'Aggressive pricing' by rivals hits Zurich
LIFE insurance giant Zurich has blamed a dramatic reversal of its market share growth in Ireland on "aggressive pricing" by Irish Life Assurance and New Ireland in the run-up to the duo's sales.
The comments from Zurich Life's Irish chief Anthony Brennan came after his unit reported a 10pc fall in new business sales for the first half of the year, against a 3pc rise across the market.
Zurich's market share at the half-year point was down 7pc at 16.7pc -- a dramatic reversal for a company that grew market share by 30pc over two years to January.
Mr Brennan attributed the "tough year" to the fact that "competitors attached to banks are being prepared for sale and this is driving aggressive pricing for new business".
He insisted that Irish Life Assurance (ILA), which only officially came on the market after the March stress tests, had been "preparing for sale" and adjusting pricing accordingly since the start of the year.
The bancassurer will report first-half results at the end of the month. Mr Brennan said he "couldn't comment" on whether Zurich had lodged a first round bid for ILA.
"What I can say is that my preference has always been for organic growth, it's simpler," he said, "but you have to look at all options."
New Ireland/Bank of Ireland Life, which will now not be sold until 2013, recently reported a 19pc rise in premiums for the first half.
Mr Brennan said the impact on pricing for "protection" products had been particularly stark, with as much as 80pc wiped off profit margins after market-wide premiums fell by about 10pc.
Zurich suffered a 14pc fall in new protection sales in the first half, against an 8pc fall across the market, but is hoping to regain some ground after "repricing" its offering in July.
The Swiss insurer has also been losing out in the growing market for "tracker bonds", a type of savings product that invests heavily in bank deposit accounts.
"We launched a tracker bond with Credit Suisse in the second quarter," said Mr Brennan. "It's probably true that we missed the market moving to tracker bonds in the first quarter, but we have responded."
Zurich's responses to the evolving market saw its market share recover from 16pc in the first quarter to 18pc in the quarter to June. Mr Brennan said he'd be "happier" at 20pc but stressed that it was still a "very tough market".
The Government is expected to slash pensions tax relief in the next budget and may also change the rate of tax people pay when they draw down their pensions.
"Industry dialogue hasn't been very effective so far, the Government has bigger issues to deal with; we've been trying to catch their attention," Mr Brennan said, adding that the issue was "absolutely critical" for insurers.
As well as its Irish business, Zurich also has about 250 Dublin staff working in its European hub selling life insurance products into Italy, Sweden, Germany and the UK.
New business in that area fell 25pc in the first half of the year, largely because of a decline in Italian business.
The Global Life unit doesn't expect to expand into any new markets this year: "There's a lot of uncertainty throughout Europe," Mr Brennan added.