Sovereign Mk III in the making
Former Sovereign creator Chris Coon and Naomi Ballantyne, who left Sovereign to establish Club Life, are looking to repeat their start up life insurance company trick again.
Tuesday, December 7th 2010, 5:00AM 18 Comments
They, along with Richard Coon, have established the Partners Group and are currently looking to raise money for the new company.
They say a unique set of market circumstances led to the creation of Sovereign and Club Life (which was bought by ING and is now called OnePath Life) and there is again a "strong opportunity" for a start up life company.
Among the opportunities listed are: under insurance; a changing regulatory environment which will make it harder for new players to enter the market; and a raft of issues relating to changes in the market.
Included in this last category is the current market consolidation. OnePath Life is predicted to become more inward focussed now it is wholly owned by ANZ and there is an expectation the bank will seek to reduce costs such as commissions.
The proposed AMP/AXA merger will see also see "a significant period of inward focus" and remove one of the bigger competitors for a start-up.
Sovereign gets singled out for its move to a more aligned distribution force, while Tower's failed hostile bid for Fidelity and AIA's ownership question are raised as positives for a start up.
Partners claims to have the "strongest product development capability" in New Zealand and says this will be a key competitive advantage.
Also it will rely on its relationships with independent financial advisers and broker dealer groups to distribute its products.
It says it already has strategic alliance relationships with a number of key distribution companies including the largest broker dealer network.
While its initial products will be life insurance it is looking to add home loans and domestic fire and general insurance later.
It plans to offer a "competitive" remuneration model and is considering offering a share option scheme to advisers. This is something Club Life did too.
It will also look to develop a direct distribution model.
Currently Partners is looking to finalise a deal with a reinsurance partner and seeking additional capital to facilitate the acquisition and development of people, systems, products and marketing expertise.`
It forecasts that new business premiums in year five will be around $27 million (8% of market share) and annual gross premium revenue will be $70 million.
The company also says that it will look to do an IPO in five years time, assuming market conditions are favourable.
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