Offshore products have benefited from major inflows in the first half of 2006, according to the ABI....
Offshore products have benefited from major inflows in the first half of 2006, according to the ABI. The increasing demand for diversification plus the tax benefits of portfolio bonds has led to the strong growth.
Figures for single premium offshore business showed total new premiums in 2005 were £5.1bn, while premiums for the first half of 2006 had already reached £3.4bn, said the ABI. The majority of this was invested in investment and pooled personal bonds.
In the view of Steven Whalley, head of marketing for investment products at Aegon Scottish Equitable, the figures show a shift in investment attitudes since the turn of the century.
"In 2000, about 80% of money was flowing into insured products, and most of that went into with-profits offerings," he said.
"However, these figures show that, for the first half of this year, around 80% of new money flowed into offshore portfolio bonds with only 20% placed in investment bonds, so the situation has reversed."
Andy Marks, sales director at Canada Life International, said the growing popularity of portfolio bonds is partly down to investor demand for a wider range of investments.
He added: "Investment banks and institutions are realising a portfolio bond is a tax-efficient vehicle and as a result many are using portfolio bonds to hold hedge fund exposure, for example, driving a growing trend over the past two or three years."
ABI statistics show the majority of new business has come through independent or whole of market intermediaries, with only £494m of the £3.4bn in the first half being invested via single-tie advisers.
By comparison, the offshore market for regular premium products was less than a 10th of the size of single premium business, with only £79m of inflows via regular premiums in 2005 and £49m for the first half of this year.key points
Diversification and tax benefits leads to surge in offshore sales
Investment attitudes shifted since turn of century
Investors want wider range of investments
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