Insurers power ahead to keep London on top

London Mayor Boris Johnson raises his glass to British business during City A.M.’s 2012 award dinner

Insurance is the one of the great success stories of the British financial services industry.

Our insurers are powering ahead helping London to maintain its place as the centre of world finance.

And the sector is contending with the government’s shake-up of pension rules by ending compulsory annuities.

Almost all the companies on our shortlist have reported some impressive results this year, with the Prudential the cream of the crop seeing a massive surge in profits, both globally and in the UK.

We were looking for companies that were either taking part in the boom – or doing their best in a tough domestic market characterised by fierce competition.



Standard Life is the quiet man in the pack, but certainly should not be overlooked. The pensions giant had been outspoken on the Scottish referendum, with chief executive David Nish (above) calling on Scots to vote No before other businesses put their heads above the parapet. Earlier this month, shares in the insurer hit record highs after it announced the sale of its Canadian business, returning £1.75bn of the proceeds to investors with the rest of the cash being used to grow Standard Life in the UK. The group is poised to take advantage of the Treasury’s annuities changes as they take shape too.

With Tidjane Thiam (below) still at the helm, despite repeatedly being linked to a political career in his Ivory Coast homeland, the Prudential – last year’s winner – has continued its impressive growth. Despite a strong pound and changes to UK annuities, the country’s biggest insurer reported better-than-expected rise in profit this year. Operating profits rose seven per cent to a massive £1.5bn for the six months ending June, beating analysts’ estimates. In the UK profits rose 10 per cent to £374m despite a 43 per cent collapse in individual UK annuity sales after the government’s announced in March that it would scrap rules compelling savers to buy the product.

Insurer Phoenix – led by Clive Bannister (above), the son of the first four-minute miler Sir Roger – is understood to be looking at £100bn worth of potent­ial acquisition opportunities in the UK, following a promising set of half-year results announced at the end of August. The group is also seeking an invest­ment-grade credit rating that it expects will reduce the cost of its debt by around 50 basis points and give it access to a broader group of investors. The life insurer, which buys and runs life insurance policies that are closed to new customers, announced a 43 per cent jump in operating profit and a reduction of its debt to £1.2bn from £1.7bn six months ago.

Direct Line (DL) has seen its shares rise almost 40 per cent in the past year and jump by over 6.5 per cent in August, off the back of a strong set of results. DL – led by Paul Geddes (below) – joined the FTSE 100 index last month and welcomed Sebastian James, chief executive of Dixons Carphone, to its board as a non-executive director. The company, which has $4.5bn market capitalisation, splashed out on a £40m advertising collaboration with Saatchi & Saatchi London, which features Harvey Keitel as character Winston Wolf from cult movie Pulp Fiction.

RSA has had a bumpy ride of late. Following problems in the Irish arm of its business last year, a big change at the top saw the insurer welcome former RBS man Stephen Hester as chief executive (above) earlier this year. Hester, who has a reputation for turning struggling businesses around, began a programme of disposals and cost-cutting that is beginning to show results. The group’s share price has been on the up steadily since earlier this month and a series of sell-offs, including in Poland, China and Canada, are likely to further bolster the insurer’s fortunes. A special dividend could be issued as soon as next year.