ARK Life, the life assurance subsidiary of AIB, has revamped its regular savings products to address falling sales. The company, which released its 1995 sales figures yesterday, is abolishing up front charges on its long term regular savings products and its tax efficient special investment policies.
The fees will, instead, be spread over the life of the schemes in order to make them more attractive, according to Mr Brian Woods finance director of Ark Life.
Sales of regular savings plans fell by 17 per cent to £3.9 million last year, according to the figures released yesterday. However, Ark increased sales of "protection" policies, such as mortgage protection policies and also of pension schemes.
Sales of protection policies were up 11 per cent to £4.5 million and sales of pension policies up 24 per cent to £3.6 million. Overall, sales of regular premium products, which includes savings, protection and pension products, were up 3 per cent, according to Mr Fred Dinmore, managing director of Ark Life.
Sales of single premium investment products were static at £64.9 million. However the company is confident that it remains the market leader in this area, with over 20 per cent of the market.
Ark claims to have over 7 per cent of the regular premium market made up of 14 per cent of the savings market, 10 per cent of the protection policy market and 8 per cent of the self employed pension market.
Over £2 million of the £4.5 million worth of protection policies sold last year related to cover taken out as security for new loans granted by AIB to customers, said Mr Dinmore.
The revamped savings products' will reverse the downward trend in savings products sales, according to Mr Woods, who predicted that sales of the new products would be in the region of £5 million in the current year. Ark has repackaged its saving products as Personal Investment Plans.
The major difference between the new plans and existing products is that the fees are spread out over the life of the plan rather than charged in the first two years.
The company is also re launching its special investment policies as Personal Equity Plans. These funds are subject to tax at the 10 per cent rate, rather than the standard 27 per cent rate, as long as 55 per cent of the money is invested in Irish equities.
Special investment accounts were introduced in the 1993 Budget to give the investment industry an alternative to the tax efficient special savings accounts being offered by the banks. However the investment industry has failed to capitalise on their potential as a regular saving product according to Mr Woods.
