Legal & General’s shares

legless

Legal & General’s shares are down to 31p. What happens to your Insurance policy if the company go’s under?:eek:

dacouch

Insurance companies are now very heavily regulated by the Financial Services Authority and its far more unlikely that an Insurer would go bankrupt now days (Although still possible).

L&G as with most Insurers shares are depressed as they make a lot of their profits by investing in properties, companies, shares etc etc. Obviously these "Assets" are all down at the moment which is one of the things affecting Insurers.

A new way of financial reporting has recently come in which means when financial companies do their reports their assets look lower. I read recently that L&G are not very happy about this and are debating about complying with this reporting, this may have also had a small effect on their share price.

If they did go belly up there is a reasonable chance that in the current climate the government would bail them out. If they do fail then the Financial Services Compensation Scheme would kick in to hand claims, this pays (For Insurance Policies) 100% of the first £2000 and 90% of the remainder. (See page 6 of the attached Key Features Document).

http://www.legalandgeneral.com/home-travel/home-insurance/HomeKeyFeatures.pdf

This is a link to the FSCS website which has plenty of information on this

http://www.fscs.org.uk/consumer/how_to_claim/insurance/

dunstonh

in addition to the above, if the contract is unit linked then it really doesnt matter as the units are ringfenced away from the insurer. You are not investing in L&G but the assets of the unit linked fund. If its conventional with profits then you are and the FSCS would be required at that point.

I wouldnt be too worried about it at this stage. The insurers are being hit with short sellers at the moment trying to do the same as they did with the banks. Even the mighty Norwich Union have been hit the same way.