2016 update:
Ground swapped his position as head of bulk annuities & longevity insurance at Legal & General for that of CEO of L&G Homes, the insurer's business that aims to build 3,000 modular-design homes a year from a factory in the north of England.
Tom Ground, head of bulk annuities & longevity insurance, Legal & General
Ground has headed up L&G's bulk annuity and longevity insurance business, managing £23bn in assets, since 2010. He has been involved in some of the biggest deals in a boom time for the market.
What have you learnt about communicating risk?
Communication is key. In the bulk annuity market, we interact with stakeholders with all levels of financial knowledge – from pension scheme trustees, pension consultants to pensioners. The products we provide to these stakeholders can be very complex and therefore ensuring good understanding is essential.
What are the major challenges ahead?
UK defined-benefit (DB) pension schemes are maturing. Almost all are closed to new members and are increasingly closed to members accruing benefits. Their populations are aging and their time horizons are reducing. As the £1.7trn of scheme liabilities start to de-risk many schemes are chasing the same opportunities – that is insurance and investments. Demand will exceed supply so all those schemes looking to de-risking will need to carefully select their strategies to ensure they can meet their goals.
What will be the next big development?
In the UK pensions market, we expect to see an increase in members leaving DB pension schemes in light of the freedoms which will be available from April. Quantifying what this means in relation to our longevity and investment risks and proactively managing it will be key for our sector over the coming years. This risk is particularly acute for bulk annuity providers who need to ensure they have correctly identified any selection risks or else they risk writing unprofitable contracts in the longer term.
What are your other interests?
When I'm not spending time with my family, I very much enjoy taking cycling holidays (along rivers to avoid the risk of significant uphill stretches) as well as beating my brother at squash.