(Bloomberg) — U.K. insurers slid in London trading after regulators said they plan a probe into policies stretching back to the 1970s, the second government threat to the industry's earnings in as many weeks.
The Financial Conduct Authority will publish a plan of its priorities for the year on March 31 that will include an examination of how long-standing customers in the life-insurance market have been treated, a spokeswoman for the London-based regulator said in a statement today.
Shares of Prudential Plc, Aviva Plc, Resolution Plc and Legal & General Group Plc tumbled, pushing the FTSE 350 Life Insurance Index down 6 percent. About 6 billion pounds ($10 billion) were wiped off insurers' market value, adding to 3.6 billion pounds on March 19, when Chancellor of the Exchequer George Osborne's budget scrapped rules that pushed retirees to buy an annuity.
The review "will likely be to the detriment of the profitability of insurers," Fahad Changazi, a London-based analyst at Nomura Holdings Inc., said in a note to clients. "Events of the last few weeks have highlighted how quickly regulation can change."
The Daily Telegraph reported earlier today that the FCA will review 30 million policies, citing Director of Supervision Clive Adamson. The FCA said today that most policies examined will be more recent than the 1970s and it has no plans to review 30 million policies individually.
Representatives from Aviva, Legal & General, Resolution and Prudential said they weren't immediately able to comment.
Contract law
