Life insurance analyst Ned Cazalet predicts a number of companies will join NPI in closing to new bu...
Life insurance analyst Ned Cazalet predicts a number of companies will join NPI in closing to new business this year.
He told Investment Week recent rises in global stock markets will not be enough to prevent other companies being forced to close to new customers.
Cazalet said: 'If you compare the FTSE now with its level at the end of last year, when life insurers reported, it is not significantly higher.
'If you look back 13 months, it was at 5,200, so insurers are in a weak position and have much lower equity holdings. This will prevent them from benefiting from any further stock market rebound.'
Existing providers are already withdrawing from parts of the market, he added, citing Norwich Union's decision to quit the smaller end of the group stakeholder market.
The closure of NPI to new business has led to advisers being bombarded with questions from clients worried about their pensions. Tom McPhail, head of pensions research at Hargreaves Lansdown, said advisers should re-examine all policies held with the AMP subsidiary.
He added: 'It's like Equitable Life again in that people will have to decide whether it is worth getting out. The administration has got worse and it will continue to do so. Charges tend to go up on shrinking funds and weightings in equities will continue to drop, making it more difficult to get decent returns for policyholders.'
However, Cazalet said, MVRs are so high that in many cases it will not be worth moving out of the company.
NPI and AMP were unavailable for comment.
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