MARK WOOD, the former UK chief executive of Prudential, has convinced former FSA chairman Sir Howard Davies to join the board of his new insurance company, The Times says this morning.
The role is Davies' first City post since resigning as chairman of the Financial Services Authority (FSA) in September 2003. Investors were told of the appointment yesterday afternoon, after Davies had spent the previous two months unofficially advising Wood on how to get the go-ahead from the City watchdog for his new company.
It will be the first new life insurance company to be set up in Britain in at least 25 years. The team has been working from the offices of Numis, the stockbroker which provided initial funding for the venture.
Wood quit Prudential last year after being beaten to the position of group chief executive by Mark Tucker, the former boss of the insurer’s Asian and American businesses. Tucker took the job after the Pru’s chief executive, Jonathan Bloomer, was ousted amid investor discontent over a series of blunders, including an unpopular £1bn rights issue.
Wood, however, is expected to concentrate on bulk annuity purchases, in which an insurer agrees to cover a company’s pensions promises in return for a premium.
Wood applied for approval from the FSA six weeks ago, which can take up to six months to receive. He is thought to be close to completing the funding arrangements and has confirmed the names of all of his non-executive directors to investors backing the business.FIGURES FROM Edinburgh life and pensions giant Standard Life yesterday showed its push into more profitable business lines was continuing to bear fruit, with sales of its self-invested personal pension (SIPP) breaking through the 10,000 mark within a year, reports The Scotsman.
According to the paper, the mutual - which plans to demutualise and list on the London Stock Exchange this summer - said it had clocked up more than 10,000 Sipp sales just over a year after it entered the market.
Its proposition, launched in December 2004, has so far attracted £1.1bn of investment, as consumers seek more flexible pension products they are able to have control over ahead of the most sweeping changes to pensions in 50 years.
The changes - which will come into force on Thursday, known as A-Day - will allow people to save up to 100% of their earnings in a pension and take 25% as tax-free cash upon retirement, as well as introduce a new "lifetime allowance" and end an unpopular rule forcing people to use their pension fund to buy an annuity by the age of 75.
Three years in the making, Standard Life's Sipp is said to have attracted about 40% of the market. It is part of Standard's strategy of turning its back on less profitable regular-premium business - such as single and group pensions - in favour of more lucrative single-premium products, including Sipps and investment bonds.
RISING EQUITIES AND higher bond yields will have significantly cut the levy which pension schemes are going to have to pay the Pension Protection Fund, reports The Financial Times.
According to consultants Watson Wyatt, company contributions to the fund could be cut by around a third, as much as £150m, because better investment returns have knocked nearly a third off pension fund deficits among FTSE100 companies in just a month.
Stephen Yeo, a senior consultant at Watson Wyatt, said deficits had fallen from £64bn at the beginning of March to just £44bn by the month’s end. Last Friday – the end of March – is the date the Pension Protection Fund will use to measure deficits.
These in turn form a key part of the calculation of whether a fund can pay out its benefits if its sponsoring company goes bust, and are used to help set the levy that schemes will have to pay this year to the pension insurance fund. The reduction is sufficient, Yeo said, “to knock about one third, or around £150m, off the £575m that the Pension Protection Fund was planning to raise”.
The PPF yesterday refused to confirm the figure. Instead, it said cautiously that the final levy, due to be issued around the end of the month, would be “around our original estimate or potentially lower”.
But a spokesman confirmed that “if the deficits are down, the net risk at a given point in time is down”. The fund also noted that equities are some 18% higher than when the PPF made its original estimate of the levy at the end of October.
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