NCB transfers pension portfolio from WITCO to insurance arm

"The marketing, administration and management of pensions both for the existing accounts, which WITCO has, and for new businesses coming in, will be done by us," managing director of NCB Insurance, Ingrid Chambers, told Sunday Business.

The administrative change will take effect on April 1 but WITCO, the country's leading provider of segregated funds with assets under management of $43.5 billion up to September 2006, will surrender its licence on June 30.

Though the pensions fund company has been in operation for the past 40 years, under private ownership of NCB group by Michael Lee Chin, it has experienced double-digit growth in its fund value over the past four years, notwithstanding the challenging economic environment which has seen a fall in interest rates on fixed-income securities and a less-than-robust equities market.

Legislative reform

The decision to transfer the pensions portfolio to the insurance company, Chambers said, was made two years ago, necessitated by legislative reform of the local pensions industry.

In 2004, the phase one of the new Pensions Act was passed, streamlining the administration of superannuation funds, to be regulated by the Financial Services Commission (FSC).

According to NCB, the shifting regulatory environment created new opportunities, which the bank believed NCB Insurance, which has an asset base of $13.5 billion, would be in a stronger position to leverage, a point Chambers stressed.

"We think the customers will be better off because they are getting that same level of expertise," she said, adding that that the pension portfolio was being enhanced and strengthened by this move. With the processing systems, and reports required by the FSC, "NCB Insurance is in a better position to manage these than WITCO," said Chambers.

Seamless transition

The transition, she added, is unlikely to create hiccups, both subsidiaries having already streamlined their back-office operations.

"It will be a seamless transition for our customers because for the past few years, since the bank made that strategic decision, we have been working together, waiting on the official approval of our licence from the FSC."

Chambers said the insurance company would seize the opportunity to cross-sell products, such as group life insurance, "but we won't be forcing customers to buy into our products. And when we get there, we will be developing individual retirement plans, which will give us very good opportunities."

She is targeting a 20 per cent growth in the company's clients to add to the existing 40 which WITCO manages, but declined to pitch the growth strategy.

"We can't dictate what size funds will come in," said Chambers, "we manage funds that are as small as $100 million."