Pinnacle Life is seeking to raise upwards of $10 million to expand its operations, with managing director Noel Vaughn saying the market for direct life sales is larger than they are currently able to exploit.

“I think we regard the niche in the market we operate in as being several times the size we’ve got. Fundamentally we think our market niche is some four or five times greater than where we are,” he said.

Vaughn said no additional cash had been raised at present as they had just begun the process of approaching institutional investors, pension funds, venture capital operations  and “well-heeled” private investors.

Vaughn said the company would use the cash primarily to expand its radio and social media advertising, but that television advertising remained a possibility depending on the amount of new capital raised.

Pinnacle Life recently received a financial strength rating of B (Fair) and an issuer credit rating of ‘bb+’ from AM Best, and Vaughn said the additional capital would also enable them to obtain a better rating.

“The issue we’ve got is we’ve run our capital pretty hard to the point we’re at and AM Best are saying, as is some of the internal control measures we’ve got, that we need more capital to keep going,” he said.

“We got a rating at the time before we came into the market for more money. We would expect as a response to getting more money that the rating would be improved.”

Vaughn acknowledged that the life market is dominated by brokers, saying they account for around 60% of the market, but he also believes scope exists for expansion of the direct-to-consumer market.

“We’re in that market, Asteron is to some extent and Cigna is as well, so we think it’s going to grow. We just need more capital to service it.”

He said he believed an increasing number of New Zealanders were becoming more comfortable buying financial services direct using online channels.

“Life insurance at its heart is a relatively simple product. Why wouldn’t you buy it directly? Make your own mind up about how much you need and how much you want to pay for it,” he said.

“The number [of people] who are dealing online is growing and we’re part of the process of servicing them.”