Founded by three former investment bankers, NeoLife is an independent financial structuring company serving savings and retirement distributors.
NeoLife was created in 2021 as a B2B control function intermediary and an administrator of retirement products to bridge the gap between investment banks and retail distributors. Pierre Moretti (formerly at Natixis), Antoine Garaialde (formerly at J.P. Morgan) and Alban de Follin (formely at Barclays) then launched Nutkin, a B2C provider, which offers retirement investment and saving solutions to retail investors.
We want to move away from what's being offered in retirement in France, which is a copycat of what's done for life insurance - Pierre Moretti
“Our aim is to leverage the B2B platform to create new contracts or restructure existing ones,” Moretti told SRP. “We are engaging with distributors of retirement products to explain what we can do at the product level and how we can help them to restructure their offerings with solutions that can offer added value and get rewarded for selling the products.”
In the value chain, both companies are on the buy side although there “was the temptation to involve ourselves in the brokerage activity of structured products”, according to Garaialde.
“But we chose to leverage our experience to work directly on combined solutions designed to fit the different savings wrappers and leverage their unique features,” he said. “We wanted to complement that approach and enable a different set of retirement products.”
In France, there are two main wrappers to deploy retirement solutions: the assurance vie wrapper and the newly created PER (savings plan for retirement, or plan épargne retraite).
Garaialde noted that so far, the approach toward the latter has been a very similar copy of what is done with the assurance vie wrapper which led the NeoLife team to look beyond France to try and expand the market and replicate the products that are available in other markets such as the US, the UK, and other markets “and make them eligible for French investors while respecting local investment guidelines”.
“We want to move away from what's being offered in retirement in France, which is a copycat of what's done for life insurance,” said Moretti, adding that the exiting approach has two major drawbacks:
On the one hand, existing products are not necessarily right for long-term retirement investors as “they are based on a one-size-fits-all approach and do not cater to different age groups”. On the other, these long-term saving products have the wrong remuneration scheme as the commissions are AuM-based. Building a meaningful AuM can take a long time, so the incentive to sell retirement products is small.
In 2023, NeoLife advised several institutional investors and deployed a guaranteed product in partnership with BNP Paribas. The company is also working with several partners including Societe Generale, Credit Agricole, BNP Paribas and Natixis on several other products that will be launched in 2024.
Structured products
The company's focus is not on deploying structured products into the retirement space but on leveraging its knowledge of structured products to meet the needs of insurance companies.
“Insurers in France are familiar with structured products as they are eligible for life insurance and retirement products,” said Garaialde. “We use the certificate or EMTN wrapper in a very different way. We are not following the logic of product campaigns every two months to attract investment in a given product with a predetermined formula.”
As an illustration of its first project, the NeoLife team established the final value of the product and tried to freeze the floating elements, to produce a different scenario at maturity.
“We are using the same concept behind structured products, but we make them as simple as possible,” said Moretti. “We work very closely with our partners on the secondary market to compound the returns of the floating price.”
Index-linked annuities
NeoLife is looking at developing a range of index-linked annuities and apply the same logic used in indexed annuities to expand the options currently offered to French investors.
“We believe existing products are suited for investment accounts but not optimal for a retirement plan,” said Garialde. “Index-linked annuities are the next step for us as they can bring more value to retirement investors because they’re designed for the long term with a synthetic structure, and the distributor has an incentive to sell them.”
The initial focus, according to Moretti, has been on fixed annuities because they offer a clear entry point and are easy to understand for retail clients.
“We think this approach will resonate with life insurance companies as, with the current setup, the money is stuck in life insurance products instead of retirement products,” he said. “We think there is scope to develop an annuities niche in France, similar to the US.”
NeoLife started working with banks because life insurance companies do not have any guarantees on their balance sheet, and wanted to deliver those guarantees without the distributor having them on their balance sheet.
“This removes the risk insurers have faced in the past when managing those guarantees in terms of scalability, but also in terms of technology because they had to deal with many different clients with different guarantees,” said Moretti. “This is where we come into play as our platform can follow all the guarantees and match the right guarantee with the right product for the right bank, the right metric, etc.”
CPPIs
Garaialde noted that the classic constant proportion portfolio insurance (CPPI) structure was not considered due to their complexity and individualised paths.
The company prefers a variable annuity-like wrapper because it allows to make the investment "simpler”.
“If a client wants a guarantee this year for a 10k investment, they can put 5k on a bank guarantee and the other half in the market, even on a 2x leverage ETF, achieving approximately the same outcome but with much more flexibility,” said Garaialde. “Some providers offer guarantees on retirement-focused products but no individualization. If you are retiring in 20 years, you should not have the same product as someone retiring in two years.”
However, the company has not turned its back completely to the CPPI wrapper as the new individualised constant proportion portfolio insurance (iCPPI) is an interesting proposition “because it offers individualisation, guarantees, and market exposure”.
“It feels like the perfect solution, but it has no traction in France because it's very complex as you will have to follow each guarantee for each individual CPPI,” said Moretti. “What we have done is build an ecosystem of guarantees and building blocks. We have a guarantee per year and an ecosystem of key assets to create a retirement plan. Every time the client invests, they invest in the same guarantee, and on the investment side, they can choose the building blocks, or we can pick them for them.”
NeoLife is seeking to capitalise on a solution that meets French market regulation and allows to offer basic blocks in a contract to build a “meaningful guaranteed product with low fees fit for retirement investors”.
“We aim to build a full range of products offering a complete solution that can be tailored for different retirement investors,” said Moretti. “We are already working with a distributor, and our target is to reach €250m by 2025 as we’re in talks with new ones.”