EUROPE - Towers Perrin has created a new subsidiary to focus on the provision of advice on risk management services, including pension fund solutions which pull together the insurance and reinsurance market with the capital markets.
The global professional services firm has already provided advice on buyout transactions in the UK market, however John Manion, director of the new subsidiary, Towers Perrin Capital Markets (TPCM), claimed the new proposition will take the advice proposition "to the next level".
He pointed out "clients understand pension risk pretty broadly now, so it's not a proposition of all or nothing", and instead claimed TPCM would give schemes the flexibility of moving between the insurance and re-insurance market and the capital markets.
The subsidiary intends to offer advice in the areas such as risk-linked securities, retirement risk transfer transactions and asset risk management services, including evaluating and facilitating risk management solutions involving securities and other capital markets instruments.
Manion said pension schemes can already obtain some instruments such as synthetic annuities through the capital markets rather than insurers, and some of these are then transferred at the back-end into reinsurance, but claimed TPCM would advise schemes on the most "efficient and effective" form of involvement in the risk management market.
The range of services could include advice on scheme buyouts or buy-ins, although Manion said in more and more cases pension funds are not choosing this route.
"We are also look at ways of transferring risk from a scheme, but not a total shiftm," said Manion.
"It's about how to deal with a particular risk in the plan, and allowing schemes to focus on the risks they want to move out and keeping those they want to retain."
Towers Perrin said it would be targeting sponsoring employers and trustees at the medium to large end of the market, in particular companies with pension funds of at least £100m in assets globally, as it highlighted the services can be "passported" across Europe.
Manion also revealed the company will target schemes and companies in all European countries covered by the passport regime, and suggested there is the potential for "a lot" of clients in Germany, the Netherlands and Switzerland, as well as the UK.
He said: "We are different from the traditional pension consultant market as we are extending our reach and bringing the insurance and reinsurance and capital sides together. The markets in risk management are evolving and it is about providing the best value and efficiency."
Gavin Palmer, chief executive of TPCM, added: "Over the past decade, the risk management market has evolved, and the techniques for managing risks have grown beyond traditional insurance and reinsurance markets to include the capital markets. Increasingly, our clients are looking to us to advise and provide additional services above and beyond the traditional insurance and reinsurance markets."
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