Life insurance giant pulls out of offshore bond investment market

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Written by Ray Clancy

Tuesday, 09 February 2010 09:33

A significant decline in demand for offshore investments from UK customers and advisers had led Aviva Life International to stop offering new offshore bonds.
The Dublin based company will no longer offer new offshore bonds to customers from February 26 but it stressed that existing customers and their policies are not affected by the decision and it is contacting them to let them know.

And from April 1, Aviva will transfer the administration of its closed book of business to Capita Life & Pensions Services, Ireland, as part of a third party supplier agreement.

The administration of the closed book will be managed out of Dublin by Capita and a small Aviva team will be retained to oversee the operations. Most of the 75 employees will transfer to Capita in Dublin under TUPE regulations.

Aviva Life International specialises in offshore investment solutions to customers resident in its core UK market is separate to Aviva’s other operations in Ireland.

‘Our decision to close offshore bonds to new business reflects the significant decline in new business sales across the offshore bonds market. However, we will continue to support our existing customers and their policies, and there is no change for them at all,’ said managing director Tim Madigan.

It is not the only offshore specialist to indicate a fall off in interest in offshore investments.
In its latest new business results for the year ending December 31, 2009, Royal London 360 reported a difficult year for the offshore market with sales down in most markets by around 40% and single premium investments particularly badly hit.

Standard Life also said its offshore bond sales were 44% lower at £370 million compared to £661 million in 2008 due to the impact of the weak economic conditions experienced during the year.

But Colin Thores, European product development manager, said the company is still optimistic about offshore investments. ‘Aviva just never cracked the offshore market. They were not that well established in it and it did not form a massive part of their business. We have a much wider distribution including via wraps and our link up with Fidelity, and we see the offshore bond area as being a key component of our wrap offering going ahead. Offshore bonds are still a very vibrant market,’ he explained.