Partnership: Budget hit to sales will be 'short

Specialist annuities provider Partnership has issued a letter alongside its annual report that has been sent to shareholders today (9 April) warning of a 'short-term' hit to annuities sales as a result of the overhaul of pensions rules at last month's Budget.

However, the letter signed by chairman Chris Gibson-Smith claims a government guarantee that all savers will receive "guidance" in the lead up to retirement will make up for the hit on annuities in the 'medium-term' by "significantly increasing the number of people who shop around".

Mr Gibson-Smith adds that the company remains "financially strong" and that its defined benefit, care annuities and protection will not be affected by the changes. The company will therefore continue to pay the maiden dividend of 3 pence per share announced in March.

Partnership announced the dividend on the day of the Budget in preliminary results that revealed total operating profits of £131m for 2013, a 17 per cent rise on 2012 that was achieved in spite of a 3 per cent drop in new business caused by a year-end rush ahead of regulatory changes in 2012.

Analysts have sounded particular concern over Partnership, which lost more than half of its value in a major sell-off on Budget day, due to the fact it is currently reliant for around 80 per cent of its revenues on new individual annuities sales.

Mr Gibson-Smith writes: "Over the short term, until the implications of the proposed changes are fully understood, it is likely that we will see a reduction in the sales of our individual retirement annuities.

"However, this may be balanced in the medium term by the proposal that all retirees will benefit from free financial guidance at the point of retirement, potentially significantly increasing the number of people who shop around and consider an annuity.

"Although there is potential for the overall market for annuities to contract, a much larger number of people than currently do so may purchase an annuity through the open market option."

Estimates on the hit to annuities have varied in the wake of the chancellors reform plans being announced, with some predicting a drop of as much as 90 per cent. Legal and General's Nigel Wilson forecast sales would shrink by three-quarters from £11.9bn to £2.8bn annually.

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MetLife rolls out voluntary retiree life insurance product

IBR Staff WriterPublished 09 April 2014

MetLife, a global provider of insurance, annuities and employee benefit programs, has rolled out its new voluntary retiree life insurance product.



The company said that the new group term life insurance has been designed to offer a retiree-paid life insurance solution for employees who are entering retirement and throughout their retirement years.

MetLife vice president Stephen Pontecorvo said, "The number of baby boomers expected to retire in the next 15 years creates a big need -- employees with life insurance provided through the workplace will be looking for ways to extend that insurance into retirement.

"In response to this need, MetLife has developed a plan specifically for retirees that provide convenient life insurance plan options as well as valuable benefits retirees are likely to appreciate."

According to the life insurer, the retirees and their spouses will have access to three plan options.

The initial amounts for plan coverage options comprises up to $25,000 offered as guaranteed issue and up to $75,000 or $150,000 in coverage, both of which require medical evidence.

Moreover, the new group term life insurance policy includes three features from MetLife Advantages, the company's suite of value-added services.

The features include face-to-face Will Preparation and face-to-face Estate Resolution Services provided by Hyatt Legal Plans and the Total Control Account, a safe and convenient life insurance settlement option. These features offer customers valued resources as they enter the retirement stage.

MetLife will also provide full plan administration to enable employers offer appropriate voluntary life coverage options to retirees.

"By providing Voluntary Retiree Life insurance, our clients are able to give employees more benefit choices as they are entering retirement," Pontecorvo added. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------Image: MetLife building at 200 Park Ave in New York City, the company's corporate headquarters. Photo: courtesy of Postdlf.

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Innovation in insurance

Innovation was a common theme among many of the sessions at the 2014 LIMRA Life Insurane Conference this week in Chicago. One such session was presided over by John Coyle, senior vice president, culture of innovation, at Maddock Douglas; Si Xie, director, Equitable Life of Canada; and Jason Alleyne, consulting actuary.

So how can an insurance company create a culture of innovation?

According to Coyle, there has to be a culture shift. You can't necessarily tell people to change their culture or change their beliefs and values, but you can ask it of employees and cocreate the culture with them.

"The old paradigm of traditional systems -- importance of IQ, six sigma, hierarchy, division of labor -- are being replaced by creativity and risk-taking, peak performance, collaboration, and complex adaptive systems," Coyle said.

For an innovative corporate culture, Coyle believes a company must have:

For Jason Alleyne, he believes that many great lessons about innovation can be gleaned from modern business books, such as:

Nudge Blink Outliers The Black Swan Change by Design The Power of Why The Tipping Point What the Dog Saw David and Goliath Moneyball: The Art of Winning an Unfair Game

Alleyne urged everyone to be more like Billy Beane, the subject of the book-turned-movie, "Moneyball."

How?

Inject a new set of eyes, from a totally unrelated discipline, into your most ciritcial value creation function Be courageous and insanely disciplined Continuously search for even more structured data Be protective of your data

What?

Ignore 100 years of conventional thinking Challenge your assumptions, especially "insurance must be sold" or "insurance is complex" Obtain even better results with less resources Win, win, win

Alleyne is begging us to "flirt with disruption." Do you think it's possible in an industry entrenched in such traditional ways?

For Xie, her simple definition of innovation is something that should be read over and over, and perhaps printed out and affixed to our mirrors or office walls.

Innovation is the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available tomarkets, governments and society. The term innovation can be defined as something original and, as consequence, new that "breaks into" the market or society. One usually associates to new phenomena that are important in some way. A definition of the term, in line with these aspects, would be the following: "An innovation is something original, new, and important - in whatever field-that breaks in to (or obtains a foothold in) a market or society"

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