15 November 2006
Equity release market to consolidate over coming year
Duncan Young, Managing Director of Retirement Plus, forecasts consolidation amongst equity release providers over the coming year.
Speaking on Wednesday at the Mortgage Business Expo Duncan offered several arguments to support his view.
Recent mergers and acquisition activity will lead to a review of current business structures and product ranges. The intended merger of Nationwide and Portman Building Societies and the acquisition of the UK GE Life business by Swiss Re are just two examples.
Growth in the equity release market has not been strong. Although recent SHIP figures for the third quarter of 2006 showed an increase in the number of equity release plans being taken out, the total value of new business being written has increased only marginally compared to the same time last year.
The fight for market share will continue. Slow growth means newcomers will need to wrestle market share from existing providers. With little product innovation being anticipated a 'me-too' product will not be enough to increase sales.
A strong distribution system will be vital for success. New players in equity release with a good existing distribution system will have an advantage.
Duncan Young said: "Consolidation in the equity release industry will come from a number of angles over the next 12 months - restructuring as a result of M&A activity, the flat growth in new business and the departure of some of the smaller players. However, I anticipate the industry becoming stronger and more efficient as a result."
