Friends Provident aims to gain long-term foothold in Germany
UK Life and Pensions provider Friends Provident is preparing to break into the German market. The FTSE 100 listed company wants to exploit the opportunities in the German market for its international expansion.“Germany is very interesting for us. We have analysed the market very carefully and strongly believe that on the back of our long-standing experience and financial strength we can take full advantage of the opportunities in the German market,” said Rocco Sepe, managing director international at Friends Provident.
The company, which was set up 175 years ago, is now one of the top ten life insurance businesses in the UK and has more than 2.5 million customers. As Friends Provident announced at the end of January 2007 in London, life and pensions new business rose by 31% to £7.1 billion in 2006. The group achieved about 40% of new business outside its domestic market. Friends Provident sees itself as not only a UK provider of insurance products but rather as an international company with excellent prospects in Europe and Asia.
The acquisition of Royal & SunAlliance International Financial Services in 2002 and Lombard International Assurance SA in Luxembourg in 2005 has set the wheels of international expansion in motion. Furthermore, Friends Provident’s international arm has been operating from Hong Kong in the Asia-Pacific region since 1988, and now also operates in the Middle East from Dubai. A branch in Singapore is under development.
Germany is a very attractive market
Now Friends Provident is planning the long-term development of business in continental Europe, especially in Germany. “The Retirement Income Act opens up great potential. After the UK and France, Germany is one of the largest life insurance markets in Europe. We want to take advantage of these opportunities by offering, via independent financial advisers, an innovative selection of investment strategies that are not currently available in the German market,” said Sepe.
In recent months, preparations have been underway to begin writing business in Germany in partnership with the distribution and service business, Financial Partners Business (fpb) AG, whose headquarters are based in Cologne. Close cooperation has led to the development of highly flexible unit-linked pension plans, which can be used for personal and company based retirement planning. Friends Provident is concentrating on the self-employed and employed customer group, which places great value on the flexibility and investment know-how of their life insurer. “To offer retirement provision products is a long-term investment business. We shall begin business activity in Germany with the Friends Plan range of pensions,” said Sepe.
A German-UK partnership combining know-how from two markets
The UK insurer is breaking into the German market through fpb AG, which organises the complete sales service for the independent broker. In Germany, Friends Provident is focusing solely on the IFA distribution channel because it promises the highest potential growth rate in the long-term.
“We are not targeting the mass-market. Our aim is to be successful in lucrative niche markets,“ said Sepe. Until now the group has sold life insurance in Germany through its wholly owned subsidiary, the Luxembourg-based Lombard Assurance International SA, with distribution through asset managers and private banks. The business model of the UK insurer is based on a close partnership with independent financial advisers, who are supported by an extensive range of services. In its domestic market Friends Provident is a market leader in its service orientation and development of flexible products. This is regularly backed up with awards, including Life Insurer of the Year at the “British Insurance Awards 2006“ and the five star award for excellent service at the “Financial Adviser – Practiv Service Awards 2006“.