Endowments: WP bonus season kicks off

EdInvestor

...with Norwich Union, reporting the good news: payouts went UP this year for the first time since the stockmarket crash at the beginning of the decade, as the market recovery nears fruition . :)This signals the start of endowments getting back on track to pay off the mortgage at the better companies (including the Pru, L&G).

Herald report

However

...the news at the poorer companies,particularly the zombie funds, like Phoenix,Pearl and Equitable is likely to be dire, for they have all their money invested in the bond market, not the stockmarket.Last year bonds were flat at best - many lost value and with interest rates still rising, the outlook is no better.

Expect something in the middle for the those providers invested half and half in stocks and bonds (Standard Life, Friends Provident), with payouts still falling or static.The poor bond performance will have negated much of the rise in the stockmarket, unfortunately.

Jockthearab

EdInvestor (or any other experts!),

Can you advise on what I can expect to receive from my 15 year Friends Provident With Profits endowment which matures in Feb 2007? I paid £47.90 per month from Feb 1992 until I made it 'paid up' in Dec 2004. The 2005 Bonus Statement has a 'Total guaranteeed amount plus all bonuses' of £10254.31. A quick calculation shows that I paid in 154 x £47.90=£7376.60.

Having google searched & found the latest news from Friends Provident I can't see what the final bonus is on a 15 year endowment (they only seem to show 10 & 25 years...).

I will be delighted if I received a cheque for the above amount as the mortgage that it applied to has already been paid off from the sale of the property, but hope to receive a wee bit more with the final bonus. Just being nosy really!

dunstonh

FP with profits is weak. However, most FP endowments are unitised with profits and allow switches into their unit linked range of funds which can offer much greater potential for growth. That option should be investigated along with costing the surrender against modern alternatives. Sometimes you have to take a step back to go forward.

jamesd

Pearl apparently had [STRIKE]55%[/STRIKE] 45% of the with profits fund in equities last year, raised to [STRIKE]60%[/STRIKE] 50% this year.

dunstonh

Pearl has gone from 45 to 50% (7th Jan 07). A couple of years ago it was 25%. They have missed most of the growth. It should be noted that Pearl include property in that as well.

YorkshireBoy

EdInvestor wrote:

...with Norwich Union, reporting the good news: payouts went UP this year for the first time since the stockmarket crash at the beginning of the decade...

Indeed, my 25 year NU WP endowment policy has just paid out - complete with a 25% surplus.

dunstonh

YorkshireBoy wrote:

Indeed, my 25 year NU WP endowment policy has just paid out - complete with a 25% surplus.

Good for you.

Were you getting amber reports at any stage in the last 5 or so years?

YorkshireBoy

dunstonh wrote:

Were you getting amber reports at any stage in the last 5 or so years?

No, never had one on this policy.

All my updates since 2000 have shown a potential surplus at the mid 6% growth rate, and then latterly at 5% when they went to 4%, 5%, 6% growth figures.

My 2000 update forecasted a 33% surplus at 6% growth rate, so I guess the fact I only got a 25% surplus this month is down to both the stock market crash and NU's subsequent (overly?) defensive position since 2003?


EDIT: I read on https://www.citywire.co.uk this weekend that NU have withdrawn their amber status, and now policies are simply classified as either red or green.

Supernova

Well, that's interesting. I looked at my Friends Provident surrender value last week and it was £24,633, up in monthly increments from £24,090 in September.

Today it is £27,052! No wonder some companies were hot under the collar to buy it off me.

So, it's lucky I dilly-dallied at the end of last year and didn't sell.

FP was up from 22% TB last year to 30% this year on 25 year policies. Mine is a 22 year policy and would have paid out 27% last year.

Can someone explain why it's shot up and what the prospects are for selling at different points of the year culminating in the bonus announcement? And would the projections have improved as a result?

dunstonh

terminal bonuses tend to appear in the first quarter. All the NU with profits plans I have checked are up between 5 and 10%.

The daily/annual bonus rates are going to remain low. Once added they cannot be taken away and that is what caused a number of insurance companies to have problem. The terminal bonus is more flexible and doesnt hit the insurer as hard when there is a crash/correction. So, its no surprise to see the terminal bonuses have all the action on the rate of return.

Supernova

OK, so the monthly bonus will creep up conservatively until the next terminal bonus. I'll check it out but I'm guessing there might be less interest in buying now but more variability in offers at the end of the year if stocks have done well.