Insurance &

Pensions Sector
Market intelligence report prepared by Guidant Group

DECEMBER 2014

Introduction
This report is designed to provide an
in-depth look at the current and expected
trends of the insurance and pensions sector.
It will provide an overview of the current
state of the market, including activity within
some of the major names in the industry,
as well as recent market insights.

The report then moves on to focus

on employment trends and the latest
strategies for attracting the best talent
within the sector.

Market Overview
The number of workers employed in the
Financial and Professional services sectors
in London, has surpassed its peak prior to
the 2007 financial crisis to reach a level not
previously seen; there were 691,700 workers
in these industries in 2007, and this figure
now stands at 703,900. 70,200 (10%) of
these are in the insurance sector.

The recent growth in the number of pension

mandates being led by LDI (Liability driven
investment), also suggests growth in the
UK pensions market, with liabilities reaching
517bn, up 17% on 2013 (KPMG).
However, big changes have been observed
in the format of pensions taken out; the
scrapping of laws requiring annuities to
be taken out has triggered a 30% fall in
annuity sales over the last 12 months.

Employment
Financial & Professional Services
800

Thousands

The UK insurance industry as a whole,

the largest in Europe, currently manages
investments of 1.8trillion, or 25% of the
total net worth of the UK.

750
700
650
600

2007

2014

The pension market is experiencing

substantial growth in itself, with the number
of pension policies sold in the past year
rising 30% year-on-year, largely due to the
regulation of automatic enrolment of those
not already on a pension scheme.

Competitive Landscape
& Analyst Commentary
Analysts fundamental outlook on the
insurance industry, particularly the life
and health sub-industry is positive.
Experts predict a stronger economy,
accompanied by better job growth
and eventually higher interest rates,
helping to drive stocks higher.
Industry experts also predict that
efforts by various companies to
rationalise their businesses by
revamping products, raising prices,
and exiting high risk or non-strategic
businesses to bear fruit.

Willis Group reported 2nd quarter

revenue grew 5.1%, with commissions
and fees up 4.5%.
Financial Services Group IFG, which
reported an 8% year-on-year growth in
first half revenues, to 34.1m, agreed
to sell its main pension administration
and advisory business IRG Ireland,
to the Irish arm of global Insurance
Group, Willis Group.

IFG is also in advanced discussions

regarding the disposal of its smaller
businesses, ARB and Insure4Less,
which will allow the organisation to
focus solely on its UK business, chiefly
its James Hay specialist pensions
business and its independent financial
advisory arm, Saunderson House.

Possible Friends Life

and Aviva Merger
Friends Life & Aviva
Friends Life and Aviva have this
week announced that discussions are
underway regarding a potential 5.6bn
merger. Aviva now have until 19th
December to submit a formal offer.
Although opinions have been split,
it is suggested that the deal would be

beneficial for both parties; it would

drive Aviva to a leading position in
corporate and individual pensions
while Bernstein Research suggest
that Friends Life would struggle to
find a more attractive buyer than
Aviva, in terms of the significant
synergies on offer.

The potential deal also heralds

strong prospects of growth
following the recent annuity
reforms, according to analysts.
The news triggered a sharp rise
in Friends Life shares of 6%.

Direct-to-Consumer Investment
According to industry experts, large insurers have announced plans to follow the banking
industry and grow their footprint in direct-to-consumer investment; the removal of
intermediaries in their business. Banks are already said to be reaping the rewards of
a lack of intermediated business, with a reduction in the level of multi-channel conflict.

Industry Status
Regulation
The pension industry is facing three
times as much regulation than it was
just six years ago; 108 regulatory
releases were observed during
2013/14 compared to just 30
in 2008/09 (out-law).
There is the potential that by enforcing
such a volume of regulatory practices,
the best outcome will not be delivered
to savers or workers.
Such regulation is largely focused around
automatic enrolment onto workplace
pension schemes, which came into
effect for large employers in 2012.

Accountability
Governor of the Bank of England,
Mark Carney, plans to ensure that
senior insurance executives are
scrutinised in the same manner as
senior bankers, in order to retain the
strength of the industry and avoid a
repeat of the incidents in the banking
industry that contributed to the 2007
financial crisis.
Carney has implied that the correlation
between seniority and accountability
has become blurred, and senior
individuals should prove their suitability
in greater depth before being
appointed into such roles.

Carney has also set out a

three stage plan to deal with
risk in the industry; to ensure that
future financial shockwaves can
be weathered, Carney believes it
is essential that capital standards
are tailored and consistent.
Mark Carney has also outlined plans
to introduce a Basel II-type directive
into the insurance industry: Solvency II.
This will ensure that regulation within
the industry is consistent, and reduce
the risk of insolvency by maintaining
strong capital buffers.

It is also believed that two

further pieces of legislation will be
enforced before the UK General
Election in 2015.
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Employment
New Appointments
Robert Wildbore, Managing Director
and Executive Vice President of Willis
Re Canada, is returning to the UK to
take up a new senior position at Willis.
Friends Life have appointed former
Aviva director Andy Curran as interim
chief executive, with John Van Der
Wielen set to be named executive
chairman of the international business.

The Bank of England said its top

insurance regulator, Julian Adams,
left to take on a role at Prudential Plc.

Charlie Diebel has been hired by

Avivas asset management arm as
Head of Rates Strategy.

Aviva named Adrian Montague as

non-executive chairman, replacing
John McFarlane, who is taking up
the same job at Barclays.

Candidate Perspective
Salary
Despite generally attractive salaries
on offer in the insurance industry as
a whole, pension professionals have
seen salaries fall below market rate,
often accompanied by an increase
in workload as a greater number of
employees look for new career moves.

Nearly two thirds of employees in the

industry did not believe their salary
met the industry average, suggesting
a detachment between candidate
expectations and employer pay levels.

It is, however, suggested, that 2015

could see wages increase at a faster
rate than inflation, largely due to the
continuing trend of low inflation at
comfortably below 2%.

This is despite a continuing shortage

of suitable candidates for the large
capacity of roles available.

Employer Perspective
Skill Base
The UK insurance industry is built on a
highly advanced skills base, with a high
comparative advantage over overseas
growing economies, with regards to
insurance skills and talent.
However, due to the breadth of roles
available in the sector, there is frequent
difficulty recruiting suitable individuals
across all skill levels, particularly those
at entry level.
Demand for highly skilled workers
in the industry has also risen over
the previous 12 months, both
interim and permanent.

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Securing the Best Talent

A rise in salaries above industry averages should be investigated,
as well as alternative approaches in order to secure the best talent, including:
Greater promotion of the industry,
and its attractive features.
Greater visibility of roles, schemes
and initiatives available in the industry.

Greater networking and guidance

opportunities to individuals considering
or even not considering a career
within the insurance industry.

Invest in entry level candidates,

including aiding attainment of
professional qualifications
(graduates, apprentices).

Prime Minister David Cameron has urged FTSE 100 employers, several of
which operate within the insurance industry, to do more to employ apprentices.
Roughly two thirds of these organisations already have such a procedure in
place, and the PM has given the remaining firms until 2020 to follow suit.
Around 1bn will be invested in order to create the
planned 3m new apprenticeship roles, which
will be created to reduce the ratio of
applications per place, which
currently stands at 11.

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References
www.gov.uk/government/uploads/system/uploads/attachment_data/file/263148/the_UK_insurance_growth_action_plan.pdf
www.professionalpensions.com/professional-pensions/news/2341134/pension-salaries-out-of-line-with-the-market
www.abi.org.uk/Insurance-and-savings/Industry-data/Free-industry-data-downloads
www.professionalpensions.com/professional-pensions/feature/2317935/key-challenges-the-pensions-industry-faces-in-2014
www.out-law.com/en/articles/2014/june/uk-pensions-industry-facing-three-times-as-much-regulation-as-six-years-ago-according-to-survey/

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We Are Guidant Group

Guidant Group, an international managed service provider and recruitment outsourcing specialist, is proud
to be part of Impellam Group, the second largest staffing business in the UK. Together we have significant experience
of working in partnership with companies within the pensions and insurance arena, reducing recruitment costs by
an average of 23.4% while significantly improving customer satisfaction and the quality of new hires.
If you would like to find out more about our services and how we can help you manage any aspect of your recruitment function,
please do not hesitate to get in touch:
Simon Blockley CLIENT SOLUTIONS DIRECTOR
T: 020 3096 4409
E: simon.blockley@guidantgroup.com

Interested in finding out the specific benefits your company could enjoy?
Please feel free to contact our advisors:

E: enquiries@guidantgroup.com

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