This early attempt to combine life insurance sales expertise with the distribution power of a banking network has been much copied, most recently by Halifax Building Society. It has become commonplace to assume that 'bancassurers' will have half the life insurance market by the end of the decade.
This may, however, be wrong. Lloyds Abbey Life has conspicuously failed to carry all before it. Since the beginning of 1989 shares in Lloyds Abbey Life have underperformed the FT-SE 100 index of leading companies by nearly 22 per cent.
In contrast, Prudential Corporation, the largest and most aggressive company in the sector, has outperformed by more than 20 per cent. Even the less impressive Legal & General has done better than Lloyds Abbey.
Admittedly, Lloyds Abbey has had to struggle against a long recession that badly hit Lloyds Bowmaker, the consumer finance arm, and its estate agencies as well as bread-and-butter business like mortgage endowment sales. But this background does go some of the way to explaining why Lloyds Abbey's first dividend rise for three years was greeted by a 15p fall in its share price to 447p.
Economic recovery is bringing much better results from Bowmaker and Black Horse Agencies (which actually made money in the second half), but the core life insurance businesses are looking sluggish.
Most worrying is the lack of progress at Black Horse Financial Services, which sells life insurance, pensions and investments to Lloyds Bank customers. Sales by bank branch staff slipped slightly, and the BHFS share of life insurance business by the bank's customers was broadly static at about 16 per cent.
Much rests on the 1,100-consultant sales force, but this year they will face the same training and competence regime that has held back Abbey Life.
Lloyds Abbey Life increasingly looks a mature business. As with the rest of the industry, prospects for growth may lie mainly in low- margin lump-sum investment business. Bancassurance is clearly no panacea.Reuse content