Paul Evans to oversee AXA Life division but future role unclear

Resolution need to indicate to the IFA market that they are a company whose main consideration is delivering value and performance for its policyholders and not for its shareholders

From where I sit, I am more inclined to buy shares in Resolution (based on their substantial book), rather than recommend clients use them for investment

This doesn't bode well for client's holding former Sun Life or Equity & Law plans. They have been poorly dealt with by Axa and now dumped to Resolution.

Given that individual plan holders have no say in this, is it TCF?

I'd be interested in the FSA's view.

The world has changed, and continues to do so.

Surely, Life Offices are now largely irrelevant for the type of business they have grown used to over the last 40 or 50 years?

By that, I mean the expensive and opaque regular premium savings and pension plans which were their mainstay until around 15 years ago, and latterly Investment Bond contracts.

In future we are going to be looking to Life Offices to provide the contract arrangements which they are best placed to offer, that is, Protection and Annuity arrangements.

It's going to be a very much thinner market for Life Offices in future, and Management are reacting to that.

I agree with Gerry Cooper, although would probably add corporate pensions as well. To be fair though, since charges on pensions came down and With profits stopped being popular, Life Companies haven't actually made any money on Investments/regular savings/individual pensions. That being the case, they will probably become more profitable if the stick to Life Policies, Annuities and Group Pensions.

As a thought though, I suspect that resolution are rubbing their hands together at the thought of all of those Axa pension policies that will end up in uncompetitive profitable annuities.

It's all about funds under management and policy charges: these old arrangements are very generous to the insurer with charges being taken from funds managed and premiums paid at an extortionate rate that is simply not seen by the fund owners and policyholders.

Axa has capitalized these ongoing income sources, whilst Resolution has bought the income, which is very generous considering that the charges were set assuming an ongoing search for new business costs that simply are not there anymore.

The only losers are the policyholders whose money is being plundered.

Dave & Gerry are quite right; this is just the start of a new wave of consolidation of Life Offices, whose historical strengths are unsuited to the modern world. RDR will mean those Offices that still live off high commission offerings and/or by paying indemity commissions will soon have no USP left. The budget has killed off hopes for an Investment Bond revival, and billions of pounds continue to flow out of with profits each year - much of it going onto new model platforms and wraps.

I'm sure Resolutiion will be looking hard at companies like Scot Eq, Scot Life, even Prudential and L&G and no doubt all, or parts, of some of these companies will be eaten up well before 31 December 2012.

As for Duncan's valid point about long-suffering policyholders of "Zombie" funds, I doubt the FSA will do very much - after all, the CEO of Resolution is a Mr John Tiner!

SIPP please

Resolution will be kerchinging all those nice charges to their shareholders when they can run the money for a fraction (many bps) of what they shall receive.

The FSA's own work into 'zombie' with profits funds versus open funds was inconclusive - archives.

This fine industry is getting into another nice mess.

At this time a fair amount of business is being done by recycling existing money. Some of this is being done very well and professionally. Some isn't and is tantamount to downright churning for churning's sake.

As there are so many closed funds (and there will be many more at this rate), this must continue to be a major source of business for quite some time to come.

However if/when commission is finally outlawed, there is little incentive for the adviser to build large sums under management unless suitable fees are agreeable to the client.

But the bottom line is that (regardless of whether the client is paying adequate fees) we are still recycling existing money - which is an ever decreasing circle.

What the industry needs is a huge inflow of new cash.

The real paradox is that it has been government meddling that has brought us to this point. Yet this meddling has brought the statutory pension schemes to virtual bankruptcy and closure. And if they do close almost every penny should be transferred out into the system. That would result in a massive windfall into our industry.

But the government would not have the capital to pay this.

Instead of addressing this, they are relying on contribution income to pay the pensions in payment and the funding position will inevitably worsen.

As an adviser, I have been involved with many pension transfers. And I am convinced that the correct way ahead for a scheme closure is to offer to fund for every member to obtain their own individual transvas from the IFA of the member's choice.

In my experience, individual quotations seem to be better for the member than bulk buyouts. I appreciate that this is a generalisation, but perhaps someone else will back me on this, based on their own experiences? In addition, individual quotes allow personal investment management to match the individual's attitude to risk - much better than a "take it or leave it" scenario (especially when there is no "leave it" option on a wind-up!).

So my point is simple. If FRS17 is to exist for all other schemes then it should apply to the 5 statutory schemes i.e. shortfalls must be funded.

Bankers got bailed out when they did not deserve to be. Instead, why not bite the bullet and scrap the 5 statutory schemes and pay out full transfer values?

This would boost our industry immensely.

However, the cynic in me would wonder whether a deal would be done to simply fund bulk buyouts instead. And if that is the case, the cynic in me asks who gets the business (given that hardly any providers actually offer such a facility)?

Or has a deal already been done on the quiet?

Incidentally, I am cynical on this issue. I have quoted for a local authority's death-in-service when it was up for renewal. I won the quote (an "insider" admitted it) but didn't get the business because I was a sole trader!