Last week we told you how the Phoenix Group, the UK’s largest owner of closed life insurance funds, was looking to contrast the Brexit theme by
ditching the Cayman Islands for the UK as it looks to reposition its holding company. However, the firm has outlined what it sees as the true impact of Brexit on the UK insurance market.
In a
Financial Times interview, Phoenix chief executive Clive Bannister stated that Brexit was likely to encourage foreign players to sell closed UK life insurance books faster – with sterling’s drop ultimately making the businesses less lucrative.
In the interview he stated that “the earnings they receive have been further reduced” and “we think that forces the tempo of strategic decisions on what to do with those assets.”
Phoenix does not generate new business and its growth is dependent on its access to closed funds that were originally sold as policies to the public.
Now Bannister believes that market – estimated to be around £250 billion to £300 billion across UK insurers, foreign insurers and UK banks – is likely to be more open with more and more of these assets bought by companies such as his own.
He believes that sterling’s fall has taken people by surprise and that UK banks and UK insurers are also likely to instigate sales because these funds are notoriously difficult to sell.
He did not comment, however, on the timing of such deals, instead describing them as “unpredictable”. He did admit, however, that Phoenix was likely to face a lot of competition – with
Swiss Re already pipping it to Guardian Financial Services last year.
Related stories:
Phoenix to ditch island for the UK
Regulator clears £375 million AXA-Phoenix deal
