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.
Showing posts with label Scottish Widows. Show all posts
Showing posts with label Scottish Widows. Show all posts
Thursday, July 16, 2009
Friday, February 13, 2009
Scottish Widows Cut Bonuses
Scottish Widows Cut Bonuses
Scottish Widows have cut the bonus rates on their with-profits (such an ironic name for a product that does not actually produce a profit for the hapless policy holder) policies. Scottish Widows claim that the £14BN with-profits fund fell by 17.5% in 2008.
The majority of the 775,000 policies will therefore pay out less than they did last year.
The concept of "with-profits", as told to hapless investors by the life assurance companies, was that the life assurance comapnies would smooth the bonuses during the life of the policy. The fact that companies are having to cut bonuses indicates that this smoothing clearly has not taken place, and the bonus payments in earlier years were too high.
Why would the companies pay out bonuses that were too high in earlier years?
Simple, so that they could attract more investors by showing that their policies were high profit yielding products (some cynics might argue that these policies were a scam).
Scottish Widows have cut the bonus rates on their with-profits (such an ironic name for a product that does not actually produce a profit for the hapless policy holder) policies. Scottish Widows claim that the £14BN with-profits fund fell by 17.5% in 2008.
The majority of the 775,000 policies will therefore pay out less than they did last year.
The concept of "with-profits", as told to hapless investors by the life assurance companies, was that the life assurance comapnies would smooth the bonuses during the life of the policy. The fact that companies are having to cut bonuses indicates that this smoothing clearly has not taken place, and the bonus payments in earlier years were too high.
Why would the companies pay out bonuses that were too high in earlier years?
Simple, so that they could attract more investors by showing that their policies were high profit yielding products (some cynics might argue that these policies were a scam).
Thursday, April 10, 2008
Tuesday, March 11, 2008
Scottish Widows
Scottish Widows
Lats year holders of endowment policies with Scottish Widows were bitterly disappointed to be told that they would not be receiving any bonus on their policies, in spite of the fact that the underlying with-profits fund grew by 10%.
However, this year Scottish Widows, despite only showing a return of 5%, has added bonuses to 239,000 polices.
Needless to say, what is given with one hand is taken with the other, the final payout to mortgage endowment customers has fallen compared to 2007.
A typical 25 year, £50 a month mortgage endowment policy maturing in January paid out £38,136 this year, last year it paid out £38,758.
A mind numbing 88% of Scottish Widows endowment policy holders will not receive payouts large enough to cover the mortgages that their policies were designed to cover.
The blindingly obvious question therefore arises, what is the point of these policies if they do not do what they were designed and sold to do?
Lats year holders of endowment policies with Scottish Widows were bitterly disappointed to be told that they would not be receiving any bonus on their policies, in spite of the fact that the underlying with-profits fund grew by 10%.
However, this year Scottish Widows, despite only showing a return of 5%, has added bonuses to 239,000 polices.
Needless to say, what is given with one hand is taken with the other, the final payout to mortgage endowment customers has fallen compared to 2007.
A typical 25 year, £50 a month mortgage endowment policy maturing in January paid out £38,136 this year, last year it paid out £38,758.
A mind numbing 88% of Scottish Widows endowment policy holders will not receive payouts large enough to cover the mortgages that their policies were designed to cover.
The blindingly obvious question therefore arises, what is the point of these policies if they do not do what they were designed and sold to do?
Friday, August 24, 2007
The List of Shame
The List of Shame
Congratulations to Money Management magazine for naming and shaming the insurance companies and endowment providers, who tired to hoodwink their customers, that the Financial Services Authority (FSA) tried to cover up.
When these shamed companies sold their products to their unsuspecting customers they used industry standard charges laid down by Lautro, the industry regulator at the time, to show the returns etc that would be expected on the policies..
However, their actual charges levied by these shamed companies were often much higher sometimes double the Lautro rate. Needless to say, they chose not to tell their customers this. This shoddy practice took place between 1988 and 1995.
It is estimated that around 200,000 policyholders, with low-cost mortgage endowments, could be owed up to £200m by these companies as a result of this practice.
The list of shame includes:
-Standard Life
-Pearl
-Axa
-Scottish Widows
-Prudential, owned Scottish Amicable
-Scottish Mutual
-Scottish Provident, now owned by Resolution.
Companies were taking up to 0.75% a year in charges from the fund. However, their customers were given the impression that the charge was only 0.3% (ie less than half).
Some companies, including Axa, Legal & General and Clerical Medical, have set aside money to make good these shortfalls. Others, such as Standard Life, have so far refused.
Shoddy practice by a very shoddy industry, and a disgraceful attempted cover up by a toothless partisan FSA.
It is hardly surprising that the British consumer has lost all faith in the financial services industry.
Congratulations to Money Management magazine for naming and shaming the insurance companies and endowment providers, who tired to hoodwink their customers, that the Financial Services Authority (FSA) tried to cover up.
When these shamed companies sold their products to their unsuspecting customers they used industry standard charges laid down by Lautro, the industry regulator at the time, to show the returns etc that would be expected on the policies..
However, their actual charges levied by these shamed companies were often much higher sometimes double the Lautro rate. Needless to say, they chose not to tell their customers this. This shoddy practice took place between 1988 and 1995.
It is estimated that around 200,000 policyholders, with low-cost mortgage endowments, could be owed up to £200m by these companies as a result of this practice.
The list of shame includes:
-Standard Life
-Pearl
-Axa
-Scottish Widows
-Prudential, owned Scottish Amicable
-Scottish Mutual
-Scottish Provident, now owned by Resolution.
Companies were taking up to 0.75% a year in charges from the fund. However, their customers were given the impression that the charge was only 0.3% (ie less than half).
Some companies, including Axa, Legal & General and Clerical Medical, have set aside money to make good these shortfalls. Others, such as Standard Life, have so far refused.
Shoddy practice by a very shoddy industry, and a disgraceful attempted cover up by a toothless partisan FSA.
It is hardly surprising that the British consumer has lost all faith in the financial services industry.
Monday, May 14, 2007
The List of Shame
The List of Shame
Those of us who are unfortunate enough to have bought an endowment policy in the late 1980's and early 1990's may find an analysis produced by Money Management to be of interest.
It shows that, despite rising stock markets, payouts to policy holder continue to fall in most cases.
They compared policies maturing in 2007 with those maturing in 2006, for a male non smoker investing £50 from the outset over 25 years. The variation in returns was staggering. The average growth rate was 8.5%.
The top performer was Reliance Mutual with a return of 13.6%. However, the laggards showing below average returns were as follows (%):
Norwich Union - 8.3
Canada Life - 8.3
CGU - 8.2
General Accident - 8.2
Brittanic Assurance - 8.2
Clerical Medical - 7.9
Legal&General - 7.7
Scottish Widows - 7.3
Scottish Life - 7.2
Standard Mutual - 6.8
Scottish Mutual - 6.8
Friends Provident - 6.7
Equitable Life - 6.5
Eagle Star - 5.7
Well done!
The key question that policy holders should be asking of their endowment company, if they are in one of the under performing ones, is why are your returns worse than others?
Does that not reflect badly on the quality of management, and on the charges levied against the fund?
Those of us who are unfortunate enough to have bought an endowment policy in the late 1980's and early 1990's may find an analysis produced by Money Management to be of interest.
It shows that, despite rising stock markets, payouts to policy holder continue to fall in most cases.
They compared policies maturing in 2007 with those maturing in 2006, for a male non smoker investing £50 from the outset over 25 years. The variation in returns was staggering. The average growth rate was 8.5%.
The top performer was Reliance Mutual with a return of 13.6%. However, the laggards showing below average returns were as follows (%):
Norwich Union - 8.3
Canada Life - 8.3
CGU - 8.2
General Accident - 8.2
Brittanic Assurance - 8.2
Clerical Medical - 7.9
Legal&General - 7.7
Scottish Widows - 7.3
Scottish Life - 7.2
Standard Mutual - 6.8
Scottish Mutual - 6.8
Friends Provident - 6.7
Equitable Life - 6.5
Eagle Star - 5.7
Well done!
The key question that policy holders should be asking of their endowment company, if they are in one of the under performing ones, is why are your returns worse than others?
Does that not reflect badly on the quality of management, and on the charges levied against the fund?
Saturday, December 02, 2006
Legal Loophole Helps Scots
Legal Loophole Helps Scots
An estimated 100,000 Scots homeowners, who missed the deadline for lodging endowment mis-selling claims, may still be eligible for compensation.
That at least is the view of Gerry Diamond, of the Endowment Compensation Centre, who has discovered a possible legal loophole which may help those who bought policies from Scottish providers including; Standard Life, Scottish Widows and Scottish Amicable.
Mr Diamond believes that the tree year time limit imposed by the Financial services Authority (FSA) is illegal in Scotland, because Scots law allows five years to challenge unfair contracts.
Quote:
"This means that people should have two more years to claim than the three-year FSA rule that is currently applied by many sellers of endowment policies."
It is estimated that over 400,000 Scots have been mis-sold endowment policies.
As I keep saying, all of this trouble could be stopped here and now if the life assurance companies "stepped up to the plate" and underwrote these useless underperforming products.
An estimated 100,000 Scots homeowners, who missed the deadline for lodging endowment mis-selling claims, may still be eligible for compensation.
That at least is the view of Gerry Diamond, of the Endowment Compensation Centre, who has discovered a possible legal loophole which may help those who bought policies from Scottish providers including; Standard Life, Scottish Widows and Scottish Amicable.
Mr Diamond believes that the tree year time limit imposed by the Financial services Authority (FSA) is illegal in Scotland, because Scots law allows five years to challenge unfair contracts.
Quote:
"This means that people should have two more years to claim than the three-year FSA rule that is currently applied by many sellers of endowment policies."
It is estimated that over 400,000 Scots have been mis-sold endowment policies.
As I keep saying, all of this trouble could be stopped here and now if the life assurance companies "stepped up to the plate" and underwrote these useless underperforming products.
Tuesday, July 26, 2005
Misery For Scottish Widows
Misery For Scottish Widows
Bad news for those of you who hold with-profits policies with Scottish Widows, the maturity values of these policies have fallen again; despite the recovery of equity markets.
The value of an average 25-year with-profits contract has dropped in the past six months, rather worrying given the fact that the stock market has been rising.
Scottish Widows said that payouts were lower because funds were invested over different time periods, yielding different earnings.
It still expects its £18BN with-profits fund to produce a pre-tax investment return of 15% in the 12 months to end-June, compared to 7.3% in the same period the previous year.
However, the company warned that maturity payouts could continue to fall, even in years where positive investment returns were achieved.
The Widows have tried to explain the reason for the fall as being due to the returns on with-profits, which aim to smooth payouts by holding back some of the return in good years to pay out in the bad, as being historically "significantly higher" than those of late.
To my simple view that means that they were paying out too much in earlier years, and not applying the "smoothing principle" properly.
Now there are two possible reasons for this:
1 Poor management of the policy
2 Deliberate over payment to attract new customers and shareholders
A typical 25-year endowment with Scottish Widows, maturing on 1 August, dropped 2.8% on February and 7.4% on the year. A mortgage-linked endowment over the same period fell 2.8% in value since February and 8.1% over the past year.
Bad news for those of you who hold with-profits policies with Scottish Widows, the maturity values of these policies have fallen again; despite the recovery of equity markets.
The value of an average 25-year with-profits contract has dropped in the past six months, rather worrying given the fact that the stock market has been rising.
Scottish Widows said that payouts were lower because funds were invested over different time periods, yielding different earnings.
It still expects its £18BN with-profits fund to produce a pre-tax investment return of 15% in the 12 months to end-June, compared to 7.3% in the same period the previous year.
However, the company warned that maturity payouts could continue to fall, even in years where positive investment returns were achieved.
The Widows have tried to explain the reason for the fall as being due to the returns on with-profits, which aim to smooth payouts by holding back some of the return in good years to pay out in the bad, as being historically "significantly higher" than those of late.
To my simple view that means that they were paying out too much in earlier years, and not applying the "smoothing principle" properly.
Now there are two possible reasons for this:
1 Poor management of the policy
2 Deliberate over payment to attract new customers and shareholders
A typical 25-year endowment with Scottish Widows, maturing on 1 August, dropped 2.8% on February and 7.4% on the year. A mortgage-linked endowment over the same period fell 2.8% in value since February and 8.1% over the past year.
Tuesday, June 14, 2005
Standard Life "Merely Following Orders"
Standard Life "Merely Following Orders"
It seems that Standard Life is getting rather a rough press these days, over its endowment policies.
Standard Life is now facing calls to compensate up to 100,000 mortgage endowment holders, for failing to disclose the full extent of charges levied on their endowment policies.
The hapless holders of their Homeplan policies are now facing 12% shortfall on their policies, because of a charging discrepancy.
Which? is leading the calls to compensate victims of this debacle; other companies (Norwich Union, L&G, Scottish Widows and Axa) which sold policies, with similar charging structures, have topped up their own clients' investments.
Standard Life used "standard charge projections", specified by the regulator, to calculate its premiums. However, the actual charges were up to 10% higher.
Standard Life claim that they have done nothing wrong.
A spokesman said that they were merely following industry guidelines at the time.
Doesn't that, "merely following orders", have a familiar ring to it?
It seems that Standard Life is getting rather a rough press these days, over its endowment policies.
Standard Life is now facing calls to compensate up to 100,000 mortgage endowment holders, for failing to disclose the full extent of charges levied on their endowment policies.
The hapless holders of their Homeplan policies are now facing 12% shortfall on their policies, because of a charging discrepancy.
Which? is leading the calls to compensate victims of this debacle; other companies (Norwich Union, L&G, Scottish Widows and Axa) which sold policies, with similar charging structures, have topped up their own clients' investments.
Standard Life used "standard charge projections", specified by the regulator, to calculate its premiums. However, the actual charges were up to 10% higher.
Standard Life claim that they have done nothing wrong.
A spokesman said that they were merely following industry guidelines at the time.
Doesn't that, "merely following orders", have a familiar ring to it?
Monday, June 06, 2005
Standards Life's Endowment Debacle
Standard Life's Endowment Debacle
Further to my earlier article about Standard Life's failing Homeplan endowment policy, it seems that the shortfalls on this useless product will be more than previously thought.
It seems that the value of many of the company's Homeplan policies, sold in the early 1990s, could be as much as 12% lower than the amount originally estimated.
It is estimated that the losses could exceed £250M.
The reason?
Standard Life set its premiums at an artificially low level in order to attract new business.
Standard Life are continuing to reject demands that the company compensate those who face shortfalls.
Well they would, wouldn't they?
A Standard Life are quoted as saying:
"At the time it was launched, Homeplan was an innovative and popular product. The innovative flexibility offered by Homeplan meant it was an immediate success and helped tens of thousands of people onto the property ladder."
Not much comfort to those facing a shortfall now though is it?
As I have repeated, time and time again, what is the point of an endowment policy if it is not going to pay off the mortgage?
People would not have taken these useless policies out if they didn't think that they would work.
In other words, it is the duty of the life assurance companies to underwrite these policies.
Standard Life are keen to blame the independent financial advisers (IFAS) for their mess. They are reportedly saying that the way the product was designed meant that IFAS, who were responsible for selling Homeplan policies at the time, could themselves decide the level of premiums that their clients should pay.
Janet Walford, editor of Money Management, politely says that this is of course bollocks:
"This just does not seem logical to me. Life offices price their policies on complex actuarial assumptions, including underwriting risk, assumed performance and charges. How would an IFA know what to charge? It's madness."
Other life insurers, have realised the error of their ways and have quietly paid compensation to their policyholders in a similar position.
The list of recalcitrants includes; Scottish Widows, Axa, Clerical Medical, Legal & General, Norwich Union and Canada Life.
Further to my earlier article about Standard Life's failing Homeplan endowment policy, it seems that the shortfalls on this useless product will be more than previously thought.
It seems that the value of many of the company's Homeplan policies, sold in the early 1990s, could be as much as 12% lower than the amount originally estimated.
It is estimated that the losses could exceed £250M.
The reason?
Standard Life set its premiums at an artificially low level in order to attract new business.
Standard Life are continuing to reject demands that the company compensate those who face shortfalls.
Well they would, wouldn't they?
A Standard Life are quoted as saying:
"At the time it was launched, Homeplan was an innovative and popular product. The innovative flexibility offered by Homeplan meant it was an immediate success and helped tens of thousands of people onto the property ladder."
Not much comfort to those facing a shortfall now though is it?
As I have repeated, time and time again, what is the point of an endowment policy if it is not going to pay off the mortgage?
People would not have taken these useless policies out if they didn't think that they would work.
In other words, it is the duty of the life assurance companies to underwrite these policies.
Standard Life are keen to blame the independent financial advisers (IFAS) for their mess. They are reportedly saying that the way the product was designed meant that IFAS, who were responsible for selling Homeplan policies at the time, could themselves decide the level of premiums that their clients should pay.
Janet Walford, editor of Money Management, politely says that this is of course bollocks:
"This just does not seem logical to me. Life offices price their policies on complex actuarial assumptions, including underwriting risk, assumed performance and charges. How would an IFA know what to charge? It's madness."
Other life insurers, have realised the error of their ways and have quietly paid compensation to their policyholders in a similar position.
The list of recalcitrants includes; Scottish Widows, Axa, Clerical Medical, Legal & General, Norwich Union and Canada Life.
Sunday, May 08, 2005
Endowment Crisis Worsening
Endowment Crisis Worsening
It seems that things are lurching from bad to worse in respect of the performance of the underperforming and useless endowment policies, held by 10 million people in the UK.
It is reported that over 50% of all policies, due to mature this year, will not meet their targets.
Norwich Union said that 19,000, or 58%, of its 33,000 policies will fall short this year.
Standard Life said that over 14,000, or 47%, of its 30,000 policies maturing this year will fall short.
That did not prevent Sir Brian Stewart, chairman of Standard Life, from deluding himself and others last week by saying that endowments were "not all bad"; in fact he was even predicting that they would make a comeback!
Scottish Widows is expecting that 2/3rds will not meet their targets this year.
L&G didn't seem to have any figures, they were not "readily available", how reassuring!
However, Prudential said that none of its 8,376 policies due to mature this year would fall short.
Maybe Prudential has something to teach the other life assurance companies, as to how to manage an endowment fund?
It seems that things are lurching from bad to worse in respect of the performance of the underperforming and useless endowment policies, held by 10 million people in the UK.
It is reported that over 50% of all policies, due to mature this year, will not meet their targets.
Norwich Union said that 19,000, or 58%, of its 33,000 policies will fall short this year.
Standard Life said that over 14,000, or 47%, of its 30,000 policies maturing this year will fall short.
That did not prevent Sir Brian Stewart, chairman of Standard Life, from deluding himself and others last week by saying that endowments were "not all bad"; in fact he was even predicting that they would make a comeback!
Scottish Widows is expecting that 2/3rds will not meet their targets this year.
L&G didn't seem to have any figures, they were not "readily available", how reassuring!
However, Prudential said that none of its 8,376 policies due to mature this year would fall short.
Maybe Prudential has something to teach the other life assurance companies, as to how to manage an endowment fund?
Wednesday, May 04, 2005
Time Bar To Bring Chaos
Time Bar To Bring Chaos
Life assurance companies, who sold underperforming and useless endowment policies to 8 million home owners, are using a number of methods to reduce the claims being made against them for compensation.
One such method is the time bar, whereby claimants are given a deadline to complain or lose their right to do so for ever.
This neat little trick is allowed by the Financial Services Authority (FSA), which said that an insurer may disregard a case for mis-selling three years after a policyholder receives the first "red" letter warning that an endowment has a high risk of not meeting its target.
Needless to say, there is now a deluge of complaints swamping the system.
Many hundreds of thousands of red letters were sent out in early 2003, this means that the deadline is now fast approaching for these people to make a claim.
The deluge has been further exacerbated by the fact that the FSA has told the life assurance companies that they must remind people 6 months before the final deadline, as to their right to make a claim.
Needless to say the life assurance companies and the Ombudsman will be hard pressed to cope with this deluge of complaints.
It has taken me over two years to reach the final stage of my claims which, for the record, were both rejected.
Simply put, the system can't cope!
This problem is exacerbated by the fact that, according to Chief Ombudsman Walter Merricks, 45% of endowment mis-selling cases were upheld by his office after being turned down by life companies.
These companies are reportedly issuing time bars:
Norwich Union - it has 1M endowment policyholders. It began warning of a time bar last October, giving 12 months' notice.
Standard Life - it has 1.2M endowment policyholders. It will write to customers in coming weeks to remind them about its deadline, giving 12 months' notice.
Royal & SunAlliance - it has 450K policyholders. It began reminding policyholders about time-barring last May and gives policyholders six months to complain after a second red warning letter.
Allied Dunbar/Eagle Star - it has 100K policyholders. Policyholders have 12 months to complain after receiving second letter.
Friends Provident - it has 450K policyholders. They have imposed a three-year time bar after policyholders receive their first red letter.
Pearl/NPI/London Life - it has 100K policyholders. Time barring applies three years after the first red letter.
Axa - it has 160K endowment policyholders. It introduced time-barring last month and is writing to customers giving 12 months' notice.
Scottish Widows - it has 165K endowment policyholders. It introduced time-barring in February, giving customers 12 months to complain after receiving their second red letter.
Good luck!
Life assurance companies, who sold underperforming and useless endowment policies to 8 million home owners, are using a number of methods to reduce the claims being made against them for compensation.
One such method is the time bar, whereby claimants are given a deadline to complain or lose their right to do so for ever.
This neat little trick is allowed by the Financial Services Authority (FSA), which said that an insurer may disregard a case for mis-selling three years after a policyholder receives the first "red" letter warning that an endowment has a high risk of not meeting its target.
Needless to say, there is now a deluge of complaints swamping the system.
Many hundreds of thousands of red letters were sent out in early 2003, this means that the deadline is now fast approaching for these people to make a claim.
The deluge has been further exacerbated by the fact that the FSA has told the life assurance companies that they must remind people 6 months before the final deadline, as to their right to make a claim.
Needless to say the life assurance companies and the Ombudsman will be hard pressed to cope with this deluge of complaints.
It has taken me over two years to reach the final stage of my claims which, for the record, were both rejected.
Simply put, the system can't cope!
This problem is exacerbated by the fact that, according to Chief Ombudsman Walter Merricks, 45% of endowment mis-selling cases were upheld by his office after being turned down by life companies.
These companies are reportedly issuing time bars:
Norwich Union - it has 1M endowment policyholders. It began warning of a time bar last October, giving 12 months' notice.
Standard Life - it has 1.2M endowment policyholders. It will write to customers in coming weeks to remind them about its deadline, giving 12 months' notice.
Royal & SunAlliance - it has 450K policyholders. It began reminding policyholders about time-barring last May and gives policyholders six months to complain after a second red warning letter.
Allied Dunbar/Eagle Star - it has 100K policyholders. Policyholders have 12 months to complain after receiving second letter.
Friends Provident - it has 450K policyholders. They have imposed a three-year time bar after policyholders receive their first red letter.
Pearl/NPI/London Life - it has 100K policyholders. Time barring applies three years after the first red letter.
Axa - it has 160K endowment policyholders. It introduced time-barring last month and is writing to customers giving 12 months' notice.
Scottish Widows - it has 165K endowment policyholders. It introduced time-barring in February, giving customers 12 months to complain after receiving their second red letter.
Good luck!
Wednesday, February 09, 2005
Terminal Decline
Terminal Decline
The Scotsman writes that endowment policies are in "terminal decline". They cite the recent cuts in bonuses, announced by the larger life assurance companies; quote:
"..Standard Life and Clerical Medical were this week the latest in a string of assurors to serve up unpalatable news to policyholders: the former slashed bonuses almost across the board, despite a 10.4 per cent pre-tax return on its with-profits fund, while the latter's investors fared little better, although its fund was up 9.9 per cent.
That followed grim tidings from Scottish Widows, a subsidiary of Lloyds TSB, and Aviva - owned Norwich Union. Like Standard Life, Widows cut final payouts for the sixth time in three years, following a 10.5 per cent lift in its fund.
Earlier, Norwich Union, the UK's largest insurer, became the first this year to deliver a stinging blow, slashing payouts by up to 11.5 per cent when its four funds overall enjoyed the same rise.
Prudential's bonus declaration is over a fortnight away, while Abbey National is not due to make its announcement until March. The Pru has claimed it will increase or maintain total bonus rates on all unitised with-profits and offer good year-on-year increases in value..".
The bottom line to this is that we, the holders of these lousy underperforming polices, are screwed.
The Scotsman writes that endowment policies are in "terminal decline". They cite the recent cuts in bonuses, announced by the larger life assurance companies; quote:
"..Standard Life and Clerical Medical were this week the latest in a string of assurors to serve up unpalatable news to policyholders: the former slashed bonuses almost across the board, despite a 10.4 per cent pre-tax return on its with-profits fund, while the latter's investors fared little better, although its fund was up 9.9 per cent.
That followed grim tidings from Scottish Widows, a subsidiary of Lloyds TSB, and Aviva - owned Norwich Union. Like Standard Life, Widows cut final payouts for the sixth time in three years, following a 10.5 per cent lift in its fund.
Earlier, Norwich Union, the UK's largest insurer, became the first this year to deliver a stinging blow, slashing payouts by up to 11.5 per cent when its four funds overall enjoyed the same rise.
Prudential's bonus declaration is over a fortnight away, while Abbey National is not due to make its announcement until March. The Pru has claimed it will increase or maintain total bonus rates on all unitised with-profits and offer good year-on-year increases in value..".
The bottom line to this is that we, the holders of these lousy underperforming polices, are screwed.
Thursday, June 17, 2004
There's a Storm Coming
Those of you holding endowment mortgages, who think that things are bad now, are going to have to steel yourselves for matters to get worse.
It is reported that about 50% of all endowments maturing this year will fail to pay off mortgage debts; this appears to be the straw in the wind of a very unpleasant storm coming our way.
It seems that, according to experts, matters will get worse.
The current estimate is that there will be a shortfall on mis-sold endowment policies of around £40BN.
However, it is reported that Ned Cazalet an insurance analyst at Cazalet Consulting, is predicting that nearly all all mortgage endowment policies that mature after 2008 will miss their targets.
Here are some stats (source Life Insurance Association):
Is it any wonder that people have lost confidence in the financial system in this country?
Those of you holding endowment mortgages, who think that things are bad now, are going to have to steel yourselves for matters to get worse.
It is reported that about 50% of all endowments maturing this year will fail to pay off mortgage debts; this appears to be the straw in the wind of a very unpleasant storm coming our way.
It seems that, according to experts, matters will get worse.
The current estimate is that there will be a shortfall on mis-sold endowment policies of around £40BN.
However, it is reported that Ned Cazalet an insurance analyst at Cazalet Consulting, is predicting that nearly all all mortgage endowment policies that mature after 2008 will miss their targets.
Here are some stats (source Life Insurance Association):
- Norwich Union expects 45% of its 38000 policies maturing this year will not meet target.
- Standard Life expects 47% of its 57000 policies not to meet target this year.
- Scottish Amicable expects 22% of its 18000 policies maturing this year not to meet target.
- Legal and General expects that 25% of its 25000 policies maturing this year not to meet target.
- Scottish Widows expects 67% of its 9000 policies maturing this year not to meet target.
- Abbey Life expects 98% of its 1500 policies maturing this year not to meet target.
Is it any wonder that people have lost confidence in the financial system in this country?
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