New report into UK offshore bond market

30 June 2022

AKG has published a new paper on the UK offshore bond market, past and present, providing insight into its role in UK wealth planning.

The report, The Revolution Will Not be Televised – 30 Years of Quiet Change in the UK Offshore Life Sector explores the history of the UK offshore bond market and how it grew to become an established and fully integrated aspect of the UK financial services industry.

The market began its regulatory journey in 1986 and gained formal recognition as a new form of UK investment business in 1988. While the market is little over 30 years old, it has experienced rapid change over the course of its short existence.

In 2007, there were a wide number of companies established and actively selling into the UK, against a backdrop of impending economic difficulty. Initial market participants were mainly UK life company owned, with the brand of the owner being mirrored and the offshore products sold alongside onshore investment products as an additional line. However, the landscape has changed significantly since that time.

AKG’s report notes that the broad market of competitors didn’t last long, with strategic changes, pricing pressure, regulatory pressure and technological evolution all posing significant challenges.

Today, the offshore market has evolved to become price competitive, with a high-value customer focus. Its approach has also changed with the growth of aspects such as discretionary fund managers and platform involvement.

In addition, the market has also witnessed significant M&A, with consolidation of participant companies, alongside the exit of others, shaping the current market.

AKG said understanding the ongoing focus, attitude of owners and commitment for investment in maintaining propositions in the interest of advisers and their client outcomes is now key.

The report said: “Those now few life companies / groups and their parents that are in the UK offshore bond market’s driving seat have got there through a mix of commitment, strength, attitude and maybe, foresight.

“With both some existing and some new players demonstrating an ability to navigate some real challenges, those that remain are perhaps then all the stronger for it but to continue to prosper, they may need to be able to adapt further to meet changing future conditions.”

AKG said that as the market moves and continues to develop further, exploring the back story to those successful market participants will hopefully add understanding and deepen the beneficial relationships across the value chain.

Professional Paraplanner