Mint Asset Management has won a $20 million Australasian equities mandate from Fidelity Life after a tender process.
The win sees incumbent, Nikko Asset Management, vacate the spot on the Fidelity Life insurance fund panel.
Fidelity has about $260 million in its statutory fund backing underlying life insurance liabilities. Aside from Nikko, Fidelity also used NZX-owned SuperLife and Vanguard Australia as investment managers, according to the life insurer’s 2019 report.
In October 2018 the NZ Superannuation Fund (NZS) paid $100 million for an approximately 41 per cent stake in the long-established local life insurance player. Mint also runs a $360 million plus NZ equities portfolio for the NZS.
Also last week in a surprise move, Fidelity chief, Nadine Tereora, resigned effective immediately after just three-and-a-half years with the firm. Tereora wanted to “spend more time with her family”, according to a Fidelity release.
Fidelity named chief distribution officer, Adrian Riminton, and chief financial officer, Simon Pennington, as interim co-chiefs. The insurance firm recently appointed Nicola Greer to the board, which had seen the exit of independent directors, Carole Durbin and Anne Blackburn, within the past 18 months.
Brian Blake, Fidelity chair, said in a release that: “[Greer] joins at a particularly pivotal time for the business, characterised by regulatory changes, company-wide transformation and, more recently, the challenges posed by Covid-19.”
Fidelity booked $13.6 million of underlying profit in the 2019 financial year, down almost $6 million on the previous annual period. But after adjusting actuarial assumptions to account for the fall in the NZ government bond rates, total profit jumped to $20.7 million – beating the 2018 result by $1 million (or $4 million including a $3 million write-down on a failed technology project).
Blake says in the 2019 report that Fidelity had since rebooted its technology rebuild.
“In 2019 we established and commenced delivery of our new technology roadmap, which aims to lift productivity, simplify our complex legacy systems and deliver a superior customer experience,” he says. “We’ve named this transformational project ‘Watson’ in honour of the entrepreneurial spirit of our founders, Gordon and Shirley Watson.”
Watson is also the name of IBM’s famous artificial intelligence system.
Furthermore, Fidelity was “exploring ways to diversify our channel mix in a way that complements our independent adviser channel”, Blake says.
“This work becomes even more important in the face of an ambitious regulatory change agenda being largely driven by low levels of consumer trust in traditional life insurance models and brands,” he says. “… Successfully navigating change and securing the company’s future will require significant investment in our brand and technology, in particular, and requires patience from shareholders. Because of the need for investment the Board has made the prudent decision not to pay a dividend this year.”