| MP66083 |
| MAPS : European Long Term Insurance: March 2003 |
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This report covers: European long term insurance, pension funds, pensions, Germany, density of insurance, life investments, The Riester Reforms, Italy, The Netherlands, Spain, the, UK, Alleanza Assicurazioni, Allianz, Aviva, Barclays, CNP, Assurances, Fortis, Groupe Axa, Lloyds TSB, Predica, Prudential,
Companies covered include: Alleanza Assicurazioni, Allianz, Aviva, Barclays, CNP, Assurances, Fortis, Groupe Axa, Lloyds TSB, Predica, Prudential,
EXECUTIVE SUMMARY
| Executive Summary |
| The European long-term insurance market faces two major problems: |
| how to finance insurance contracts when the stock markets are falling |
| how to fund pensions when the working population is declining, but the number of pensioners is rising. |
| Until 2000, many critics answered both questions with confidence: first, life insurers were required by national governments to hold adequate capital reserves to fund their contracts; and second, by adopting the UK approach to pension funding, the problem of pension support for the elderly could be overcome. |
| However, by 2003 the credit ratings of even the strongest insurers with reserves initially well over the minimum capital requirements were beginning to crumble in the face of the longest bear market for several decades. The introduction of bancassurance in the late 1980s — whereby banks bought insurers to exploit their capital reserves, and insurers bought banks in order to sell their insurance and pension products more widely — may now be seen as a mistake. Banks now have to support their insurance companies with their own capital reserves. Insurers have three options: to sell their shareholdings at distress prices; to raise more capital through the markets or through debt issues; or to cut their bonuses. |
| In this report, Key Note considers the current state of life insurance in seven European countries — Belgium, France, Germany, Italy, the Netherlands, Spain and the UK — and compares the state of their life insurance industries. To a greater or lesser extent, all seven countries are deregulating their life insurance markets and most are experiencing growth, which in some countries is vigorous. An insurance company experiencing pain in one country will be able to benefit from better conditions in another, provided it has gained sufficient scale to operate across national boundaries. The meagre provisions of the UK state pension scheme are related to the occupational and stakeholder schemes available, and this report highlights the potential and actual problems of the UK system, even though the UK pensions and life industry is the best funded of any in Europe. The report also examines pension provisions in the other profiled countries, which in many cases assume that an adequate pension is a right which should be provided by the State, not by private companies. |
| Key Note forecasts a return to growth in most markets by 2007, assuming that the bear market conditions experienced at the time this report was published (March 2003) have reached a trough and share values start to rise. |
TABLE OF CONTENTS
| Executive Summary 11 |
| 1. Introduction 12 |
| BACKGROUND 12 |
| DEFINITION 12 |
| REPORT COVERAGE 13 |
| 2. Strategic Overview 14 |
| MARKET DYNAMICS AND SEGMENTATION 14 |
| Current Status of the Market 14 |
| Total Industry Value and Growth 14 |
| Table 1: Total Direct Life Premium Income of CEA Members (em and index 1998=100), 1998-2002 14 |
| Market Share 15 |
| Table 2: Market Share Taken by Life and Non-Life Premiums Among All CEA Members (%), 1998-2002 15 |
| Figure 1: Market Share Taken by Life and Non-Life Premiums Among All CEA Members (%), 1998-2002 16 |
| Countries With the Highest Growth Rates 16 |
| Table 3: The Five Highest Growth Rates for Total Direct Life Premium Income in Europe by Country (%), 1992-2001 17 |
| Countries With the Lowest Growth Rates 17 |
| Table 4: The Five Lowest Growth Rates for Total Direct Life Premium Income in Europe by Country (%), 1992-2001 18 |
| DISTRIBUTION 18 |
| Number of Companies 18 |
| Table 5: Number of Companies Selling Life Insurance Products in CEA Member States (number and index 1998=100), 1998-2002 19 |
| Distribution Channels 19 |
| Table 6: Distribution Channels for Life Insurance Products for Seven European Countries by Value (%†), 1995, 1999 and 2000 20 |
| COMPETITIVE STRUCTURE 20 |
| Table 7: Market Share Held by the Largest Life Insurance Companies of CEA Member States by Life Premiums in National Markets (_m and %), 1992 and 2000 21 |
| INVESTMENTS 21 |
| SOCIAL AND ECONOMIC TRENDS 23 |
| The Population 23 |
| Table 8: The Population of the EU and 29 European Countries (000 and index 1998=100), 1998-2002 23 |
| Inflation 23 |
| Table 9: Inflation in the EU and the Eurozone (base 1995=100),1998-2002 24 |
| PENSION FUNDS 24 |
| Overview 24 |
| Old-Age Dependency Ratio 25 |
| Pension Fund Dynamics 26 |
| Table 10: General Overview of Autonomous Pension Funds in the EU (number, %, 000 and em), 1997-2000 27 |
| Regulations 28 |
| REGULATION 29 |
| EU Insurance Directives 29 |
| Harmonisation 29 |
| Legislation 30 |
| MARKET FORECASTS 30 |
| 3. Belgium 31 |
| BACKGROUND 31 |
| Current Legislation on Life Insurance and Pensions 31 |
| MARKET SIZE 32 |
| Table 11: Total Direct Life Premium Income in Belgium (_m and index 1995=100), 1995 and 1999-2002 32 |
| COMPETITIVE STRUCTURE 32 |
| Table 12: Largest Life Companies in Belgium by Total Direct Written Premium Gross of Reinsurance (_m), 2000 33 |
| SOCIAL AND ECONOMIC TRENDS 33 |
| The Population 33 |
| Table 13: The Population of Belgium (000 and index 1998=100), 1998-2002 34 |
| Inflation 34 |
| Table 14: Inflation in Belgium (base 1995=100), 1998-2002 34 |
| Dependency Ratio 35 |
| cONSUMER TRENDS 35 |
| Density of Insurance 35 |
| Table 15: Average Life Premium per Inhabitant in Belgium (_ and index 1995=100), 1995 and 1999-2002 35 |
| Life Investments 35 |
| Table 16: Life Investments in Belgium (_m and index 1995=100), 1995 and 1999-2002 36 |
| DISTRIBUTION 36 |
| Number of Companies 36 |
| Table 17: Number of Companies Selling Life Insurance in Belgium (number and index 1998=100), 1998-2002 37 |
| Distribution Channels 37 |
| Table 18: Distribution Channels of Belgian Life Insurance by Value (% share), 1995 and 1999-2002 37 |
| Figure 2: Distribution Channels of Belgian Life Insurance by Value (% share), 1995 and 1999-2002 38 |
| PENSIONS 38 |
| 4. France 39 |
| BACKGROUND 39 |
| Current Legislation on Life Insurance and Pensions 39 |
| MARKET SIZE 40 |
| Table 19: Total Direct Life Premium Income in France (_m and index 1995=100), 1995 and 1999-2002 41 |
| COMPETITVE STRUCTURE 41 |
| Table 20: Largest Life Companies in France by Total Direct Written Premium Gross of Reinsurance (_m), 2000 41 |
| SOCIAL AND ECONOMIC TRENDS 42 |
| The Population 42 |
| Table 21: The Population of France (000 and index 1998=100), 1998-2002 43 |
| Inflation 43 |
| Table 22: Inflation in France (base 1995=100), 1998-2002 43 |
| CONSUMER TRENDS 44 |
| Density of Insurance 44 |
| Table 23: Average Life Premium per Inhabitant in France (_ and index 1995=100), 1995 and 1999-2002 44 |
| Life Investments 44 |
| Table 24: Life Investments in France (_m and index 1995=100), 1995 and 1999-2002 45 |
| DISTRIBUTION 45 |
| Number of Companies 45 |
| Table 25: Number of Companies in France Selling Insurance (number and index 1998=100), 1998-2002 45 |
| Distribution Channels 46 |
| Table 26: Distribution Channels for Life Insurance in France by Value (% share), 1995 and 1999-2002 47 |
| Figure 3: Distribution Channels for Life Insurance in France by Value (% share), 1995 and 1999-2002 47 |
| PENSIONS 48 |
| 5. Germany 49 |
| BACKGROUND 49 |
| MARKET SIZE 49 |
| Table 27: Total Direct Life Premium Income in Germany (_m and index 1995=100), 1995 and 1999-2002 50 |
| COMPETITIVE STRUCTURE 50 |
| Table 28: Largest Life Groups in Germany by Total Direct Written Premium Gross of Reinsurance (_m), 2000 50 |
| SOCIAL AND ECONOMIC TRENDS 51 |
| The Population 51 |
| Table 29: The Population of Germany (000 and index 1998=100), 1998-2002 51 |
| Inflation 52 |
| Table 30: Inflation in Germany (base 1995=100), 1998-2002 52 |
| CONSUMER TRENDS 52 |
| Density of Insurance 53 |
| Table 31: Average Life Premium per Inhabitant in Germany (_ and index 1995=100), 1995 and 1999-2002 53 |
| Life Investments 53 |
| Table 32: Life Investments in Germany (_m and index 1995=100), 1995 and 1999-2002 54 |
| DISTRIBUTION 54 |
| Number of Companies 54 |
| Table 33: Number of Companies in Germany Selling Insurance (number and index 1998=100), 1998-2002 54 |
| Distribution Channels 55 |
| PENSIONS 56 |
| The Riester Reforms 56 |
| 6. Italy 58 |
| BACKGROUND 58 |
| MARKET SIZE 58 |
| Table 34: Total Direct Life Premium Income in Italy (_m and index 1995=100), 1995 and 1999-2002 59 |
| COMPETITVE STRUCTURE 59 |
| Table 35: Largest Life Companies in Italy by Total Direct Written Premium Gross of Reinsurance (_m), 2000 59 |
| SOCIAL AND ECONOMIC TRENDS 60 |
| The Population 60 |
| Table 36: The Population of Italy (000 and index 1998=100), 1998-2002 60 |
| Inflation 60 |
| Table 37: Inflation in Italy (base 1995=100), 1998-2002 61 |
| CONSUMER TRENDS 61 |
| Density of Insurance 61 |
| Table 38: Average Life Premium per Inhabitant in Italy (_ and index 1995=100), 1995 and 1999-2002 61 |
| Life Investments 62 |
| Table 39: Life Investments in Italy (_m and index 1995=100), 1995 and 1999-2002 62 |
| DISTRIBUTION 63 |
| Number of Companies 63 |
| Table 40: Number of Companies Selling Life Insurance in Italy (number and index 1998=100), 1998-2002 63 |
| Distribution Channels 63 |
| Table 41: Distribution Channels of Life Insurance by Value (% share), 1995 and 1999-2002 64 |
| Figure 4: Distribution Channels of Life Insurance by Value (% share), 1995 and 1999-2002 65 |
| PENSIONS 65 |
| 7. The Netherlands 67 |
| BACKGROUND 67 |
| MARKET SIZE 67 |
| Table 42: Total Direct Life Premium Income in the Netherlands (_m and index 1995=100), 1995 and 1999-2002 67 |
| COMPETITIVE STRUCTURE 68 |
| Table 43: Largest Life Companies in the Netherlands by Total Direct Written Premium Gross of Reinsurance (_m), 2000 68 |
| SOCIAL AND ECONOMIC TRENDS 68 |
| The Population 68 |
| Table 44: Population of the Netherlands (000 and index 1998=100), 1998-2002 69 |
| Inflation 69 |
| Table 45: Inflation in the Netherlands (base 1995=100), 1998-2002 69 |
| CONSUMER TRENDS 69 |
| Density of Insurance 69 |
| Table 46: Average Life Premium per Inhabitant in the Netherlands (_ and index 1995=100), 1995 and 1999-2002 70 |
| Life Investments 70 |
| Table 47: Life Investments in the Netherlands (_m and index 1995=100), 1995 and 1999-2002 70 |
| DISTRIBUTION 71 |
| Number of Companies 71 |
| Table 48: Number of Companies Selling Insurance in the Netherlands (number and index 1998=100), 1998-2002 71 |
| Distribution Channels 71 |
| Table 49: Life Insurance Distribution Channels in the Netherlands (% share), 1999-2002 72 |
| Figure 5: Life Insurance Distribution Channels in the Netherlands (% share), 1999-2002 73 |
| PENSIONS 73 |
| 8. Spain 74 |
| BACKGROUND 74 |
| MARKET SIZE 74 |
| Table 50: Total Direct Life Premium Income in Spain (_m and index 1995=100), 1995 and 1999-2002 75 |
| COMPETITIVE STRUCTURE 75 |
| Table 51: Largest Life Companies in Spain by Total Direct Written Premium Gross of Reinsurance (_m), 2000 75 |
| SOCIAL AND ECONOMIC TRENDS 76 |
| The Population 76 |
| Table 52: The Population of Spain (000 and index 1998=100), 1998-2002 76 |
| Inflation 76 |
| Table 53: Inflation in Spain (base 1995=100), 1998-2002 77 |
| CONSUMER TRENDS 77 |
| Density of Insurance 77 |
| Table 54: Average Life Premium per Inhabitant in Spain (_ and index 1995=100), 1995 and 1999-2002 77 |
| Life Investments 78 |
| Table 55: Life Investments in Spain (_m and index 1995=100), 1995 and 1999-2002 78 |
| DISTRIBUTION 78 |
| Number of Companies 78 |
| Table 56: Number of Companies Selling Insurance in Spain (number and index 1998=100), 1998-2002 79 |
| Distribution Channels 79 |
| Table 57: Distribution Channels of Life Insurance in Spain by Value (% share), 1999-2002 80 |
| Figure 6: Distribution Channels of Life Insurance in Spain by Value (% share), 1999-2002 80 |
| PENSIONS 81 |
| 9. The UK 82 |
| BACKGROUND 82 |
| MARKET SIZE 82 |
| Table 58: Total Direct Life Premium Income in the UK (_m and index 1995=100), 1995 and 1999-2002 83 |
| COMPETITIVE STRUCTURE 83 |
| Table 59: Largest Life Companies in the UK by Total Direct Written Premium Gross of Reinsurance (_m), 2000 84 |
| SOCIAL AND ECONOMIC TRENDS 85 |
| The Population 85 |
| Table 60: The Population of the UK (000 and index 1998=100), 1998-2002 86 |
| Inflation 86 |
| Table 61: Inflation in the UK (base 1995=100), 1998-2002 86 |
| CONSUMER TRENDS 87 |
| Density of Insurance 87 |
| Table 62: Average Life Premium per Inhabitant in the UK (_ and index 1995=100), 1995 and 1999-2002 87 |
| Life Investments 88 |
| Table 63: Life Investments in the UK (_m and index 1995=100), 1995 and 1999-2002 88 |
| DISTRIBUTION 88 |
| Number of Companies 88 |
| Table 64: Number of Companies Selling Insurance in the UK (number and index 1998=100), 1998-2002 89 |
| Distribution Channels 89 |
| Table 65: Life Insurance Distribution Channels in the UK by Value (% share), 1995 and 1999-2002 90 |
| Figure 7: Life Insurance Distribution Channels in the UK by Value (% share), 1995 and 1999-2002 90 |
| PENSIONS 91 |
| 10. PEST Analysis 93 |
| POLITICAL FACTORS 93 |
| ECONOMIC FACTORS 93 |
| SOCIAL FACTORS 95 |
| TECHNOLOGICAL FACTORS 95 |
| 11. Company Profiles 97 |
| ALLEANZA ASSICURAZIONI 97 |
| Corporate Strategy 97 |
| Strengths and Weaknesses 97 |
| Brand Development 97 |
| Innovations 98 |
| Appointments 98 |
| Profitability 98 |
| Future Company Developments 98 |
| ALLIANZ 98 |
| Corporate Strategy 98 |
| Strengths and Weaknesses 99 |
| New Product Development 99 |
| Brand Development 100 |
| Innovations 100 |
| Appointments 100 |
| Distribution 100 |
| Profitability 101 |
| Future Company Developments 101 |
| AVIVA PLC 101 |
| Corporate Strategy 101 |
| Strengths and Weaknesses 101 |
| New Product Development 102 |
| Brand Development 102 |
| Innovations 102 |
| Distribution 102 |
| Profitability 102 |
| Future Company Developments 103 |
| BARCLAYS BANK PLC 103 |
| Corporate Strategy 103 |
| Strengths and Weaknesses 103 |
| New Product Development 104 |
| Brand Development 104 |
| Innovations 104 |
| Appointments 105 |
| Distribution 105 |
| Profitability 105 |
| Future Company Developments 105 |
| CNP ASSURANCES 106 |
| Corporate Strategy 106 |
| Strengths and Weaknesses 106 |
| New Product Development 107 |
| Brand Development 107 |
| Innovations 107 |
| Distribution 107 |
| Profitability 107 |
| Future Company Developments 108 |
| FORTIS 108 |
| Corporate Strategy 108 |
| Strengths and Weaknesses 108 |
| New Product Development 109 |
| Brand Development 109 |
| Appointments 109 |
| Distribution 109 |
| Profitability 109 |
| Future Company Developments 110 |
| GROUPE AXA 110 |
| Corporate Strategy 110 |
| Strengths and Weaknesses 110 |
| Distribution 110 |
| Profitability 111 |
| Future Company Developments 111 |
| LLOYDS TSB GROUP PLC 111 |
| Corporate Strategy 111 |
| Strengths and Weaknesses 111 |
| New Product Development 112 |
| Distribution 113 |
| Profitability 113 |
| Future Company Developments 113 |
| PREDICA 114 |
| Corporate Strategy 114 |
| Strengths and Weaknesses 114 |
| New Product Development 114 |
| Distribution 114 |
| Profitability 115 |
| Future Company Developments 115 |
| PRUDENTIAL PLC 115 |
| Corporate Strategy 115 |
| Strengths and Weaknesses 115 |
| New Product Development 116 |
| Brand Development 116 |
| Distribution 116 |
| Profitability 116 |
| Future Company Developments 117 |
| 12. The Future 118 |
| MARKET SIZE 118 |
| Table 66: Forecast Total Direct Life Premium Income of CEA Members (_m and index 2003=100), 2003-2007 118 |
| COMPETITIVE STRUCTURE 118 |
| Table 67: Forecast Market Share Held by the Largest Life Insurance Companies by Life Premiums of CEA Member States in National Markets (_m and %), 2003 and 2007 119 |
| SOCIAL AND ECONOMIC TRENDS 119 |
| The Population 119 |
| Table 68: The Population of the EU and 29 European Countries (000 and index 2003=100), 2003-2007 120 |
| Inflation 120 |
| Table 69: Inflation in the EU and the Eurozone (base 1995=100), 2003-2007 120 |
| CONSUMER TRENDS 121 |
| Density of Insurance 121 |
| Table 70: Average Life Premium per Inhabitant in the EU (U and index 2003=100), 2003-2007 121 |
| Life Investments 121 |
| Table 71: Life Investments in the EU (_m and index 2003=100), 2003-2007 121 |
| DISTRIBUTION 122 |
| Table 72: Distribution Channels of Life Insurance of CEA Member States by Value (% share), 2003-2007 122 |
| Figure 8: Distribution Channels of Life Insurance of CEA Member States by Value (% share), 2003-2007 123 |
| PENSIONS 123 |
| Table 73: General Overview of Autonomous Pension Funds in the EU (number, %, 000 and _m), 2003-2007 124 |
| SUPPLIER ISSUES 125 |
| Barriers to Entry 125 |
| Regulations 126 |
| DEMOGRAPHIC CHANGES 126 |
| MARKET DYNAMICS 127 |
| Political Factors 127 |
| Economic Factors 128 |
| Social Factors 128 |
| Technological Factors 128 |
| 13. Further Sources 130 |
| Trade Association 130 |
| Bonnier Information Sources 130 |
| Government Publications 131 |
| Other Sources 132 |
Text © 2003 Key Note
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