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.
Showing posts with label commercial union. Show all posts
Showing posts with label commercial union. Show all posts
Saturday, September 19, 2009
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
Thursday, March 13, 2008
The Endowment Rip Off
The Endowment Rip Off
Underlying funds held by insurance companies have risen by an average of 6% over the last year. This in theory should be good news for the millions of people holding useless, underperforming with-profits endowment policies.
Unfortunately, as with all endowment policy matters, what at first appears to be an opportunity for the hapless policy holder to earn a respectable return turns out to be an opportunity for the life insurance companies to take "a dip".
The biggest and the "best" of Britain's life insurers have in fact reduced their payouts by 3% last year (remember the funds they "manage" on our behalf have actually risen by 6%).
This cut in payouts has cost the endowment policy holders around £8BN, according to The Times.
The Times quote Tom McPhail, at Hargreaves Lansdown:
"Stock markets have risen substantially since the end of the bear market in 2003, but final payouts keep on falling.
It just doesn't add up."
That's putting it politely!
We would be better off having "invested" our money in a "bog standard" savings account over the last 10 years.
Simple!
Because they can!
Insurers have discretion over how much of the gain they pass on, therefore they choose to keep the money for themselves.
A report for the trade body Actuarial Profession expects payouts to continue to fall by 3% per annum until 2020.
We are being ripped off by the insurance companies, and no one in the regulatory authorities is doing anything about it.
Underlying funds held by insurance companies have risen by an average of 6% over the last year. This in theory should be good news for the millions of people holding useless, underperforming with-profits endowment policies.
Unfortunately, as with all endowment policy matters, what at first appears to be an opportunity for the hapless policy holder to earn a respectable return turns out to be an opportunity for the life insurance companies to take "a dip".
The biggest and the "best" of Britain's life insurers have in fact reduced their payouts by 3% last year (remember the funds they "manage" on our behalf have actually risen by 6%).
This cut in payouts has cost the endowment policy holders around £8BN, according to The Times.
The Times quote Tom McPhail, at Hargreaves Lansdown:
"Stock markets have risen substantially since the end of the bear market in 2003, but final payouts keep on falling.
It just doesn't add up."
That's putting it politely!
We would be better off having "invested" our money in a "bog standard" savings account over the last 10 years.
- A 10 year endowment policy from Friends Provident has returned a mind numbingly small 0.9% a year, compared with 1.6% from a 90 day deposit account.
- Prudential's fund grew by 7.2% last year. However, a typical maturing £50-a-month, 25 year Prudential endowment policy will now pay out £44,515. This represents a 5% cut on the £46,695 paid out on an equivalent plan that matured in 2007.
- A typical 25 year Commercial Union endowment policy will pay out £40,737. This is 7% down on the £43,697 paid out on an equivalent plan last year.
Simple!
Because they can!
Insurers have discretion over how much of the gain they pass on, therefore they choose to keep the money for themselves.
A report for the trade body Actuarial Profession expects payouts to continue to fall by 3% per annum until 2020.
We are being ripped off by the insurance companies, and no one in the regulatory authorities is doing anything about it.
Thursday, January 17, 2008
Commercial Union Cut Payouts
Commercial Union Cut Payouts
Those unfortunate endowment policy holders who save with Commercial Union are in for a very unpleasant shock this year.
A saver who put in £50 a month for 25 years from January 1 1983, (from age 29) will receive just £39,321. This is 10% down on the £43,697 paid out on a 25-year plan taken out in January 1 1982.
To add to the misery, it is 19.6% down on the £48,889 paid out two years ago.
The odd thing is the fund, in which these policies are invested, grew by 5.4% last year and 11.7% the year before.
Why the cut the cut then?
Will the senior management of Commercial Union be taking a cut in their bonuses too?
Will Commercial Union be cutting their management charges, given that the fund is not producing the payouts that holders were led to believe it would?
As ever, it the hapless long suffering endowment policy holder that is left to foot the bill for failure not the managers of the endowment company.
Those unfortunate endowment policy holders who save with Commercial Union are in for a very unpleasant shock this year.
A saver who put in £50 a month for 25 years from January 1 1983, (from age 29) will receive just £39,321. This is 10% down on the £43,697 paid out on a 25-year plan taken out in January 1 1982.
To add to the misery, it is 19.6% down on the £48,889 paid out two years ago.
The odd thing is the fund, in which these policies are invested, grew by 5.4% last year and 11.7% the year before.
Why the cut the cut then?
Will the senior management of Commercial Union be taking a cut in their bonuses too?
Will Commercial Union be cutting their management charges, given that the fund is not producing the payouts that holders were led to believe it would?
As ever, it the hapless long suffering endowment policy holder that is left to foot the bill for failure not the managers of the endowment company.
Monday, June 18, 2007
Norwich Union's Inherited Estate
Norwich Union's Inherited Estate
Norwich Union with-profits policyholders are demanding cash rather than extra bonuses, when the insurer comes to distribute its £5BN inherited estate.
Inherited estate being money in a with-profits fund that is surplus to requirements.
Norwich Union is currently in the process of deciding how to distribute its fund fairly to its 1.1 million policyholders. Prudential is also doing the same wrt its 4 million with-profits policyholders.
Former gas regulator, Clare Spottiswoode, has been appointed to represent the interests of Norwich's with-profits policyholders.
Those affected are in two of its with-profits funds, the old Commercial Union fund and the old General Accident fund. Those in the Norwich Union and Provident Mutual funds will not get anything, because they got windfalls when the insurer joined the stock market ten years ago.
Mrs Spottiswoode has held roadshows across the country to canvass the views of policyholders, and has also commissioned a survey of their views. The results of the roadshows and surveys show that twice as many policyholders would prefer to have cash in hand, rather than extra bonuses.
Clearly the long suffering policy holders have lost faith in the concept of endowment mortgages.
Who can blame them?
Norwich Union with-profits policyholders are demanding cash rather than extra bonuses, when the insurer comes to distribute its £5BN inherited estate.
Inherited estate being money in a with-profits fund that is surplus to requirements.
Norwich Union is currently in the process of deciding how to distribute its fund fairly to its 1.1 million policyholders. Prudential is also doing the same wrt its 4 million with-profits policyholders.
Former gas regulator, Clare Spottiswoode, has been appointed to represent the interests of Norwich's with-profits policyholders.
Those affected are in two of its with-profits funds, the old Commercial Union fund and the old General Accident fund. Those in the Norwich Union and Provident Mutual funds will not get anything, because they got windfalls when the insurer joined the stock market ten years ago.
Mrs Spottiswoode has held roadshows across the country to canvass the views of policyholders, and has also commissioned a survey of their views. The results of the roadshows and surveys show that twice as many policyholders would prefer to have cash in hand, rather than extra bonuses.
Clearly the long suffering policy holders have lost faith in the concept of endowment mortgages.
Who can blame them?
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?
Tuesday, January 23, 2007
Insurers Cash Grab
Insurers Cash Grab
Aviva and Prudential are planning to divert billions of pounds of surplus cash in their with-profits funds to shareholders, despite the fact that those who hold endowments, bonds and pensions are suffering lousy returns.
Aviva own Norwich Union, which recently warned 90% of its endowment policy holders to expect shortfalls on their policies. Aviva wants to pass a large part of the £4BN of inherited estate, in its Commercial Union Life and CGNU Life with-profits funds, to shareholders in 2008.
It is estimated that 1.4m policyholders will each received several hundreds of pounds of compensation. However, Which? believes that they are entitled to over £2K.
Doug Taylor at Which is quoted in The Times as saying:
"The fair solution would be to give 90% to policyholders and 10% to shareholders, even if this is not Norwich Union's preferred result."
Patrick Connolly at JS&P Towry Law, said:
"Norwich Union doesn't want to release the funds to benefit policyholders but because it wants to use them to support the business and boost shareholders' profits."
Prudential also wants to pass on £9BN billion from the inherited estate to shareholders.
These moves are expected to encourage other insurers to do the same, in order to prop up their share prices and to keep the shareholders quiet and subservient.
David Riddington, a senior actuary for Norwich Union, said:
"The inherited estate is legally owned by the company and its shareholders, so policyholders don't have any rights as such. Payments to customers are likely to be comparatively modest."
Ian Allison at Brunel Franklin, said:
"We are astonished that Norwich Union sees fit to attribute some of its surplus to shareholders while many endowment victims' finances remain in tatters."
Clare Spottiswoode has been appointed as "policyholder advocate", by Norwich.
The Policyholder Advocate is the representative for all the eligible with-profits policyholders of a company that is considering a reattribution of inherited estates.
The Policyholder Advocate's key job is to negotiate the size of any incentive to withy-profits policyholders to give up their rights to any possible future distribution from the inherited estate.
Details about Spottiswoode can be found on the website www.policyholderadvocate.org.
The outcome of these two moves will impact the rest of the industry, and the finances of the long suffering endowment policy holders.
Aviva and Prudential are planning to divert billions of pounds of surplus cash in their with-profits funds to shareholders, despite the fact that those who hold endowments, bonds and pensions are suffering lousy returns.
Aviva own Norwich Union, which recently warned 90% of its endowment policy holders to expect shortfalls on their policies. Aviva wants to pass a large part of the £4BN of inherited estate, in its Commercial Union Life and CGNU Life with-profits funds, to shareholders in 2008.
It is estimated that 1.4m policyholders will each received several hundreds of pounds of compensation. However, Which? believes that they are entitled to over £2K.
Doug Taylor at Which is quoted in The Times as saying:
"The fair solution would be to give 90% to policyholders and 10% to shareholders, even if this is not Norwich Union's preferred result."
Patrick Connolly at JS&P Towry Law, said:
"Norwich Union doesn't want to release the funds to benefit policyholders but because it wants to use them to support the business and boost shareholders' profits."
Prudential also wants to pass on £9BN billion from the inherited estate to shareholders.
These moves are expected to encourage other insurers to do the same, in order to prop up their share prices and to keep the shareholders quiet and subservient.
David Riddington, a senior actuary for Norwich Union, said:
"The inherited estate is legally owned by the company and its shareholders, so policyholders don't have any rights as such. Payments to customers are likely to be comparatively modest."
Ian Allison at Brunel Franklin, said:
"We are astonished that Norwich Union sees fit to attribute some of its surplus to shareholders while many endowment victims' finances remain in tatters."
Clare Spottiswoode has been appointed as "policyholder advocate", by Norwich.
The Policyholder Advocate is the representative for all the eligible with-profits policyholders of a company that is considering a reattribution of inherited estates.
The Policyholder Advocate's key job is to negotiate the size of any incentive to withy-profits policyholders to give up their rights to any possible future distribution from the inherited estate.
Details about Spottiswoode can be found on the website www.policyholderadvocate.org.
The outcome of these two moves will impact the rest of the industry, and the finances of the long suffering endowment policy holders.
Wednesday, June 29, 2005
Norwich Union Raises Bonuses
Norwich Union Raises Bonuses
In a rare piece of good news, for some of those holding endowment policies, Norwich Union has announced that it will be raising bonuses on some of its with profits endowment policies.
This will be the first increase since 1991, that fact alone shows just how badly endowment policies have been performing.
As noted many times before; why were these polices, when they were obviously failing, still sold by the life assurance companies?
Norwich Union said that it had decided to raise the rates paid on certain with profits policies in the CGNU (which includes General Accident) and CULAC (Commercial Union) funds, on those with profits policies taken out before October 1998.
The bonus rates will be increased from 1% to 2% in the CGNU fund, and people in the CULAC fund will be paid 1.5% compared with 0.5% previously.
Norwich said all other bonus rates would remain unchanged, and that there would be no changes to the value of maturity payouts or the current levels of "market value reduction".
In a rare piece of good news, for some of those holding endowment policies, Norwich Union has announced that it will be raising bonuses on some of its with profits endowment policies.
This will be the first increase since 1991, that fact alone shows just how badly endowment policies have been performing.
As noted many times before; why were these polices, when they were obviously failing, still sold by the life assurance companies?
Norwich Union said that it had decided to raise the rates paid on certain with profits policies in the CGNU (which includes General Accident) and CULAC (Commercial Union) funds, on those with profits policies taken out before October 1998.
The bonus rates will be increased from 1% to 2% in the CGNU fund, and people in the CULAC fund will be paid 1.5% compared with 0.5% previously.
Norwich said all other bonus rates would remain unchanged, and that there would be no changes to the value of maturity payouts or the current levels of "market value reduction".
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