With Profit Profits

raddy59

An article in the Economist (27.10.07) talks about insurers sitting on £billions of policyholders funds that should be distributed to with-profit (endowment?) holders. Prudential and Norwich Union get a special mention. The companies are sitting on their hands hoping to distribute the £20,000,000,000 to their shareholders, while with-profit fund holders are left holding 'red traffic light' mortgage shortfall notices.

This makes reclaiming bank charges look like small fry.

Come on Martin - take a look and give us some advice

martin1018

Gets my vote for a check-up by 'The Main Man Martin'!

I've got two endowments coming up for paying out next year, one with Legal & General and the other with Friends Provident (UK Provident). Both currently have the benefit of red lights showing against them, so I would be particularly keen for them both to have an injection of finance to bring them up to paying out their intended target at least. I think to get the promised (when sold) extra is probably asking too much but I can dream.....

Raddy59 - any chance of a link to the original article? I am going to check out their website (I presume they have one) to try to find the article you mention.

Many thanks.

martin1018

Got it.

I hope this displays correctly - my first time at getting a link to show!

http://www.economist.com/world/britain/displaystory.cfm?story_id=10026646

Milarky

(I didn't know that the FSA had any reputation left to protect?)

umami

Thank you, I shall be following this with interest.

dunstonh

Orphan asset distribution (or not) has been going on for a while now. There is nothing new here and technically, the insurers dont have to issue a penny to policyholders.

AMP were the highest profile case so far when they used much of Pearl's orphan funds for its own uses. It led to the irony that AMP bought Pearl for £1.2 billion and then were able to raid the orphan funds to the tune of £918 million which meant they were almost able to use Pearl's money to buy Pearl.

raddy59

dunstonh - I am not sure these are orphan funds as the beneficiaries are known i.e. these are not accounts with missing/deceased beneficiaries
Take a look at the article - I'm sure the Economist has done its homework

dunstonh

Orphan assets and inherited estate are the same thing. You see some articles calling them by either name.

The Pearl example was tested in the high court and AMP won (the article mentions tested in court but doesn't name Pearl/AMP).

The Economist are just re-regurgitating other articles that have appeared in recent times. Its been doing the rounds. If you do a google search you will find articles going back to the beginning of the decade on this subject.

EdInvestor

The AXA case in 2000 was so contentious that nothing has happened since.

http://news.independent.co.uk/business/news/article168360.ece

Particularly in the light of WP events since such as the collapse of Equitable life and the widespread endowment shortfalls, you can see that the companies might have been a little lacking in confidence that they could get away with another ripoff on the same scale.