Paternoster, the latest entrant to the bulk annuity market, has joined forces with Jardine Lloyd Thompson Benefit Solutions.
Following approval form the Financial Services Authority (FSA) on 28 June, Paternoster has signed a letter of intent for JLT to be a service partner for the long-term administration of pensions policies.
Paternoster says it will be working with JLT to develop a joint operation which will source administration services in India to provide competitive actuarial pricing and financial analysis to its clients.
The appointment of JLT seems to move Paternoster a step closer to its first deal, as the news comes just two weeks after it revealed it had drawn down its first £250m of capital to start actively pursuing mandates, and is currently in a number of discussions.
Paternoster, which was started by Wood - former chief executive of Prudential - and includes Lord Adair Turner - former chairman of the Pensions Commission - as a non-executive director, announced its intention to enter the bulk annuity market in April.
Its announcement of £500m capital from a consortium of backers including Deutsche Bank and Eton Park International, seems to have opened the floodgates for new entrants, with another new company set up by former Prudential executives Synesis Life waiting for FSA approval to join the market.
Established life companies AIG and Aegon have also signalled their intention to join a sector previously dominated by just two insurers, Legal & General and Prudential.
However, in its earnings news last week, L&G announced the increased competition in the sector was not going to put them off, in fact it seemed to hint it would be extending its reach within the market to the larger funds, which would put them in direct competition with Paternoster which plans to target schemes with liabilities up to £1bn.
Andrew Palmer, group finance director at L&G, stated in his presentation the majority of policies in the market written by L&G were in the smaller end of the market under the £2m mark, with only one policy written with a value of more than £100m.
However he stated: “We are, however, beginning to see early signs of a new market emerging in other areas of the industry. There has been an increase in the number of large pension funds and existing annuity portfolios that are coming to the market. We are actively looking at how best to deploy our considerable experience and obvious competitive advantages in respect of these new opportunities.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
View from the front row
Project Libra unveiled
Including SJP and investment trusts
Spent two years at Sanlam
Will also assess FCA's actions