Zurich Insurance Sales Fall

18 August 2011 - Which Way to Pay

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Zurich Insurance Sales Fall

Zurich have reported the dramatic reversal of their Irish market share growth is a result of “aggressive pricing” by Irish Life Assurance and New Ireland. The life insurance giant seems unable to match up to the duo’s sales as shown by the 10% fall in new business sales for the first half of this year. This statistic does not tally with the overall rise of 3% seen across the market for life insurance giving Zurich cause for concern.

Zurich Life's Irish chief Anthony Brennan reported that the market share at the half-year point was down 7% to 16.7% - a marked and dramatic reversal for the same company that grew its market share by 30% over two years to January. Mr Brennan accredited the "tough year" to the fact that "competitors attached to banks are being prepared for sale and this is driving aggressive pricing for new business".

 Irish Life Assurance (ILA) only publically appeared to the market after the March stress tests, and Brennan insists it had been "preparing for sale" as supported by the continual price adjustments witnessed since the start of the year. Mr Brennan said he "couldn't comment" on whether Zurich had lodged a first round bid for ILA.

Other insurers have been drawing on good results, notably New Ireland/Bank of Ireland Life who reported a 19% rise in premiums for the first half despite a market-wide fall in premiums by about 10%. However, Government changes may make squeeze the whole market further. In the next budget, the Government is expected to slash pension tax relief and it has been indicated that changes to the tax rate for people drawing down on their pensions may be introduced. In response to these issues, Mr Brennan said;

"Industry dialogue hasn't been very effective so far, the Government has bigger issues to deal with; we've been trying to catch their attention".

 Zurich has suffered mainly due to falls in new protection sales (down 14% in the first half), which has been felt to a lesser magnitude market-wide. The Swiss insurer hopes to regain this ground after "repricing" its offering in July. Similarly, losses occurred due to Zurich’s late acknowledgment of the growing market for "tracker bonds", a type of savings product that invests heavily in bank deposit accounts. Zurich responded to the evolving market by launching a tracker bond with Credit Suisse in the second quarter which saw its market share recover from 16% in the first quarter to 18% in the quarter to June. Mr Brennan admitted to missing the trick by saying;

"It's probably true that we missed the market moving to tracker bonds in the first quarter, but we have responded”.

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