With one notable exception, this summer has been a relatively quite period for our sector. But as the tans start to fade, so the machinery of corporate advice gets back into gear. This autumn will be a crucial time for the shaping of the regulatory framework for workplace benefits, with key decisions around remuneration and implementation of pensions to be made in the next few months.
Employees will be in for changes too – those in contracted-out schemes will be coming to terms with their reduced benefit projections, while many predict an increase in enhanced transfer activity.
While on most fronts the summer months have been uneventful for many of us, there has been one notable exception – the not unexpected but still seismic announcement that Resolution is, subject to shareholder approval, to take over Friends Provident, using the insurer as its first building block in the creation of a consolidated life office giant that is open for new business.
The message from Resolution is that its £5bn plus paper war chest means that all but the biggest players are in its sights. With such a broad range of businesses said to be on the consolidator’s list of potential candidates, talk of any one target would seem misguided at this stage. But staff and board members at Friends can be forgiven for any feelings of schadenfreude at the discomfort of others now the subject of speculation after so long in the limelight itself.
However, what is important to the project is that corporate intermediaries are satisfied. Friends’ value as a life office writing new business is predicated on the confidence it can instil in corporate advisers. Similarly, advisers’ primary concern about the businesses that are to be bolted onto Friends is that they manage to offer their corporate clients and their employees high levels of service over a very long time horizon. Sticking together life offices where systems do not dovetail causes frustration for advisers and ultimately turns them off the provider. We have seen it before with life office mergers and Resolution will need to make sure that whatever it puts in place meshes efficiently if it is to be of any value when it is brought to market three or four years down the line.