Prudential reattribution delayed

by Gill Montia

Story link: Prudential reattribution delayed

Prudential’s 4.5 million with-profits policyholders have been told that they will have to wait another six months for a final decision on their eligibility for a share of the insurer’s “inherited estate”.

The estate comprises a 150-year-old with profits sub-fund, valued at £8.7 billion.

A review has been running since March of this year and policyholders had been hoping for a decision by Christmas.

However, Nick Prettejohn, the chief executive of the Prudential’s UK business, has pointed out that the work involves analysing “millions and millions of policies, all of which have to be understood and modelled”.

The insurer also has to look at whether a reattribution is in the interests of policyholders and shareholders.

When a reattributed takes place the insurer pays a sum to each policyholder in exchange for forgoing the right to a payout if the fund is closed at a later date.

The amount paid out is judged on the size and maturity of a policyholder’s fund.

Barrie Cornes, an analyst for corporate broker Panmure Gordon, points out “that the earliest an attribution might take place would be 2010.”

Prudential has also announced that it is outsourcing 1,750 back-office and administrative posts at offices in Reading and Stirling to Capita, leaving the company with around 3,000 staff in the UK.

A further 1,250 employees located in Bombay will also move to Capita, leaving 550 Prudential staff in India.

The move is expected to reduce cost per policy by 32%, by 2011.