Prudential to retain £8.7 billion inherited estate
Prudential has announced that its plans to return part of its £8.7 billion with-profits surplus to policyholders and shareholders are being shelved.
Around 4.5 million policyholders could have benefited from the reattribution of the company’s so-called inherited estate which has accrued because Prudential has held back a proportion of its investment returns during profitable years, to cover payouts during years when returns are poor.
The company’s chief executive, Nick Prettejohn, said that the decision had been made after comprehensive and extremely complex analysis that was not directly related to the credit crisis.
He added that windfalls for policyholders would have been relatively small and the money would instead be used to strengthen the fund and protect the interests of future policyholders.
The move will add to the controversy currently surrounding with-profit surpluses.
This has already seen a committee of MPs demand that the Financial Services Authority review its regulation in the area.
During recent negotiations over Norwich Union’s proposed reattribution of its £2.6 billion inherited estate, consumer groups and the policyholder advocate, Clare Spottiswoode, declared that the current rules favour shareholders.
Category: Insurance News, Life Insurance News, Prudential Insurance News
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