Axa increases with profits bonuses

by Gill Montia

Story link: Axa increases with profits bonuses

Axa is increasing bonuses on its long-term savings policies in response to a period of strong investment returns.

Improved returns allowed Axa to increase rates twice during 2006 and the trend is continuing with further increases in rates of regular and terminal bonuses, in 2007.

Regular bonuses paid on Axa’s with-profits policies will increase by up to 1.25% this year, as compared with 2006. Bonuses on its bonds are increasing by up to 8% in 2007.

The increases will benefit approximately one million investors in the group’s AXA Sun Life (ASL) and Sun Life Assurance Society (SLAS) with-profits funds.

In monetary terms, the increases mean that an investor holding a 20 year conventional mortgage endowment with ASL, payable at £50 a month, will see their final payout rise to £40,494 if the policy matures in 2007. This compares with £40,202 should the same policy have matured last year.

However, £200 a month invested in a 20 year personal pension with ASL would produce a payout of £103,172 in 2007, down from £107,488 in 2006.

In the case of the latter, higher bonus rates would be offset by the different investment period covered.

The ASL fund has 57% of its assets invested in equities and is worth £9.7 billion. Axa’s SLAS fund, has only 40% of its money in equities and is worth £6.8 billion.