Standard Life De-mutualisation

EdInvestor

Hi Kantankerous

Stick with Standard Life as I only have 8 yrs remaining and hope for the best? Or try to sell policies and transfer any remainder onto repayment mortgage?

Have a look at the "guaranteed value" of your policy. That's the "guaranteed sum assured" plus the "attaching declared bonuses" so far. That's what you will definitely get at maturity, plus any extra declared bonuses each year but they are likely to be pretty small.

How does that guaranteed value compare with what you still have left to repay, after deducting compo, DM bonus etc from the mortgage amount?

The answer should give you an idea of whether or not to keep the endowment.

Kantankrus_Mare

Now this is where I find it a little confusing.

On my oldest policy which was taken out in 88,
Sum assured is 5,712
Bonuses added 3,856
Minimum they will pay at maturity in 2013.. 9,568
(this plan aims to pay off 17,575)

So far so good. I understand that policy but...

My second policy which was taken out in 1993 seems to be laid out completely different! There doesnt seem to be a "sum assured" figure??

It just gives me a total value on 1 Feb 2005 figure which is 5,216 (made up of total fund value 5,127 and final bonus 88.

This endowment aims to cover 17,052 by 2013.

Im contemplating getting in touch with Standard Life to see if they can give me a figure similar to first policy so I can see more clearly what potential shortfall I may possibly have.

Why are the policies laid out so differently?

EdInvestor

The earlier one is a conventional With profits endowment and the second one is a "unitised With profits endowment." The latter doesn't have a guaranteed value, you really need to monitor it, much as you would a unit linked fund (you can do this online at the Standard life site).

What premium do you pay per month and I'll see if I can provide a more realistic projection: I doubt it will make 4%.

Midas

I know that I am jumping the gun a bit here, as it is still likely to be at least a year until the shares actually get distributed, but there has been some interesting discussion about the the strength (or otherwise) of Standard Life on this thread. Now I was wondering whether people planned to keep the shares for a while after demutualisation, or sell them and invest the money elsewhere (and if so, where?)

My instinct (based on the terrible performance of my SL policy :mad: ) would be just to sell them straight away and never go near the company again. But perhaps (as Editor suggests above) things are on the up for the life companies?

Does anyone have a view?

EdInvestor

It's a bit early to say Midas, personally I'm waiting to see how well they manage to perform the corporate turnaround the company needs. If they do well, not only will we hopefully get bigger windfalls (ie more shares) but the market will think Standard is a much better company and thus the shares should be worth holding.

I'll also be waiting to see their dividend policy.Most life assurers (and banks)adopt a fairly high yield divi policy, so I'll be hoping for something in the 5% or so range. As many people who have held onto their DM shares from the BSs ( and many of the "Sid" privatisation shares from the Thatcher time), the profits are mainly from the divis - you can reinvest them for growth.

My instinct (based on the terrible performance of my SL policy ) would be just to sell them straight away and never go near the company again.

Actually if you look closely at other companies, a poor policy performance can often be balanced by a good share performance.So the solution to an underperforming policy might be to buy the shares of the company that sold it to you.....

Just a thought

Midas

Thanks for the very thoughtful post above Editor. I will watch out for the points that you raise with interest.

You are certainly right regarding the dividend policy - Halifax shares for example, are at about the same price as they were at the time of demutualisation, but if you take into account the dividends they have paid over the years they have been a decent investment (an investment would have grown about 40% if all dividends reinvested).

As you also say, it will probably largely depend on how well the management perform - and performing 'well' may be largely to the benefit of the shareholders rather than the policyholders! :think:

So let the good times for Standard Life roll once more!

needmoney

I have quite a substantial amount tied up in WPB at Standard Life, taken out in Sept 2002. Sometime this year I will have to withdraw some money to subsidise my income I was so disillusioned and disappointed and just plain confused I have not kept up to date with proceedings, Am I to understand that they are definitely going to demutualise and we will all get something and if so how will my taking some money out affect this. Last year I was considering taking it all out and putting it elsewhere because of the poor performance but was advised to stay.

Kantankrus_Mare

Thankyou editor for clarifying the difference of my two policies for me. Much appreciated....So will I likely be paid out on EACH of the policies I hold when they demutualise?
I'll have to investigate that second policy with Standard Life.......cant understand why I have two different types of policy though.......probably our own fault for trusting the advisor and mortgage arranger at the time.
Not so naive now!!
Thanks again!
P.s We pay 34 pounds a month on second endowment.

dunstonh

Am I to understand that they are definitely going to demutualise

No. This is subject to a vote from the members.

and we will all get something

not necessarily. Only plans invested in with profits funds started before a certain date will qualify for a payment. Plus, legally they do not have to make a payment. However, that is extremely unlikely (on a par with West Brom winning the premiership next season).

I have quite a substantial amount tied up in WPB at Standard Life, taken out in Sept 2002. Sometime this year I will have to withdraw some money to subsidise my income

Most of the stockmarket drop had happened at that point and being a unitised with profits plan it shouldnt have done to badly. The very last with profits bond I did with SL did is beating bank or building society accounts. That was early 2003 and at that point there was a waiver on any demutualisation benefit. I cannot recall from memory when that waiver first started though.

Compensationitis

Not all demutualisations have produced some dosh for the long-suffering members but amazingly the directors and officers always come up smelling of roses and so do the lawyers and consultants and printers and newspapers etc etc. Must be the aftershave?

Imagine a life office having to make up for the millions of shortfalls on every single product they sold between 1988 and 1995, painful.... very painful but just desserts nonetheless.

I used to respect these outfits, I have no idea why.