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Apr 28, 2016 7:45 AM ET

Archived: Cerulli Associates global analytics: Unit-Linked Success Critical to the Business Model of Europe’s Large Diversified Insurers

iCrowdNewswire - Apr 28, 2016

Cerulli Associates


Unit-Linked Success Critical to the Business Model of
Europe’s Large Diversified Insurers


Insurance firms consider their options as they struggle to meet policy guarantees  


Cerulli Associates’ report entitled  European Insurance Industry 2016: The New Frontier for Institutional Asset Managers finds that life insurers Europe-wide are becoming providers of investment products as guaranteed business stutters.
The French stole the limelight shone on unit-linked in 2015, by buying more non-guaranteed products than guaranteed. But in truth insurers across the region are increasingly dependent on the success of unit-linked to keep afloat.
“Those insurers without a network at all and used to selling risk products face significant challenges,” says David Walker, Cerulli’s director of institutional research. “But these challenges present opportunities for asset managers to step into the breach and offer distribution advice.”
Some insurers are stepping only tentatively into the world of non-guaranteed fare by launching partially guaranteed products that limit client participation in market gains, and use the extra gain to buy protection against loss. Guarantees on other products only take effect after set periods.
Such hybridization opens the door to general account work for those asset managers whose interaction was previously on insurers’ investment products, because the hybrid products mean insurers’ general account and distribution teams are having to interact ever more with one another. Justina Deveikyte, a senior institutional analyst at Cerulli says that managers should exercise caution when providing cogs for insurers’ unit-linked or hybrid product ranges: “They must explain with crystal clarity how their cog and attached guarantees operate, as well as the costs.”
Guaranteed business may yet stage a comeback but in the near term at least, expanding into pensions and unit-linked business will be the growth drivers for many of Europe’s diversified insurers. M&A may be the fate for small and specialized underwriters.
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About Cerulli Associates
Headquartered in Boston with offices in London and Singapore, Cerulli Associates is a global analytics firm that provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.
Cerulli’s research product line includes Cerulli Reports, The Cerulli Edge series, and Cerulli Lodestar.

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