Founded in 1991, Lombard International Assurance was one of the European leaders in unit-linked insurance, which lets savvier investors put part of their insurance premiums to work in a wide selection of investment funds that they can choose themselves. At the end of last year, Luxembourg-based Lombard was snapped up by its rival, London-headquartered Utmost Group.
Utmost has acquired 15 businesses since 2015 and had “been looking at Lombard for three years,” according to Paul Thompson, CEO of Utmost Group, which he co-founded with CFO Ian Maidens in 2013. “We had a lot of respect for them.” The “stars aligned this time around” and Utmost was able to Lombard from investment funds run by Blackstone Group, which has roughly $1trn in assets under management. The acquisition was completed on 31 December 2024. The value of the transaction was not disclosed.
One main driver for the deal was that their businesses were geographically “complementary”, Thompson stated during an interview at Utmost Group’s offices next to Findel airport earlier this week. Lombard “were much, much stronger in France... we’d been trying to penetrate that market for two to three years with limited success.” Lombard “were slightly stronger in Scandinavia and they had a presence in Benelux that we didn’t have.” On the other hand, Utmost “were slightly stronger in Iberia,” Ireland and the UK. “We were about the same in Italy, but felt that adding the two together would be one plus one equals two and a bit more.”
The acquisition boosted Utmost’s client assets under administration from roughly £60bn (around €73bn) to more than £100bn (€121bn).
Integration and rebranding
The company plans to maintain its booking centres in Dublin and Luxembourg. “Given our scale and the amount of business that we would write together, we were more than comfortable to have two European hubs. And because we both employ about 400 people in either Dublin or Luxembourg and we have 200,000 customers, each of those are big businesses. So there was no need to think about operational integration, it was all about franchise enhancement.”
At the same time, “it didn’t make sense to run two brands.” The sign on the front of its Luxembourg office building “was rebranded literally on day one”. But the process of republishing marketing materials and customer documentation and reregistering the legal names of entities is still in process. Thompson expects “the Lombard name will disappear” in October.
“People will see a single brand and we’ll have a unified sales force, which is focused on distributors” in each jurisdiction. But not much will necessarily change for clients and distribution partners. “We are keeping all products open, just rebranding them and harmonising the features and terms and conditions. And so a salesman in Italy, when he speaks to a partner, will be able to offer him either a product which is hosted in Ireland or one that’s hosted in Luxembourg. It’s for the distributor or the underlying customer to choose which one he would like. We’ll be agnostic and we’ll make sure they get the same service and it will be with the same company and everything’s got the same rating,” referring to Utmost’s A+ (“strong”) rating from the credit agency Fitch.
Mature markets and geographic expansion
While it has branches in Hong Kong, Singapore and Dubai, the group’s business is heavily oriented to “mature markets” in Europe. There are still plenty of opportunities here, Thompson said. “The penetration rate of our product against other savings vehicles is relatively too small. We’d like to educate people on the benefits of our product. There’s still a lot of penetration we can go for. That’s really a case of growing the size of the pie in Europe.”
Its non-European business represents just 10% of the total, “which is tiny.” Indeed, “there’s a lot of wealth and emerging wealth” in Asia and Latin America. “We just need to educate that market more on the benefits of our product and it’s about getting more distribution.”
“We’d love to be able to crack” the US market, but due to regulatory differences the company’s current product lineup cannot be sold there. American rules restrict the choices investors can make to a limited number of investment funds. “So while you can buy insurance as a savings vehicle, it’s not the open architecture flexibility that we provide. And there’s no point competing with the people who do the plain vanilla business.”
Similarly, Asian markets are dominated by universal life products, typically sold through bank branches. “Our product is more sophisticated [and] needs more explaining and is attractive to a slightly different cohort of customer, which we need to work on.”
On the product side, expanding its range of private market investment funds is a key priority. Utmost aims to “increase the amount of alternatives that customers can hold within our products.” Around “25% of Lombard’s assets at the moment are non-standard. So, in other words, not listed equities or bonds or cash. That could be hedge funds, private equity, LP interests, private companies. Extending that out to private credit and other areas of alternatives is a natural step.”
Thompson said the firm is currently developing partnerships “with a small handful of some of the biggest alt managers in the world, [to] have a range of funds and products from them which we can bring to our customers through our distribution.” But for the moment, “I don’t want to name names.”
Technology investment and artificial intelligence
The combined entity plans to increase investment in technology. “We need more digitalisation. We do have some online capability and end-to-end processing, but not enough and we want to make that easier for everybody and want to make the actual capabilities people can execute online richer and the data much richer.” Plus deployment times need to be faster. “As you know, technology gets surpassed so quickly now that you need to you need to keep up.”
Staff at the company have been “relatively cautious about” AI, which is “absolutely right.” Financial sector professionals need to have “realistic” expectations of what the technology can do, he said. Some “people would say it’s not the answer to the core platforms and end-to-end processing, but it is very helpful to a lot of the work that people do in terms of research, preparing reports, marketing... we now have an internal AI champion and he is tasked with helping everybody think about how they can use it. So it’s going to be a bottom-up approach, rather than a top-down sort [with] senior management saying you must apply AI here and there. I think it’s more case of giving the tools to individuals--we have our own versions of some of the tools--and saying ‘try using them and see how helpful they are’ and that is beginning to happen.”
For example, Thompson said he used AI tools to prepare for his interview with Paperjam, asking it to produce a background brief on your correspondent and potential key talking points, instead of giving the task to a company staffer.
More central to business is an area like anti-money laundering (AML) rules, “where we have customer data in lots of different places. Ideally you’d have it in a single repository, but because of [acquisition] history it’s not like that. You can task AI to actually look for certain things, [such as] looking at bank account numbers and things like that. So instead of one person having to sift through” multiple databases to comply with AML regulations, they “can use AI for that.” While the firm is “beginning to embrace” AI, “I think you’ve got to be realistic about what it can solve.”