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.
Thursday, March 17, 2011
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.
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.
Friday, February 25, 2011
FSA Finally Acts - Maybe
The Financial Services Authority (FSA) has finally published its review into rules on with-profits investments, and announced its intention to toughen up its rules.
The FSA has finally admitted that with-profits policyholders "are not always getting the fair treatment they deserve".
Really?!
The FSA has warned insurers that they "will continue to supervise the sector in an intensive way".
The new proposals, which will now be consulted on, cover:
MVRs: Firms will be restricted in their ability to impose "market value reductions"
(MVRs) - the exit penalties you face when you cash in your policy early or move your money to a different company. Companies will not be able to arbitrarily impose penalties because they want to stop policyholders leaving, and will only be allowed to impose penalties to ensure policyholders receive a fair reflection of the value of their policy.
New business: The company will need to demonstrate that writing new business into the fund does not have an adverse effect on existing policyholders. This will tighten up the rules so firms will not be able to offer 'loss leaders' which erode the amount in the with-profits fund for existing policyholders.
Charges: Firms will not be allowed to use servicing companies to extract extra money in charges from with-profits policyholders by including a profit margin on top of the actual cost.
Excess surplus: Firms will be required to have a plan to distribute any excess surplus cash fairly to policyholders, particularly if a company suffers a big fall in the amount of new business it is doing.
With-profits Committees: Firms must provide a clear distinction between the recommendations of the with-profits committee and what action the firm intends to take in response, and will be required to notify the regulator when it overrules the advice of the with-profits committee.
All very nice, but too little too late for those hapless house owners ripped off by the endowment mortgage scandal of the 80's and 90's.
The FSA has finally admitted that with-profits policyholders "are not always getting the fair treatment they deserve".
Really?!
The FSA has warned insurers that they "will continue to supervise the sector in an intensive way".
The new proposals, which will now be consulted on, cover:
MVRs: Firms will be restricted in their ability to impose "market value reductions"
(MVRs) - the exit penalties you face when you cash in your policy early or move your money to a different company. Companies will not be able to arbitrarily impose penalties because they want to stop policyholders leaving, and will only be allowed to impose penalties to ensure policyholders receive a fair reflection of the value of their policy.
New business: The company will need to demonstrate that writing new business into the fund does not have an adverse effect on existing policyholders. This will tighten up the rules so firms will not be able to offer 'loss leaders' which erode the amount in the with-profits fund for existing policyholders.
Charges: Firms will not be allowed to use servicing companies to extract extra money in charges from with-profits policyholders by including a profit margin on top of the actual cost.
Excess surplus: Firms will be required to have a plan to distribute any excess surplus cash fairly to policyholders, particularly if a company suffers a big fall in the amount of new business it is doing.
With-profits Committees: Firms must provide a clear distinction between the recommendations of the with-profits committee and what action the firm intends to take in response, and will be required to notify the regulator when it overrules the advice of the with-profits committee.
All very nice, but too little too late for those hapless house owners ripped off by the endowment mortgage scandal of the 80's and 90's.
Monday, January 31, 2011
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Thursday, January 27, 2011
A Surplus!
A Surplus!
Ian Cowie, of the Telegraph, writes about his Legal and General endowment policy:
"..my 25-year with-profits endowment matured last month and paid out 33pc more than the target value.
Since you ask, the maturity forecast was £45,000 but the actual payout was a bit above £60,000..."
How nice for him!
My L&G policies both mature next year, and are forecast to make large losses.
How can there be such a difference between his L&G policy and mine, given that the maturity date is less than two years apart?
Ian Cowie, of the Telegraph, writes about his Legal and General endowment policy:
"..my 25-year with-profits endowment matured last month and paid out 33pc more than the target value.
Since you ask, the maturity forecast was £45,000 but the actual payout was a bit above £60,000..."
How nice for him!
My L&G policies both mature next year, and are forecast to make large losses.
How can there be such a difference between his L&G policy and mine, given that the maturity date is less than two years apart?
Friday, November 27, 2009
ABI Displays Empathy
ABI Displays Empathy
In a rare display of public empathy, the Association of British Insurers (ABI) says that life companies must do more to design products with consumer needs in mind.
ABI head of distribution policy, Peter Jolly, said that life companies have failed to properly engage with consumers.
"I guess the evidence of that is we need to sell them. If we had products that people really wanted they would come and buy them and most of the products in our industry are designed to be sold, rather than bought.
And the industry's failure to develop a new regular premium savings product is probably evidence of that. As the endowment market tailed off we don't really have a replacement."
LOL!
The endowment market "tailed off" because it was a lousy product, not fit for purpose and badly managed.
In a rare display of public empathy, the Association of British Insurers (ABI) says that life companies must do more to design products with consumer needs in mind.
ABI head of distribution policy, Peter Jolly, said that life companies have failed to properly engage with consumers.
"I guess the evidence of that is we need to sell them. If we had products that people really wanted they would come and buy them and most of the products in our industry are designed to be sold, rather than bought.
And the industry's failure to develop a new regular premium savings product is probably evidence of that. As the endowment market tailed off we don't really have a replacement."
LOL!
The endowment market "tailed off" because it was a lousy product, not fit for purpose and badly managed.
Thursday, November 19, 2009
Class Actions
Class Actions
This week's Queen's Speech has raised the possibility of hapless endowment policy holders being able to mount class actions against the life assurance industry.
The government proposes to give consumers the right, for the first time, to take "class action" suits through the courts in cases of large-scale wrongdoing such as endowment mis-selling or personal pensions.
This is something that I have been calling for over many years. Not only has the financial services industry mis-sold these flawed and badly designed products, but they have mismanagement them (despite awarding themselves very generous "management" fees and commissions).
The consumer will not only has grounds for suing wrt mis-selling, but also has grounds based on the fact that the products are not fit for purpose (ie they did not pay off the mortgage, which is what they were meant to do).
Why buy the product if it wasn't going to work?
Unfortunately, there is little chance of this becoming law this side of the election.
This week's Queen's Speech has raised the possibility of hapless endowment policy holders being able to mount class actions against the life assurance industry.
The government proposes to give consumers the right, for the first time, to take "class action" suits through the courts in cases of large-scale wrongdoing such as endowment mis-selling or personal pensions.
This is something that I have been calling for over many years. Not only has the financial services industry mis-sold these flawed and badly designed products, but they have mismanagement them (despite awarding themselves very generous "management" fees and commissions).
The consumer will not only has grounds for suing wrt mis-selling, but also has grounds based on the fact that the products are not fit for purpose (ie they did not pay off the mortgage, which is what they were meant to do).
Why buy the product if it wasn't going to work?
Unfortunately, there is little chance of this becoming law this side of the election.
Friday, October 02, 2009
Fit For Purpose?
Fit For Purpose?
Legal and General informed me today that the shortfall on my "with profits" endowment mortgage of £39K will range between £13K - £16K.
So much for the concept of "smoothing", allegedly one of the main components of a "with profits" policy.
Maybe they could also explain to me why they sold and "managed" a product that clearly was not fit for purpose?
Legal and General informed me today that the shortfall on my "with profits" endowment mortgage of £39K will range between £13K - £16K.
So much for the concept of "smoothing", allegedly one of the main components of a "with profits" policy.
Maybe they could also explain to me why they sold and "managed" a product that clearly was not fit for purpose?
Saturday, September 19, 2009
Aviva Policyholders Lose
Aviva Policyholders Lose
The Times reports:
"800,000 policyholders of with-profits funds run by Aviva, Britain’s largest insurer, will share less than half of the billion-pound windfall promised just over 18 months ago.
The investors had been pledged £1 billion in February last year when the funds were valued at £4.2 billion, but were told this March that the payout would be £500 million because falling gilt, bond and property prices had reduced the funds to £1.2 billion.
The High Court yesterday upheld Aviva’s decision to pay the £500 million because the fund had shrunk in value. Aviva will keep £700 million for its own use.
Eligible policyholders — those with Commercial Union Life, CGNU Life and Norwich Union Life with-profits funds — will receive between £200 and £1,150. Aviva said it would put the scheme into effect on October 1, with the majority of payments being made before the end of the year."
Why has the FSA sat on its hands and allowed Aviva to take (Which? uses the word "plunder") £700M of policyholders' money?
Some also argue that Aviva have deliberately dragged this out; so as to not to have to pay out so much money, as the markets continued to fall.
Policyholders, yet again, have been ill served by a life assurance company.
The Times reports:
"800,000 policyholders of with-profits funds run by Aviva, Britain’s largest insurer, will share less than half of the billion-pound windfall promised just over 18 months ago.
The investors had been pledged £1 billion in February last year when the funds were valued at £4.2 billion, but were told this March that the payout would be £500 million because falling gilt, bond and property prices had reduced the funds to £1.2 billion.
The High Court yesterday upheld Aviva’s decision to pay the £500 million because the fund had shrunk in value. Aviva will keep £700 million for its own use.
Eligible policyholders — those with Commercial Union Life, CGNU Life and Norwich Union Life with-profits funds — will receive between £200 and £1,150. Aviva said it would put the scheme into effect on October 1, with the majority of payments being made before the end of the year."
Why has the FSA sat on its hands and allowed Aviva to take (Which? uses the word "plunder") £700M of policyholders' money?
Some also argue that Aviva have deliberately dragged this out; so as to not to have to pay out so much money, as the markets continued to fall.
Policyholders, yet again, have been ill served by a life assurance company.
Friday, August 21, 2009
Reality Dawns
Reality Dawns
As I have noted many times on this site, at some stage the hapless millions who were conned into buying useless, underperforming endowment mortgages will have to cover the shortfall when the policy matures.
The penny may finally be dropping, wrt paying off uncovered debt, as The Times reports that people are waking up to the problems of paying off interest only deals (an offshoot of endowments).
"Figures from the Financial Services Authority, which has regulated mortgages since 2004, show that 38 per cent of Britain's 11.1 million mortgage borrowers — or more than one in three — may have made inadequate provision to pay off their capital sum.
Many are in negative equity and the savings products taken out to cover the capital repayments have fallen short. That 38 per cent figure does not include those with endowments or buy-to-let investors who took out interest-only mortgages to keep the cost down."
These policies are beginning ot mature at the very time the property market/economy is struggling to pull itself out of the mire.
As I have noted many times on this site, at some stage the hapless millions who were conned into buying useless, underperforming endowment mortgages will have to cover the shortfall when the policy matures.
The penny may finally be dropping, wrt paying off uncovered debt, as The Times reports that people are waking up to the problems of paying off interest only deals (an offshoot of endowments).
"Figures from the Financial Services Authority, which has regulated mortgages since 2004, show that 38 per cent of Britain's 11.1 million mortgage borrowers — or more than one in three — may have made inadequate provision to pay off their capital sum.
Many are in negative equity and the savings products taken out to cover the capital repayments have fallen short. That 38 per cent figure does not include those with endowments or buy-to-let investors who took out interest-only mortgages to keep the cost down."
These policies are beginning ot mature at the very time the property market/economy is struggling to pull itself out of the mire.
Wednesday, August 19, 2009
Unbelievable Betrayal
Unbelievable Betrayal
The hopeless and hapless FSA has now published its final decision on its endowment mis-selling consultation, and has ignored consumer concerns about the proposals.
Which? describe this as "an unbelievable betrayal of consumers".
Which? goes on to note that the FSA had 234 responses to their consultation. Only 10 responses were from firms and industry bodies. Despite this, the FSA only addressed the concerns of firms who felt that the proposals go too far.
Which? quite rightly states that the FSA is allowing the financial services industry to dictate policy once again; get away with ripping off the consumer.
The FSA will not be missed when it is abolished after the next election. It has been worse than worthless in its role as consumer "champion", and serves only the needs of its paymasters in the financial services industry.
The hopeless and hapless FSA has now published its final decision on its endowment mis-selling consultation, and has ignored consumer concerns about the proposals.
Which? describe this as "an unbelievable betrayal of consumers".
Which? goes on to note that the FSA had 234 responses to their consultation. Only 10 responses were from firms and industry bodies. Despite this, the FSA only addressed the concerns of firms who felt that the proposals go too far.
Which? quite rightly states that the FSA is allowing the financial services industry to dictate policy once again; get away with ripping off the consumer.
The FSA will not be missed when it is abolished after the next election. It has been worse than worthless in its role as consumer "champion", and serves only the needs of its paymasters in the financial services industry.
Monday, August 10, 2009
Things Will Only Get Worse
Things Will Only Get Worse
Those of you who hung onto a flimsy straw of hope that the recent rebound in the FTSE may help draw a line under your collapsing "with profits" (such a misnomer for such a lousy product) endowment policy, need to read this article in The Times.
The bottom line is that the returns will worsen, and that the life assurance companies will continue to cut bonuses.
Either way, in good times or bad, the policy holder picks up the bill for the failures of these useless products and the conmen who sold them to you.
We need a class action to bring these companies to heel!
Those of you who hung onto a flimsy straw of hope that the recent rebound in the FTSE may help draw a line under your collapsing "with profits" (such a misnomer for such a lousy product) endowment policy, need to read this article in The Times.
The bottom line is that the returns will worsen, and that the life assurance companies will continue to cut bonuses.
Either way, in good times or bad, the policy holder picks up the bill for the failures of these useless products and the conmen who sold them to you.
We need a class action to bring these companies to heel!
Monday, July 27, 2009
Slash and Burn Policy
Slash and Burn Policy
Aviva (nee Norwich Union) has slashed the payouts on its with-profits (an ironic term, given how useless these products are) endowments and pensions.
Aviva runs several with-profits funds including those sold by; General Accident, Commercial Union, Norwich Union and Provident Mutual.
- A 25 year General Accident mortgage endowment is now down 8.4%
- Aviva Life is now down 12%
- Commercial Union down 7.7%.
Precisely why does the FSA allow life assurance companies to use the phrase "with profits", when it is very clear that they do not do that?
Read more: http://www.dailymail.co.uk/money/article-1201432/Aviva-slashes-payouts-profits-endowments-pensions.html#ixzz0MSDHkBV4
Aviva (nee Norwich Union) has slashed the payouts on its with-profits (an ironic term, given how useless these products are) endowments and pensions.
Aviva runs several with-profits funds including those sold by; General Accident, Commercial Union, Norwich Union and Provident Mutual.
- A 25 year General Accident mortgage endowment is now down 8.4%
- Aviva Life is now down 12%
- Commercial Union down 7.7%.
Precisely why does the FSA allow life assurance companies to use the phrase "with profits", when it is very clear that they do not do that?
Read more: http://www.dailymail.co.uk/money/article-1201432/Aviva-slashes-payouts-profits-endowments-pensions.html#ixzz0MSDHkBV4
Tuesday, July 21, 2009
Aviva Error
Aviva Error
The Telegraph reports that a computer error by Aviva, has resulted in the miscalculation of Aviva's orphan asset payout to 9,000 policyholders.
One million policy holders were contacted in May, wrt the terms of distribution for Aviva's £1.4BN inherited estate.
Aviva was then forced to send another letter to 9,000 policyholders, to tell them of a "technical error" that resulted in them being offered the wrong amount.
The Telegraph reports that a computer error by Aviva, has resulted in the miscalculation of Aviva's orphan asset payout to 9,000 policyholders.
One million policy holders were contacted in May, wrt the terms of distribution for Aviva's £1.4BN inherited estate.
Aviva was then forced to send another letter to 9,000 policyholders, to tell them of a "technical error" that resulted in them being offered the wrong amount.
Thursday, July 16, 2009
99% Shortfall
99% Shortfall
This Is Money reports that a staggering 99% of endowment policies will fail to pay off the mortgages which they were designed to cover.
With over 4.3M policies still in force this means that millions of people will be affected by the failure of these useless products.
The FSA and the life assurance companies that "manage" these failed products continue to hide behind the excuse that, as they are investments, the consumer knowingly accepted the risk that they might not cover the mortgage.
This excuse is not valid, as the life assurance companies told the hapless consumer that they were designed to pay off their mortgages. Why else would anyone have bought these products if they were not going to fulfil their primary function of paying off a mortgage?
The fact 99% of them will fail to do this is proof that the product was poorly designed, and continues to be atrociously "managed" (eg why do life assurance companies continue to milk the policies of commissions, when they have demonstrably failed?).
The consumer has been ripped off by the life assurance industry, and left to rot by the FSA.
This Is Money reports that a staggering 99% of endowment policies will fail to pay off the mortgages which they were designed to cover.
With over 4.3M policies still in force this means that millions of people will be affected by the failure of these useless products.
The FSA and the life assurance companies that "manage" these failed products continue to hide behind the excuse that, as they are investments, the consumer knowingly accepted the risk that they might not cover the mortgage.
This excuse is not valid, as the life assurance companies told the hapless consumer that they were designed to pay off their mortgages. Why else would anyone have bought these products if they were not going to fulfil their primary function of paying off a mortgage?
The fact 99% of them will fail to do this is proof that the product was poorly designed, and continues to be atrociously "managed" (eg why do life assurance companies continue to milk the policies of commissions, when they have demonstrably failed?).
The consumer has been ripped off by the life assurance industry, and left to rot by the FSA.
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