New data from ratings provider AKG on with-profits finds, reflects the large amount of money still in the market, with Prudential continuing to dominate.
The latest AKG UK Life Office With Profits Reports analysed 195 sub-funds within 64 funds across 21 firms.
The report found with-profits technical provisions totalled over £210 billion at the end of 2022, down 15% from 2021 levels of £248 billion. AKG said the fall not only reflects the gradual decline of the with-profits sector as historic business runs off but also the increase in interest rates leading to lower liability values as valuation interest rates increase.
The total market size, on the other hand, grew in 2022 by 22% from £5.6 billion net premiums earned in 2021.
The top 10 companies accounted for around 97% of the market in 2022, by net premiums earned, with Prudential continuing to dominate the market. It was responsible for 80% of net premiums earned, up from 69% in 2021. Wesleyan and NFU also both reported gains.
Gary Brown, chairman at AKG, said: “Despite the acknowledged evolution of the market in recent years, there’s still a huge amount of client money wrapped up in with-profits funds and hence a significant universe of funds for analysis, either open or closed.
“Important industry issues, including the introduction of Solvency UK and Consumer Duty, along with ESG factors, are impacting on the operation of with-profits funds. It’s vital that when client circumstances dictate, advisers, paraplanners and trustees put themselves in a position to adequately assess the market and make informed decisions via support from this type of output.
“Similarly, providers, those directly involved in the market or those with strategic interests in with-profits, can ensure they are kept up to speed with key with-profits fund dynamics via our reports.”
