A company spokesman stressed that the decision was merely a technical one, which involved transferring “regulated activities” from one licensed entity – Zurich International Solutions, or ZISL – to the Zurich Intermediary Group (ZIG). He said the changeover occurred “at the end of 2011”, with the result that, from 1 Jan 2012, “distributors have been able to source both domestic and international products through ZIG”.
Zurich Intermediary Group is based in Swindon, and markets a full range of Zurich insurance and investment products to the UK retail market.
Zurich International Life, which is based in the Isle of Man, continues to market pension and group risk products to corporate clients in the UK, through specialist employee benefit consultants, the Zurich spokesman stressed.
Industry observers said Zurich’s move reflected its focus on such rapidly-growing markets as the Middle East and Asia – as well as, probably, an early realisation that the already mature UK offshore products business would become even more challenging after the changes being brought in by the Retail Distribution Review took effect on 1 Jan 2013.
“They [Zurich International] have never been particularly UK focussed, so it doesn’t surprise me, given the issues of conforming with RDR,” said one executive with a rival purveyor of offshore bonds, who requested anonymity, when informed of Zurich’s decision.
Nevertheless, there was some surprise that the company had not alerted the market to the change, beyond informing its existing clients.
The Zurich Group continues to sell offshore bonds into the UK market, based on the Association of British Insurers’ quarterly sales data.
However, the ABI does not specify which entities in the Zurich organisation are generating these sales, and a company spokesman said that the statistics “do not include any ZILL (Zurich International Life Ltd) sales”.
“[The ABI statistics] will reflect any offshore bonds sold in the UK through any other Zurich businesses which are active in the UK market,” he added.
Consolidating UK industry
Zurich International’s decision to discontinue active marketing to the UK retail market comes as some of its rivals have also walked away from it.
Royal London 360°, for example, announced last year that it would focus only on platform and wrap markets in the UK, while Axa Wealth restructured its marketing operations, getting rid of offshore sales specialists and reducing the headcount of such other teams as account directors and telephone sales.
The difficulty when companies cut back on their marketing efforts is that advisers tend to forget them, once they begin to fade from view, noted Richard Leeson, a former Prudential and Axa Wealth executive who launched D&W Management Consulting earlier this year to help life companies, advisory firms and wealth managers to adjust to the post RDR world.
“No doubt Zurich will be keen to reassure UK advisers of its commitment to support them in the future,” Leeson added.
Such cutbacks have come against a backdrop of steadily declining sales of offshore bonds into the UK market. As reported here in May, new business offshore bond sales ended up a fifth below 2011’s levels, which in turn were down more than 7% from the previous year, as investors shunned equities and similar investments, and the industry was distracted by the need to prepare for RDR.
