Spectres have been forming a disorderly queue at our leading insurers.
If it’s not the Brexit fallout it’s onerous Solvency II capital ratios. One day it’s a shake-up of the primordial but sclerotic annuities system.
Next day it’s worries about lower-for-longer rates, or a suspension of commercial property funds to stop a run on the sub-sector.
However, beneath the “challenging times” default position of much of the business sector, our blue-chip insurers are proving both insightful and focused in keeping the show on the road.
Aegon’s swoop to buy the Cofunds investment platform from Legal & General yesterday completes its transformation into a metaphorical department store of investment products rather than a corner shop selling life assurance and pensions.
The profit margins are better and its makes the Dutch-owned group more nimble in its offer and less capital-constrained on the balance sheet. Prudential’s results earlier this week showed a continuation of its remarkably successful love affair with the Asian market. Aviva has gone all “garage” and digital under the impressive stewardship of
Mark Wilson, with cash generation and dividends up, and the company unrecognisable from the tired complacency it epitomised some years back under different management.
Standard Life also looks in good nick, its core earnings healthy and enthusiasm for the financial potential of India undimmed by the volatility in many emerging markets. And in an era of very low interest rates the insurers’ dividend yields are attractive.
The story of big-league UK insurance in recent years has been one of rolling with the punches of market and regulatory pressures. The core response to these has been a proactive eye on cost efficiencies mixed with product and geographical diversification. And it has manifestly borne fruit.
Admittedly, an unnerving cloud is that the pensions landscape looks opaque, fluid and risky. Insurers, though, have read the runes and reconfigured.
Strategically – and Aegon is a good example with its investment platform step-change via Cofunds – they may not be absolutely ahead of the game, but they are certainly up with the play.