The Association of International Life Offices (Ailo) has recruited a new member from Luxembourg, Nat...
The Association of International Life Offices (Ailo) has recruited a new member from Luxembourg, Nationwide Mutual Insurance Company, as it begins a drive to attract more companies from the Grand Duchy. This takes the number of distinct member companies of Ailo to 25. It now has 33 members if the subsidiaries of all the offshore insurers are included.
Nationwide has two Luxembourg-based insurers. It acquired Pan Euro Life in 1999 and then Danica Life in 2002, both of which will go under the Nationwide banner as members of Ailo. Ohio-based Nationwide established Nationwide Life Company in Poland in 2000 and Europewide Life in 2003 to target the Italian market. It also acquired asset manager Gartmore in 2000.
Stuart Fairclough, chief executive of Ailo, said Pan Euro Life used to be a member but resigned a few years ago. He added that Ailo is talking to other insurers in Luxembourg to discuss the benefits of becoming members and its relevance to European cross-border business.
The membership of Ailo is still dominated by insurers based on the Isle of Man. Fairclough attributed this to historic reasons because it grew out of the rise of offshore sales into the UK. "When European cross-border insurers started being established in Dublin and Luxembourg, there were questions about how relevant Ailo was to them. But now virtually all the old international insurers have entered the cross-border European market as well."
While Ailo is striving to recruit more Luxembourg members, offshore insurance sales are still dominated by the UK market, which comprises around 60% of total business. It appears offshore sales in the UK have recovered this year after a disappointing 2003. Ailo reported that sales globally fell by 18% last year, with UK business being between £2bn and £2.5bn. For 2004, however, sales are expected to recover to between £3bn and £3.5bn.
Furthermore, said Fairclough, the proportion of UK IFAs who have written at least one offshore case should rise this year to between 30% and 40% from 15% to 20% in 2003. Fairclough said the key to expanding sales of offshore bonds is explaining the tax planning and investment advantages of these products to clients.
"We have issued a series of guides to educate intermediaries and investors," he added.
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