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AKG publishes analysis of 72 with profits funds

29 January 2018

AKG has launched its 2017 UK Life Office With Profits Reports, designed to help adviser firms and providers assess specific with profits funds.

The reports contain analysis and assessments of 185 sub-funds within 72 funds across 26 firms that were active in the UK market at the end of December 2017. AKG said the reports lists providers whose with profit funds exceed £110m, as well as smaller companies and friendly societies operating in the intermediary market.

The ratings and financial analysis consultancy said the introduction of the Solvency II reporting framework, coupled with available metrics, means with profit funds can now be assessed.

“Each individual report provides information on the structure and operation of a provider’s with profits funds. The aim is to provide comprehensive, structured and consistent information, accompanied by AKG’s key analytical assessments of with profits financial strength, future performance and transparency,” it said in a statement.

In addition, the reports, which cost £2,150 plus VAT, will include a number of comparative industry-wide tables, covering a range of key metrics. For the first time, the tables feature industry-wide data from the Solvency and Financial Condition Reports, introduced as part of the new Solvency II regime.

The last full review that focused on with-profits business was in 2010, but the amount of with profits business in existence remains considerable. Figures revealed with profits technical provisions totaling over £274bn as of the end of 2016.

The findings by AKG show that with profits technical provisions accounted for over 90% of the total with profits market in 2016, with the top five listed as Prudential Assurance Company Ltd; Aviva Life & Pensions UK Ltd; Royal London Mutual Insurance Society Ltd; Standard Life Assurance Ltd and Scottish Widows Ltd.

Only nine firms showed positive net flows in respect of their 2016 with profits business. The top three were: Prudential Assurance Company Ltd; Liverpool Victoria Friendly Society Ltd; Wesleyan Assurance Society.

AKG added that M&A activity was continuing to affect the UK Life Office with profits market.

In June 2017, the FCA issued an information request to the majority of with profits firms to help them carry out a multi-firm review of the sector. It was due to begin in the last quarter of 2017 or first quarter of 2018.