Continued upheavals within the personal finance industry might lead AIB to reassess Ark Life's role within the group, according to Mr Billy Finn, the managing director of the subsidiary.
"Ark Life may no longer be the sole provider of [life and pension] product on the AIB shelf," he said. Certain products could be sold under different branding in the future Mr Finn explained.
"Uncertainty is the order of the day. We can no longer plan on the industry growing. Previous levels of profit may never be seen again," Mr Finn warned yesterday when the group published its new business figures for 2002.
New regular premium savings declined by 16 per cent to €88.4 million from €105 million in the twelve months to January. The slowdown accelerated dramatically after the close in April of the SSIA scheme, according to the company.
Ark Life blamed a post-SSIA fall-off for a deterioration in turnover. Stock market volatility may have persuaded investors to favour the scheme over pensions, it suggested.
Despite warnings by Government and industry of a dearth of adequate cover, pensions sales contracted by 9 per cent to €28 million from €31 million.
Regular premium business dropped 12 per cent to €131 million from €147 million although demand for death and critical illness cover rose by 37 per cent to €14.9 million. Annual premium equivalent (APE) - the standard performance barometer in the sector - decreased 10.5 per cent to €179 million from €200 million.
Single premiums - large lump sum investments - also suffered, declining 10 per cent to €476 million from €530 million.
Speculation that the Government was set to cap SSIA's in the Budget did not result in an appreciable surge in new savings premiums at the end of 2002.
Although savings premiums exhibited the most pronounced decline, Ark Life said it was more concerned by the slump in pension sales.
Unless drastic steps were taken an estimated €7 billion pension shortfall is likely to materialise within 20 years.
But the Republic is not alone in its predicament - the pensions deficit was now reaching crisis proportions throughout western Europe, said Mr Finn.
The introduction by the Government early this year of Personal Retirement Savings Accounts (PRSA) is likely to exacerbate uncertainty among pensions providers.
