Former Axa NZ and Accident Compensation Corporation (ACC) chief, Ralph Stewart, has embarked on a final round of capital-raising, seeking $2.25 million to help fund the country’s first variable annuity business, scheduled for launch this June.
Under the offer, up to 45 wholesale investors can subscribe for parcels of 50,000 shares, at $1 per share, in the Retirement Income Group (RIG), a subsidiary of New Zealand Income Guarantee (NZIG).
According to the Companies Office, Stewart is currently the sole shareholder of NZIG via his Stewart Capital entity.
If the share placement is successful, the foundation investors will own 29 per cent of RIG with Stewart and co-founder Rhys Gwilym owning 45 per cent and 26 per cent respectively.
The offer comes as the Reserve Bank of New Zealand (RBNZ) has just finalised a new variable annuity (VA) solvency standard. As from April 10, any insurance companies wishing to launch a VA product must comply with the new solvency standard, which takes into account factors such as capital charge, statutory fund liabilities and reinsurance recovery risk.
In an appendix to the standard, the RBNZ says any insurers offering a VA product in addition to meeting the solvency standard, must: link it to a separate statutory fund; have an up-to-date risk management strategy, and; hire an independent actuary.
The RBNZ defines a variable annuity as “a life policy with unit linked or managed fund investment characteristics and optional benefits for the policyholder”.
“The benefits are calculated by reference to the value of the units allocated to the policy, but the benefits may exceed the value of those units in specified circumstances,” the RBNZ document says.
Stewart launched NZIG in 2013, ultimately aiming to offer a VA product to a growing cohort of retiring New Zealanders, many of whom may have accumulated large KiwiSaver lump sums.
“The fastest growth will occur between 2011 and 2036, as the baby boomers move into the 65+ age group,” the RIG offer document says.