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AKG Update Issue 31
9 January 2017
 
How significant is the With Profits market nowadays?

Following the recent launch of the latest edition of AKG's UK Life Office With Profits Reports, we have compiled some interesting statistics on how the market has changed over the last 20 years.

From its peak in 2001, the total size of the UK With Profits market has been steadily reducing year by year, but total policy reserves at the end of 2015 still exceeded £200 billion, a not inconsiderable sum.



The reduction in new business volumes, which also peaked in 2001, has been much more marked, however, particularly for regular premium business.

There was actually an increase in With Profits new business APE for the market as a whole in 2015, which can be ascribed almost entirely to Prudential's £5.2 billion single premium new business, up 62% on the previous year.

 

Guy Vanner

AKG's Managing Director
Solvency II public domain disclosure arrives

Solvency II has been in place since 1 January 2016 and we are now beginning to see full public disclosure, with the first tranche of companies (those with June Year Ends) required to publish their Solvency and Financial Condition Report (SFCR) before the end of 2016. Such disclosure for most companies, those with December Year Ends, is not likely to emerge before May of this year.

The SFCR replaces the much loved (in certain circles) PRA Returns. Initial scrutiny of the first wave of these new documents reveals a document which contains more informative descriptive information than its predecessor, with welcome sections on business performance, governance and risk profile alongside solvency and capital disclosure, but with less actual data.

A risk based approach to regulation, Solvency II sees the introduction of a new solvency coverage ratio for us to use as part of our assessment process. Whilst there may be some relatively large differences in coverage ratios for some companies between the Solvency I and Solvency II regimes, the coverage ratio is only one criterion used in our assessments where a balanced scorecard approach is adopted, and as such we do not envisage any significant changes to our financial strength ratings.

Gary Bown

AKG's Chairman
Rating Activity

Life Companies, Friendly Societies & Similar Providers

Legal and General Assurance Society Ltd
Overall Financial Strength
B+ [Previously A] Issued 21 Dec 2016

Liverpool Victoria Friendly Society Ltd
Overall Financial Strength
B+ [Confirmed] Issued 21 Dec 2016

Liverpool Victoria Life Company Ltd
Overall Financial Strength
B+ [Confirmed] Issued 21 Dec 2016

Phoenix Life Assurance Ltd
Overall Financial Strength
B [Previously B-] Issued 6 Jan 2017

Phoenix Life Ltd
Overall Financial Strength
B [Previously B-] Issued 6 Jan 2017

The Royal London Mutual Insurance Society Ltd
Overall Financial Strength
B+ [Confirmed] Issued 23 Dec 2016

Note: This section refers solely to our Overall Financial Strength Ratings/Platform Financial Strength Ratings/DFM Financial Strength Ratings.
Report Releases

Company Profile & Financial Strength Reports

Legal & General
Short Report – Issued 21 Dec 2016

LV=
Full Report – Issued 21 Dec 2016

Phoenix Life
Short Report – Issued 6 Jan 2017

Phoenix Life (PLAL)
Short Report – Issued 6 Jan 2017

Royal London
Full Report – Issued 23 Dec 2016
Report Withdrawals
No reports have been withdrawn since our last Update.
AKG in the News
AKG regularly provides opinion and comment pieces for the trade press and other prominent industry publications/outlets. Click here to see the full listing.

In a recent piece featuring in International Adviser Guy Vanner discusses the evolution and positioning of the international retail financial services market in light of the various challenges that have presented themselves to companies in this space in recent years. Click here to read feature in International Adviser.
AKG Update Newsletter Archive
Archived copies of all past AKG Update newsletters can be accessed on the AKG website.
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