Providers in the UK would be ‘world leaders’ in digital distribution if they had not spent so much on meeting regulatory requirements, according to Legal & General chief executive Nigel Wilson.
Speaking during a panel debate at the Marketforce Distribution Innovation in Pensions and Investments conference, Wilson (pictured) said the cost of regulation has stopped providers from investing in advice.
‘The retail distribution review (RDR) was a good thing but has cost a fortune to implement…and created an advice gap in the UK which we have to now see as an opportunity,’ he said.
Continue Reading “L&G: UK providers would be ‘world leaders’ without regulatory costs” at New Model Adviser
The capital regime for the insurance industry needs “fundamental” review, a committee of MPs has been told.
Legal & General and Prudential both appeared before the Treasury Select Committee yesterday (25 January) to criticise the Solvency II regime.
The cross-European regime came into effect a year ago and sets out how much capital insurance companies must hold to reduce the risk of insolvency.
Continue Reading “Insurers warn of Solvency II impact ” at FT Adviser News
Is it possible for regulators to become too heavily involved in the insurance business? One giant of the UK insurance sector seems to think so. Legal & General has accused a regulator of becoming increasingly interventionist in their control of the industry believing that their role should be cut back.
Specifically, it highlighted the position of the Prudential Regulation Authority (PRA) in relation to Solvency II rules stating that it is “effectively overruling the judgment of the board” in relation to setting capital requirements; and that it has started to take an increasingly “directive” approach in regards to transaction approval.
“Boards do not feel empowered to make commercial decisions without reference to the regulator,” it said in a submission to the Treasury Select Committee.
Continue Reading “Time to scale back the role of insurance regulators?” at Insurance Business
One of the UK’s biggest insurers has accused regulators of becoming more interventionist in their oversight of the industry, suggesting the role should be scaled back.
Legal & General said that under new Solvency II rules, the Prudential Regulation Authority is “effectively overruling the judgment of the board” when it comes to setting capital requirements, and is taking a more “directive” approach when approving transactions.
“Boards do not feel empowered to make commercial decisions without reference to the regulator,” it said.
Legal & General would like audit firms to take over some of the work carried out by the PRA, especially that related to internal capital models. “The regulator could then opine on the more strategic issues which impact its statutory objectives,” it said.
Continue Reading “Legal & General Accuses Regulator of Increased Intervention” at Financial Times Advisor
Turbulent financial markets have caused Legal & General’s (L&G) Solvency II capital requirement (SCR) ratio to slip to 156% with a capital surplus of £4.9bn ($6.5bn), down from 169% and £5.5bn respectively at the end of 2015.
Responding to a near 30% drop in its share price since the announcement of the Brexit vote on 23 June, the UK insurer clarified its solvency position and the moves it took to rebalance its portfolio ahead of the referendum.
“Legal & General’s central planning scenario, ahead of the referendum, was for a 50-50 probability of a vote for the UK to leave,” L&G said on 28 June. “We positioned our balance sheet accordingly to reduce risk for our customers and shareholders.
Continue Reading ” Brexit prompts 13-point drop in L&G’s Solvency II ratio” at Insurance ERM
There’s a buying opportunity at UK listed assurance and savings group Legal & General thanks to market concerns that have pushed its share price lower.
The group had a strong year in 2015, with divisional operating profit rising by about 15 per cent.
L&G, which is leveraged to savings growth in the UK, also upped dividends by 19 per cent.
But while the headline numbers were solid, investor focus is on new Solvency II capital requirements.
There has also been disquiet about the company’s exposure to “weak” sectors, such as resources, in the annuity bond portfolio.
Continue Reading “Legal & General’s overblown market sell-off presents buying opportunity” at Financial Review
Solvency II’s latest proposals could hinder the ability of firms to launch innovative products in the annuity market, the group commercial actuary for Legal & General has warned.
Striking a negative note at the Association of British Insurers’ Solvency II conference, at which delegates laid bare their anxieties over Solvency II, Carl Dowthwaite expressed concerns about the unintended consequences of EU regulation on providers’ ability to be creative with annuity products.
Mr. Dowthwaite, who said he had examined the latest version of the European Union’s insurance regulation directive, said the proposals were an improvement on level-one standards but could leave the annuity market “restricted” in terms of introducing evolutionary new products.
Continue Reading “Solvency II May Stifle Innovation: Dowthwaite” at FT Adviser News
Next time you pass the Olympic Park in Stratford, consider this: we could have a second park — with the stadium, the swimming pool, the velodrome, the athletes’ village and even the shopping centre for the amount the insurance industry based in London has spent on getting ready for Solvency II, a new Europe-wide system of regulation.
The costs of preparing for Solvency II have been horrific. All the big firms — such as Aviva, Legal & General and Prudential — say they have spent between £150 million and £300 million developing the models and rebuilding their reporting systems to provide the required data.
Continue Reading ” Anthony Hilton: Solvency II is Wrong Model for Insurers” at London Evening Standard News
Legal & General says the implementation of Solvency II for insurers could be delayed again as EU politicians negotiate changes to the final legislation.
The new rules, which will force insurers to hold more capital to cover their risks, are due to be fully implemented by insurers by 1 January 2014, a year later than the original EU proposals.
Continue Reading “L&G Predicts Solvency II Delay” at Money Marketing News