Zurich takes heart from hints on pensions
LIFE insurance giant Zurich is "heartened" by recent hints that the new government will take a positive approach to pension reform but sees "enormous risk" in 2011 as austerity measures choke pensions affordability.
Anthony Brennan, chief executive of Zurich's Dublin operations, made the comments yesterday as Ireland's second biggest life insurer revealed a return to the black in 2010 when new business premiums rose by 1pc.
While Zurich's 2010 result was a significant improvement on the 11pc fall in premiums suffered in 2009, Mr Brennan said the trends had turned negative towards the second half of the year, with a 10pc fall in income in quarter four.
"There's an enormous amount of risk in 2011," he stressed, pointing to future austerity measures which could leave people unable to afford life and pensions products.
Zurich already saw its core new business margin dip from 2.9pc in 2009 to 2.6pc last year.
Industry leaders have also warned of massive fallout from a new tax regime for employer PRSA in the Finance Bill and from the Government's longer-term plan to cut pension tax relief to the standard rate.
"The PRSA changes were very unfortunate, but we were heartened to see that a Fine Gael senator proposed changes when the Finance Act was going through," said Mr Brennan.
"We've been heartened by comments from opposition politicians -- we've been trying to make everyone see that a banking crisis doesn't have to turn into a pensions crisis."
The full-year figures for 2010 showed something of a slowing in Zurich's market share, which more than doubled between 2007 and 2009, but grew just two percentage points to 18pc last year.
"The gap [between our performance and the others'] is closing," Mr Brennan admitted. "We've grown to this position and the competition is fighting back very strongly... It's going to be tougher to grow [our market share] but I wouldn't rule it out."
The detail of 2010's Zurich Ireland results showed single premium life insurance policies -- essentially one-off savings products, were the best performers for Zurich with sales shooting up 67pc to €117m against market growth of 30pc.
Regular premium pensions were the toughest area, with Zurich's figures falling 7pc and the market down 14pc, as fewer people at work drove lower pension take-up.
The overall new business income for Zurich came in at €177.9m based on the industry standard annual premium equivalent (APE) which includes the full contribution from annual premiums and 10pc of the single premium income.
Dublin is also home to Zurich's European life insurance hub, where revenues grew from €28.8m to €82.3m last year as staff numbers grew to 350.
"There's a lot more room for Zurich Europe to grow," Mr Brennan said.