* Rivals say they will continue their ABI membership
* Decision follows merger of ABI unit with IMA
* L&G says large part of business falls outside ABI remit
(Adds comment by analyst, background)
By Nishant Kumar
LONDON, Aug 13 Legal & General Group Plc
will quit the Association of British Insurers (ABI) by
the year-end, it said on Wednesday, dealing a blow to the trade
body at a time of rapid regulatory changes in the UK financial
Legal & General's decision follows changes in the mandate of
the ABI as a result of the merger with the separate Investment
Management Association trade body of the ABI's Investment
Affairs division, which includes its service advising members on
how to vote at company meetings.
While rivals such as Prudential, Aviva and
Standard Life said they will not follow the path taken by
Legal & General, analysts said the decision reflects the
diminishing role played by ABI for insurers with large
investment management units, even though it has nearly 300
members, accounting for 90 percent of the UK insurance market.
"It feels like a bit of pivotal moment now," said Tom
McPhail, head of pensions research at Hargreaves Lansdown.
"The ABI had been under particular pressures in terms of its
membership and its ability to present a consensus view on behalf
of its members," he added.
The active investment management industry is, increasingly,
not managed within insurers, making the IMA, which is to be
renamed the Investment Association from the beginning of next
year, more suitable for players like Legal & General which
generated roughly a fifth of its operating profit in the first
half of 2014 from its investment management arm.
The company said its engagement with government, regulators
and others will be more individually tailored in future, and
less suited to uniform representation through one trade body and
the ABI tends to concentrate on the general insurance sector,
where Legal & General has only limited business.
"A large proportion of our business lines will fall outside
of the remit of the ABI given that the business of Legal &
General has significantly evolved and in 2014 our business is
now as much investment management as insurance," Legal &
General's chief executive Nigel Wilson said in a statement on
ABI's director general, Otto Thoresen, said that the trade
body was "disappointed" by Legal & General's departure from the
"However the ABI's continuing strong membership represents
over 90 percent of the insurance sector," he said in a
"The great advantage of the ABI is that our members work
together across the usual corporate boundaries to tackle issues
that are important to consumers and to deliver an agenda for
reform. The Board of the ABI believes the industry is at its
most effective when working together to respond to legislative
and regulatory change."
(Additional reporting by Richa Naidu; Editing by Erica
Billingham and Greg Mahlich)