Profit margin on corporate wrap in the UK is thinner than in other countries such as France, says Henri de Castries, chairman and chief executive of Axa Group.
Explaining Axa’s decision to leave the corporate pensions space at a presentation in London this week, de Castries said the idea of a financial services market developing in the workplace is an attractive proposition, but argued that domestic factors such as legislation and different countries’ business models meant that margin differs widely between nations.
At the presentation, Mike Kellard, Axa Wealth UK chief executive reiterated the logic for the company’s UK restructure by revealing 74 per cent of single premium personal pension business in the second quarter of 2010 was recycled. Kellard added that Axa could return to the corporate wrap space, and had through the small print of the Resolution deal kept the intellectual property to allow it to do so.
De Castries said: “Seen from outside corporate wrap is an ideal solution. Then seen from one country to another there are very big differences.
We have a very significant position in France where we have a lot of good business.
Clearly we think we would be very well positioned to do this, having a global brand and resources we are well positioned. Having said that, the question is how good is the legislation and how good are the margins. Because if it is to do a business where the margins would be very thin, that is not interesting for us.”
Kellard said: “You can stretch the payback time for group pensions in some cases to 15 to 17 years. We have pulled out of that part of the business but we have kept our trustee investment plan business, which is a platform to get large assets onto, so we are therefore still in the market with EBCs and trustees of pensions schemes in the UK. We have kept the right to develop the corporate wrap.
Worksite may prove to be in future a strong route into wealth management and we are watching that space very carefully and we have got the capability to move back in there.”