This article contains a bit more about Axa and the enhanced annuity rates pilot. Axa, a very significant player in the insurance industry, has become the first annuity provider to put off a product launch because of concerns about the possible financial effects of Solvency II legislation. The company has been trialling an impaired life annuity, which offers enhanced annuity rates based on an individual’s medical condition, with a small number of financial advisers since 2007. Axa admitted this week that it will not be going ahead with the product until there is more certainty surrounding the European Union’s proposals.
Axa said potential increases in capital requirements and insurance company valuation reporting, which will be enforced through the EU’s Solvency II legislation in a couple of years time, from 2012, could force a re-pricing of annuity rates. Some insurers have estimated that annuity rates could fall by up to 20%, although many are claiming it is too early to predict with any accuracy what the true outcome will be. Media reports earlier this week suggested that Axa had exited the market altogether, but Axa maintained it is capable of competing in the enhanced annuity market, which is currently dominated by companies like Just Retirement, Aviva and LV.
