UK investment, insurance associations propose merger to create single voice

The UK Investment Management Association, which represents managers responsible for some £4.5trn of AUM is set to merge with the investment activities of the Association of British Insurers, which represents some 90% of premiums in the country, or 7% of global insurance premiums.

A statement released jointly by the IMA and ABI they said: “The Boards of the Association of British Insurers (ABI) and the Investment Management Association (IMA) have agreed in principle to merge the investment activities of the ABI, including the Institutional Voting Information Service (IVIS), with the IMA. The final stages of the discussion are still ongoing, and will result in the creation of an organisation, with a new name and a new Chairman, that covers the full spectrum of investment management activity with a single, stronger and more coherent voice. The ABI will continue to represent insurers as asset owners.”

The IMA, is the national association representing asset managers in the UK, and at the EU level through its participation in the European Fund and Asset Management Association.

The ABI represents insurers who collectively employ some 320,000 staff, and which generates 26% of its net premium income from markets other than the UK, according to figures on its website.

According to its latest full year figures compiled for the year ending in 2012, the industry generated single premiums for pension business alone of more than £32bn.

The UK insurance industry recently was hit by unexpected rule changes proposed in the latest Budget issued by the UK’s equivalent of a finance minister, the chancellor of the Exchequer George Osborne. In particular he proposed that people retiring in the UK will not in future be compelled to buy a so-called annuity with their pension savings, but will have far more freedom in their individual approach to long term savings and investments.

This significant change to the regulatory framework may be at least a partial explanation for the decision to merge the interests of the ABI and the IMA as more investors in the UK now face a period of uncertainty as to how exactly they will be best able to accumulate and decumulate assets in order to ensure they have enough income through retirement.

The merger proposal as proposed is “in principle”, which may be explained by the mixed reaction the announcement has had thus far; at least one group representing consumer rights has said that the merger could be damaging as it would create a much more powerful lobbying voice for the asset management industry.


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