Pressure on 100pc guarantees

Pressure on insurance companies to deliver returns to shareholders will lead to a reduction in the range of guaranteed financial products available on the market, a leading insurance executive has warned.

Speaking at a The CityUK conference in London last month, Elizabeth Corley, chief executive officer of Allianz Global Investors said: “There is an assumption in the IORP that there is enough capital in the world to support the liabilities from ageing demographics. There isn’t enough capital in the world to support the demographics.

“If I listen, not just to our own company where we provide variable annuities, capitalised products as they are called abroad, or with-profits, but when I listen in a low interest rate, low return environment, to what shareholders think on the returns on that capital, I think it would be very stupid for us to assume that those products will continue to be available in the breadth and depth they are now.

“The implications of Solvency II are massive on the insurance industry, let alone the pensions sector. And the reality is that will start to bite in the next year. So this move from something that provides a 100 per cent capitalised guarantee for an ageing population that is growing to a middle way is going to become a global topic.”