Jim Armitage: For insurers, new rules mean bigger is better
Axa’s decision to quit the last chunks of its life insurance operations tells you all you need to know about the current state of the industry.
If you’re not a Legal & General or an Aviva, you will never have the scale to compete.
That dynamic has only been accelerated by the new capital requirements companies need under the Solvency II rules, which make it far harder to operate as a niche player.
Axa had actually made its move to get out of life insurance long before — five years ago when it sold the bulk of its operations to Clive Cowdery’s Resolution. But Solvency II will have hastened today’s completion of that move.
Far better, Axa has decided, to focus in the UK on brands like PPP, where it’s number two in the market, and general insurance, from where the newly elevated UK boss Amanda Blanc hails.
Neither area is as plagued by new regulations as life insurance, where the new burdens make more consolidation inevitable.
That dealmaking means fat fees ahead for the City’s specialist consultants. Boutique adviser Fenchurch, hired by Axa on today’s sale, has done six financial services deals in the past month.
So, you see, new regulations may be a bind for the companies forced to implement them. It may stifle growth and innovation. But it’s bringing happy days for some.
