No one has written the definitive  history of life insurance over the past 50 years, but Gordon Aitken has a good go.

There are of course part of the pictures he cannot touch. Wealth management was initialled by Abbey Life and taken on through Mark Weinberg and friends through Hambros which became Allied Dunbar and spawned SJP which continues to prosper independently of the story Gordon tells. But the big picture is outlined here and in the Substack that he promotes.

I write at the end of the week and it seems like the end of the week for our life insurance industry. Here is the link to the more in depth article 

 I lost resolution in 2027

The complaint that while life insurance set out its stall as providing people with protection against calamity, it has become a platform for the sale of a wide variety of products bought by British people. The lesson is that the public need and buy protection but – to quote the article

Public markets debate insurance complexity. Professional buyers buy cashflows.

Herein a problem

the asset barely changes, but the type of buyer who wants it, and the reason they want it, changes about every fifteen years. Right now, in my view, it is changing again.

In the last century , we (the people) owned the life insurers

The mutual era ends in a land-grab (late 1990s)

then

The clearing banks tried bancassurance, and mostly failed

then

The Europeans arrive for growth, and leave when it fades

The buying and selling had left a lot of casualties and these could be swept up , consolidated and run for profit

The first financial buyers: closed life books, bought at discounted multiples (2000s)

The business of the life insurance salesman was long gone and had been swapped for one of financial reorganisation.

Now we have lost any sense of social purpose within insurers. Now we have businesses looking to de-risk what was built in the second half of last century.

The customer, on whom life and pensions were built is no longer important to the new owners of insurers. As Gordon eloquently puts it, insurance is now the funding for an investment machine held outside of Britain and of Europe.

We have allowed this to happen because we gave up our ambition for life and pensions. We do not see salespeople, life and hospital costs and health insurance are part of an employee’s benefit and if outside the workplace , there is inherited wealth for the rich and tax-payer provision of benefits for the rest of us.

But let that be. What troubles the PRA about the latest bout of buying is that the risk that is being sold once more is now finding a new home which everyone’s uncomfortable with

The risk that travels offshore

The newest owners do bring a newer risk, though it is not really about who holds the shares. It is about where the risk ends up sitting. A great deal of UK annuity risk is now ceded offshore, typically to Bermuda, through funded reinsurance.

The PRA are onto this and Gordon Aitken is confident that our pensions will be protected if a reinsurer fails (concerns centre on the quality of the reserving).

Gordon’s voice is informed by 30 years experience dealing in the institutional end of all this. My experience is of being a salesperson for many of the names he mentions in his sub-stack.

At some point – people ceased to matter. This merry-go-round of ownership – detailed by Gordon Aitken has taken us to where we are today. A British insurance industry , British only in name, not in ownership.

If you are trustee of a UK pension, do you want to offload your liabilities to the British insurance industry? I suggest you think long and hard about your fiduciary duty to your members.

Thanks to Gordon Aitken for his remarkable scope and eloquence.