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Bancassurance News - Summer 2009

Barclays and CNP link for international bancassurance joint venture

Barclays and CNP Assurances have agreed to establish a long-term life insurance joint venture in Italy, Portugal and Spain. As part of this transaction, Barclays will sell a 50% stake in Barclays Vida y Pensiones Compañía de Seguros (BVP). its Iberian life insurance and pensions subsidiary, to CNP. Barclays will also enter into a 25-year agreement with CNP for the marketing and distribution of life insurance and pension products through the Barclays retail network in Spain, Portugal and Italy. The transaction is conditional on, amongst other things, receipt of the necessary regulatory approvals and is expected to be completed during 2009.

CNP will pay Barclays an initial upfront consideration of €140 million in cash on completion. This is subject to a post-completion adjustment by reference to BVP’s net assets as at closing. An additional consideration of up to a maximum of €450 million will be payable to Barclays in cash over a period of 12 years, dependent upon the achievement of certain volume and margin thresholds and Barclays branch openings, to maintain a balanced sharing of the value created through the joint venture between the two shareholders.

Barclays intends to invest the proceeds from the sale in developing its businesses in Italy, Portugal and Spain. This joint venture will support the growth of Barclays in these countries, where the number of distribution points has already increased from approximately 600 in January 2007 to over 1,000 currently.

Intesa Sanpalo unveils plan to rationalise bancassurance interests

In the ever-evolving world of Italian bancassurance, Intesa Sanpaolo has disclosed details of the reorganisation of its bancassurance ventures with the aim of creating two new unified entities, one focused on the group's branch network, the other distributing through its sales force of financial promoters within Banca Fideuram. The reorganisation will potentially involve Intesa Sanpaolo acquiring full control of two joint venture companies, namely Intesa Vita (50% of which is owned by Generali) and Centrovita Assicurazioni (51% of which is owned by BNP Paribas Assurance), with these companies being integrated with two further insurance entities that the group controls completely, namely Eurizon Vita and Sud Polo Vita. However, the plan is subject to receiving the necessary authorisation from the relevant regulatory bodies particularly as a previous ruling had judged that Intesa Sanpaolo should divest Sud Polo Vita. If it proceeds, the combined bancassurance operations of Intesa Sanpaolo would have gross premiums written in the region of €8 billion.

UNIQA and Veneto Banca extend existing bancassurance tie to non-life policies

Also in Italy, Austrian insurance group UNIQA has announced that it aims to expand the distribution of its insurance products through the subsidiaries of Veneto Banca. While announcing the acquisition of a 60% stake of a subsidiary of Veneto Banca through UNIQA Previdenza, UNIQA’s Milan-based unit, the company has also disclosed that the Italian bank will in the future distribute the non-life insurance products offered by UNIQA. Indeed, Veneto Banca has been distributing UNIQA’s life insurance products since 2004.

Allianz Commercial wins commercial lines deal with Lloyds Banking Group

The UK has also seen several new bancassurance initiatives not least of which is the commencement of a multi-year partnership between Allianz Commercial and the Lloyds Banking Group with the aim of offering insurance solutions to the 850,000 small business customers of Lloyds TSB and Bank of Scotland. Following a competitive tender, the two banking brands will now offer the business insurance policies of Allianz Commercial to new customers from the start of November 2009 and to existing customers at renewal.

Santander enters UK motor insurance market through agreement with Equity

In the field of personal motor insurance in the UK, Equity Direct Broking has signed an affinity partnership agreement with Santander Insurance Services UK, an insurance subsidiary of Santander. A new private motor policy branded Santander Car Insurance, including free breakdown cover, will initially be aimed at Abbey’s customer base. In addition, Santander Car Insurance will be available online through major aggregators including GoCompare, InsuranceWide, and TescoCompare with further aggregator developments likely to occur subsequently. Equity Insurance Group already possesses several significant affinity partnerships in the UK including those with first direct, Harley-Davidson and Renault.

Legal & General lures banking partners with new online point-of-sale system

Legal & General has revealed that Yorkshire Building Society is the first banking partner to go live with its new online point-of-sale business system, OLP Connect. The system will give advisers at Yorkshire Building Society the ability to quote and apply for a greater number of product variations from Legal & General’s protection range on one application, allowing them to solve a wider range of protection needs than was previously available. In fact, Yorkshire Building Society will now have access to family protection online, as well as life insurance and critical illness cover. The multiple quote service will allow advisers to modify and amend quotes according to a client’s budget, demands and needs. Moreover, OLP Connect offers improved point-of-sale underwriting, which means quicker approvals for clients, and allows advisers to manage their own cases from start to finish.

OLP Connect is currently being rolled out in phases with various partners throughout 2009 having launched to the IFA market in April 2009. Further banking partners will have access throughout the summer of 2009 and use by appointed representatives (members of Legal & General Partnership Services, the mortgage network) is being rolled out during the third quarter of the year.

LCL and SPB introduce all-encompassing mobile insurance policy

In France, retail bank LCL and SPB, an affinity broker, have innovated with the launch of the first ever policy to cover simultaneously all of a policyholder’s mobile electronic devices. Given that consumers are ever more footloose while their mobile electronic devices are only partially insured, LCL has teamed up with SPB to offer an all-embracing insurance policy. This comprehensive product, aimed at customers or homes equipped with mobile electronic devices such as cell phones, computers, digital cameras, DVD players, MP3/MP4 players, video recorders and other mobile devices, provides worldwide cover against accidental material damage, theft outside the home and fraudulent cell phone use for all of the policyholder’s mobile devices, with no deductible payable by the client. The maximum annual indemnity is €400 for a cell phone (or €250 to cover fraudulent use) and €1,800 for the other mobile electronic devices, with a limit of two claims or four mobile devices.

SPB targets opportunities in evolving creditor insurance market in France

SPB is also eyeing opportunities in the French creditor insurance sector given that from 2010 onwards, French banks will no longer be able to impose their group policy on clients but, rather, will have to offer alternative contracts. Hence, SPB is proposing to help banks with this new requirement by designing and managing individual insurance programs for them, which requires a high degree of sophistication in some cases.

Currently, banks simply sell their group policy with loans in most cases. However, it does not cover all types of risk, such as those associated with high value loans, seniors and workplace hazards, and the announcement by the Ministry of Finance in late 2008 that banks will not be able to impose their group contract from 2010 gives them the opportunity to propose individualised alternative solutions which can cover all types of risks, from the most standard to the most difficult.

In essence, SPB is proposing to take care of creditor insurance product design, defining the terms of the contract and pricing, sales assistance through dedicated underwriting extranets, a sales support team, and administration of the insurance program in areas such as acquiring new customers, collecting premiums and managing claims. However, banks will be able to choose some or all of these benefits as they wish.

For the individual creditor insurance market, SPB has decided to concentrate its expertise on high and unusual risks which are not covered by group policies. Specifically, one of the features of SPB’s offer is based on the so-called 'cocooning' team which it considers to be unique in the market today. This allows banks to hand the most complex risks to this specialist team, which deals directly with applicants to assist them in preparing their case and to seek the best solution available on the market, while preserving medical confidentiality.

IC ROSNO links for loan-related insurance with mortgage restructuring entity

In Russia, IC ROSNO, a leading insurance company, is establishing a partnership with HMLRA, a subsidiary of Home Mortgage Lending Agency, which was founded in February 2009 to implement the state program for support of mortgage borrowers in a difficult life situation. HMLRA restructures mortgage loans under the principles of maturity, payment of interest, and repayment of principal, enabling the borrowers, subject to their current financial condition, to make continuously and in full, current monthly mortgage payments for 12 months. During this period, the borrower only pays interest for the borrowed funds, and thereafter he or she will repay the principal of a loan issued under the program. The 12-month grace period is granted to the borrower in order for him or her to search for employment and to restore his or her solvency. The insurance element provided by IC ROSNO relates to coverage of secured assets against loss or damage and personal life and health insurance acquired optionally by the borrowers themselves. Ultimately, by partnering HMLRA, IC ROSNO is ensuring that mortgage borrowers have sound insurance coverage.

Citi and MetLife Europe combine for variable annuity in Spain

In Spain, Citi and MetLife Europe have announced a commercial agreement that allows MetLife to offer a complete retirement plan to Citibank clients. Both companies are working to identify the new retirment income needs of Spanish consumers especially given that life expectancy is more than 80 years and that Spain is a country where people retire relatively early. In fact, for these reasons, analysis is needed to devise a plan that guarantees an adequate income level in retirement.

Hence, the two partners have developed the Auvida policy as a suitable solution for retirement, complementing the objectives of regular pension plans, ultimately classifiable as a variable annuity and with the particular advantage of allowing retirement planning with a forecast of the minimum income required.

Auvida invests in a combination of investment funds designed for individuals over 40 with customers selecting one of three investment funds, depending on their investment profile. The product also allows accumulated capital, guaranteeing a minimum income for life for clients aged 55 and over.

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