The Endowment Diary

The Endowment Diary


The Endowment Mis-selling Debacle - one of the UK's worst financial scandals

Wednesday, March 30, 2011

Shortfalls For Royal London and Scottish Life

This Is Money reports that with-profits (a misleading description if ever there was one) mortgage endowments with Royal London Mutual and Scottish Life will face a shortfall when their policies mature.

Hapless holders of 25 year £50 per month with-profits policies from Royal London Mutual will face a fall on policies maturing this year of 3.3%, compared with the previous year.

Scottish Life, which is part of Royal London Mutual, offers a worse return (4% down).

95% of all mortgage endowment policyholders at Scottish Life will face a shortfall, 53% of those with Royal London.

Lousy results from a lousy product.

Thursday, March 17, 2011

Legal and General Increase Dividend

The FT reports that L&G are rewarding its shareholders:

"Legal and General has increased its full-year dividend by almost a quarter in spite of the life and pensions group missing profit estimates.

The UK’s fourth-biggest insurer by market value blamed the 9.6 per cent decline in IFRS operating profit to £1bn – worse than the 5 per cent fall expected by the City – on December’s cold weather, poor trading in the Netherlands and rising annuity reserves.

But Tim Breedon, chief executive, said the figures released on Thursday “demonstrate that we’ve been able to grow the business in 2010 and at the same time generate more cash with which to pay increasing dividends”.

He added: “All L&G’s businesses – risk, savings, LGIM and international – have contributed to today’s strong numbers by writing more new business at lower cost, growing assets under management and expanding distribution.”

L&G increased its dividend by 24 per cent to 4.75p a share, beating analyst estimates of 4.5p, and following the example set by Prudential last week when it boosted its pay-out by 20 per cent.

That's nice for the shareholders, let us trust that L&G's largess is also reflected in its with profits bonuses this year on its endowment policies.

Monday, March 07, 2011

L&G Endowments Above Target?

Legal & General recently announced that mortgage endowment policies maturing this year will pay out more than was originally predicted when the policies were taken out 25 years ago.

Seemingly, if L&G's projections are correct, someone who paid £50 a month into one of the policies for 25 years will receive £34,750 (£372 above the target amount).

This optimistic announcement contrasts somewhat sharply with the September client mailing carried out by L&G, in which 81% of its mortgage endowment customers received red letters.

Don't crack open the champagne, until you receive your payout.