Tuesday, September 18, 2007

The Curate's Egg

The Curate's Egg

The Telegraph reports that around 260,000 extra mortgage endowment holders have seen their policies meet their targets in the past year.

It seems that buoyant stock market has helped some policies recover their lost ground over the past few years. However, as to whether a particular policy that had previously been deemed to fail to meet target will now hit target very much depends on a number of variables; not least the quality of the company that is managing the endowment policy.

The Telegraph notes that, eg:

"Prudential's fund has been strong. The proportion of its policies that are red has significantly reduced over that period too. In 2003, 44 per cent of its policies were flagged up as red, now the figure is 15 per cent of the remaining 201,000 policies.

To date none of the Prudential's policies has failed to pay out the full target amount

Those with Scottish Amicable have also seen an improvement. In 2003, Scottish Amicable had 65% of its policies listed as red, this figure now stands at 10%.

However, those who hold Legal and General policies have not been so fortunate. In 2004 over 55% of its policies were expected to fail to meet their repayment value. The figure now stands at 40%.

Standard Life is even worse, as it has seen its red policies rise from 86% to 88%.

As can be seen from the above, the performance is very much dependent on the "quality" of the fund managers.