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AKG Update Issue 7
14 May 2015
Interesting times in the Offshore market...

We have been assessing and rating companies, from a financial strength perspective, in our Offshore Life Companies peer sector since 2001. We currently assess and rate 33 Offshore Life Companies in this peer sector. Financial advisers and other interested parties can access our financial strength ratings for each of the companies in this peer sector via the AKG Rating Portal (sign in or register at www.akg.co.uk).

The first half of 2015 has seen some interesting developments in terms of acquisitions.

  • In February Great-West Lifeco’s subsidiary, Canada Life, announced its agreement to acquire Legal & General International (Ireland) Ltd from Legal & General PLC, subject to approvals. On completion of this transaction Canada Life’s proposition in the Isle of Man and Dublin will no doubt be reinforced by the integration of the acquired business.

  • In April Charles Taylor Group completed its acquisition of Scottish Widows International Ltd from Lloyds Banking Group and renamed it as LCL Assurance Ltd. It is intended that the acquired company will be re-domiciled from Jersey to the Isle of Man and that its policies will be transferred into Charles Taylor’s existing Isle of Man life insurance subsidiary LCL International Life Assurance Company Ltd.

  • On 7 May RL360 Group announced that, subject to approvals, it was to acquire the Isle of Man based CMI Insurance Company Ltd from Lloyds Banking Group, creating a business with £8bn of assets under management. RL360 (which is backed by private equity firm Vitruvian Partners) said it was buying the closed book life business to accelerate its growth strategy. RL360 came out of the Royal London Group in October 2013 in a management-led buyout. Its existing Isle of Man operation RL360 Insurance Company Ltd trades under the RL360° brand.

It remains to be seen whether this type of activity will be repeated in the second half of 2015, but this conforms to AKG’s long held view that the significant strategic decisions are required across the market, with little time or ‘wriggle room’ to delay action. As we embark on our body of 2015 Offshore Life Company assessment work we will be keen to appraise the strategic direction of travel of these companies and others in the peer sector.

It is too early to tell exactly what the impact of pension freedom might be on offshore life offices but there may be some nervousness around the outlook for offshore bond sales for all but the most committed market participant. This would continue a theme of uncertainty in the sector since the Retail Distribution Review challenged distribution approaches and adviser remuneration models. Reporting in the May 2015 edition of International Adviser stated that, according to ABI figures, new business sales of UK-distributed offshore bonds fell by 10.7% last year but were contracting at a slower pace than in recent years (12.4% fall in 2013 and 20.4% drop in 2014).

As is the case with many companies operating across AKG’s assessment and rating peer sectors Offshore Life Companies need to evolve and respond to the various market and regulatory challenges. However an intermediary distribution sector in the UK which increasingly has tax and inter-generational planning at its heart may well, over time, embrace offshore options more into its mainstream market.

Guy Vanner

AKG's Managing Director
AKG to discuss the growing importance of fund governance
Matt Ward, Head of Communications at AKG, will be featuring in an educational WebEx meeting for financial advisers later this month. The meeting is being hosted by Prudential and will be held on Thursday 28 May 2015.

WebEx registration details can be found at http://www.pruadviser.co.uk/content/knowledge/oracle_live/ under the “Upcoming WebEx Meetings” section.

Matt will be covering AKG’s view on the growing importance of fund governance in the context of managed fund/portfolio solutions and he will be highlighting the areas which should be explored by financial advisers when seeking to understand and appraise fund governance structures and processes.
Rating Activity

Life Companies, Friendly Societies & Similar Providers

Aberdeen Asset Management Life and Pensions Ltd
Overall Financial Strength
B- [Confirmed] Issued 5 May 2015

FIL Life Insurance Ltd
Overall Financial Strength
B [Confirmed] Issued 5 May 2015

Financial Administration Services Ltd
Overall Financial Strength
B [New rating] Issued 23 Apr 2015

Hargreaves Lansdown Asset Management Ltd
Overall Financial Strength
B+ [Confirmed] Issued 12 May 2015

Talbot and Muir SIPP LLP
Overall Financial Strength
C [Confirmed] Issued 6 May 2015

Offshore Life Companies

Altraplan Bermuda Ltd
Overall Financial Strength
Rating withdrawn 6 May 2015 [Previously B]

Altraplan Luxembourg S.A.
Overall Financial Strength
Rating withdrawn 6 May 2015 [Previously B]

Augura Life Ireland Ltd
Overall Financial Strength
Rating withdrawn 6 May 2015 [Previously B]

La Mondiale Europartner S.A.
Overall Financial Strength
Rating withdrawn 6 May 2015 [Previously B]

La Mondiale Europartner S.A.
Overall Financial Strength
B- [Previously B] Issued 6 May 2015

Old Mutual International Ireland Ltd
Overall Financial Strength
B+ [Confirmed] Issued 24 Apr 2015

Old Mutual International Isle of Man Ltd
Overall Financial Strength
B+ [Confirmed] Issued 24 Apr 2015

PEL Altraplan (Gibraltar) PCC Ltd
Overall Financial Strength
Rating withdrawn 6 May 2015 [Previously B]

Private Estate Life S.A.
Overall Financial Strength
B- [Previously B+] Issued 6 May 2015

Platform Operators

Cofunds Ltd
Platform Financial Strength
B+ [Confirmed] Issued 21 Apr 2015

James Hay Wrap Managers Ltd
Platform Financial Strength
B [Confirmed] Issued 21 Apr 2015

Novia Financial plc
Platform Financial Strength
B [Confirmed] Issued 6 May 2015

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

Company Profile & Financial Strength Reports

Aberdeen Life
Short Report – Issued 5 May 2015

Fidelity Worldwide Investment
Short Report – Issued 5 May 2015

Hargreaves Lansdown
Short Report – Issued 12 May 2015

Offshore Profile & Financial Strength Reports

Old Mutual International
Full Report – Issued 24 Apr 2015

Platform Profile & Financial Strength Reports

Cofunds
Full Report – Issued 21 Apr 2015

James Hay Partnership
Full Report – Issued 21 Apr 2015

Novia
Full Report – Issued 6 May 2015
Report Withdrawals

Company Profile & Financial Strength Reports

Talbot and Muir
Short Report – Withdrawn 6 May 2015

Offshore Profile & Financial Strength Reports

La Mondiale Europartner
Full Report – Withdrawn 6 May 2015

NPG Wealth Management
Full Report – Withdrawn 6 May 2015
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AKG Platform Profile Reports Now Available To Purchase In Bundled Format
We have been assessing and rating operators within our Platform Operators Peer Group for over five years now and this group currently comprises reports on 22 platform operators.

Each of these reports is available to purchase on an individual basis at £23.50 plus VAT but, conscious of the requirement for financial advisers to review the operators within the market more broadly on an annual basis, we are now making our Platform Profile & Financial Strength Reports available on a bundled basis.

Unlimited online access to the complete range of 22 AKG Platform Profile & Financial Strength Reports, including all updates issued in the next 12 months, can be purchased for £325 plus VAT by clicking here.
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