Zurich's growth fall due to lack of parent bank
Published 24/02/2012 | 05:00
LIFE-insurance giant Zurich has blamed the popularity of insurance bonds backed by bailed-out banks for a dramatic reversal of Zurich's growth.
The comments from Zurich Life Ireland boss Anthony Brennan came after his company reported a 14pc fall in new business for 2012 against an 8pc fall across the market.
The performance saw Zurich's market share slip from 19pc to 16pc -- reversing a dramatic march that saw the insurer double its market share in less than five years.
"An awful lot of new business has been tracker bonds underwritten by insurance companies' parent banks," Mr Brennan said. "We don't have a parent bank."
Zurich's competitors are Irish Life, Aviva and New Ireland. Almost-nationalised Irish Life is owned by Permanent TSB, Aviva had a joint venture with almost-nationalised AIB last year, and New Ireland is owned and distributed by state-backed Bank of Ireland.
Mr Brennan said that although Zurich had launched a bond underwritten by Credit Suisse, it didn't have the same high yields as those offered by Irish banks.
"The yield on one of the AIB bonds would be about 7pc," he said. "People are prepared to trade security for that yield, and AIB is backed by the Irish Government anyway."
Asked if he felt "disadvantaged" by the massive state presence, he replied: "No, we've been competing in this market for years." He adding that Irish Life isn't "acting any differently" since the state took a 99.8pc stake in its parent company.
Mr Brennan said his main concern was the performance of the overall life-and-pensions market, which swung to a 23pc loss in quarter four after a good start to the year.
"Persistency is a major issue these days, people are stopping paying into pensions," he said, adding that in November and December lapses were "double" what they would usually be over those months.
Mr Brennan said he would be in favour of proposals to allow people to withdraw some of their pension money early because that might make people "more confident" about saving.
The detail of Zurich's results showed life premiums fell 4pc, while pension business was down 16pc. Mr Brennan said the company made an operating profit, but fell to a loss after charges for economic assumptions and investment losses.
He insisted his parent company saw "opportunities" in Ireland, but wouldn't comment on whether it will enter the fray to buy Irish Life or New Ireland when they come onto the market over the coming years.
Zurich also runs an international life-insurance business out of Ireland. Sales there fell 20pc last year to €82.3m, Mr Brennan said a tax amnesty in Italy drove an exceptional performance in 2010 and that the unit "absolutely" had scope to grow.