two in Uruguay and
number one in Argentina, where it has also become the number two
annuity provider. ING is also the number one pension provider in
Peru.

“Completing this transaction is a major accomplishment for ING’s
growth strategy,” said Tom McInerney, CEO of ING Insurance
Americas.

REINSURANCE

Hanover Re to establish office in Korea

Attracted by solid growth prospects, multi-line reinsurer Hanover
Re has announced plans to establish a branch office for life and
health reinsurance business in Korea in June 2008.

“In view of the anticipated vigorous expansion of the Korean
market, we now want to be in a position to offer clients our
service directly from a local base,” said Wolf S Becke, member of
Hanover Re’s executive board responsible for life and health
reinsurance.

Hanover Re views regulatory liberalisation as a significant driver
of growth in Korea’s insurance market, in particular the granting
of permission for all life insurance products to be sold via banks
as from 1 April this year. Hanover Re’s key focus areas in Korea
will be bancassurance and the cultivation of new markets, said
Becke.

Until now, Hannover Re has served the Korean market through its
Hong Kong branch. According to Hanover Re, Korea is the largest
life reinsurance market in Asia, generating annual premium volume
of about €2 billion.