Life insurance and pensions company Legal & General Group said it will quit the Association of British Insurers (ABI) by the end of the year, as a large part of its business falls outside the trade body’s remit.
The move by Britain’s third-largest insurer by market capitalisation is a blow to the association that has nearly 300 members, accounting for 90 per cent of the UK insurance market.
Legal & General’s decision follows changes in the mandate of the ABI as a result of the merger of its investment affairs division with the Investment Management Association earlier this year.
“A large proportion of our business lines will fall outside of the remit of the ABI given that the business of Legal & General has significantly evolved and in 2014 our business is now as much investment management as insurance,” Legal & General chief executive Nigel Wilson said.
The ABI tends to concentrate on the general insurance sector, where Legal & General has only limited business, he added.
The ABI said it was disappointed by Legal & General’s departure from the organisation.
The move comes a week after L&G reported a rise in profits, after a jump in annuities for companies offset a fall in individual annuity sales following the pensions shake-up introduced by the Chancellor.
Pre-tax profits in the first-half of the year rose 9 per cent to £507m, boosted by a 20 per cent increase in annuity assets to £38.5bn, a 9 per cent rise in insurance premiums to £1.5bn and a 17 per cent jump in savings assets to £117.8bn.
George Osborne effectively scrapped the requirement to buy an annuity with the money in a pension plan by abolishing punitive rates of tax on people who withdrew the cash in a lump sum.
Savers will, from next year, be allowed to withdraw the money in their pension as and when they choose.