Andy Briggs, chief executive of Aviva UK and Ireland Life, has backed a revamped Sesame after the Aviva forced an overhaul at the advice group following its takeover of Sesame parent Friends Life last year.
Speaking earlier today (10 March) Mr Briggs made assurances that “Sesame has had a great year,” after a strategic review into the advice firm concluded last year, and saw the Sesame network exit investment advice.
His comments suggest a turnaround in Aviva’s attitude towards Sesame.
At the start of last year and ahead of the Friends acquisition, Aviva stated in a note to shareholders that it would not provide “open-ended” financial support to the lost-making advice network, and without a return to profit it would cease to trade.
“Unless the directors of Sesame are able to reach a solution that does not require continued reliance on the financial support of the Friends Life Group, or following completion of the proposed acquisition, the enlarged Aviva Group, it is likely that the Sesame business will no longer be viable and will not be able to continue to trade,”the note said.
Post-acquisiton last July, the debt-laden network Sesame was given access to a £45m bailout fund by its parents Aviva and Friends Life.
Aviva provided £25m of “support” to the Sesame Bankhall Group (SBG) should it need it to pay “any liability” any part of the group is unable to meet.
The Friends Life arm of the enlarged Aviva business added a further £20m, specifically to cover costs associated with past business reviews, restructuring and solvency and liquidity needs.
Under the strategic review, Sesame moved to a restricted advice model and undertook past business reviews, primarily an investigation into pension switching advice.
The network was fined £1.6m in 2014 for setting up what the FCA called a ‘pay-to-play scheme’ that “undermined the ban on commission payments brought in by the Retail Distribution Review (RDR)”.
In March last year, Sesame Bankhall Group confirmed it would no longer be offering an appointed representative network option for wealth firms, with wealth firms becoming directly authorised with the support of Bankhall.
Following this, FTAdviser reported Intrinsic, part of Old Mutual Wealth, had been selected as the preferred network partner by Sesame Bankhall Group.
In August last year, Sesame Bankhall Group lost almost 60 per cent of its network’s member firms following a decision to kill-off its investment advice business.
In UK and Ireland life, operating profits increased by 37 per cent to £1.4bn against 2014’s figure of £1bn, according to Aviva’s results published today (10 March).
According to Aviva, Friends UK contributed £358m of the £383m increase in operating profit, with underlying growth constrained by a lower level of one-offs and management actions.
However, operating expenses for UK and Ireland life were up to £815m in 2015, up from £565m in 2014.
Excluding Friends UK, the UK life business reduced expenses by 5 per cent while Ireland Life expenses fell by 25 per cent.
Mark Wilson, group chief executive officer of Aviva, said: “The integration of the £6bn Friends Life acquisition has gone faster and better than expected.
“We expect to achieve our target of £225m integration synergies in 2016, one year ahead of schedule.
“After nine months, we have achieved run-rate synergies of £168m and expect £1.2bn of capital benefits, £400m of which we have realised in 2015.”
ruth.gillbe@ft.com
