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Daily Insurance Industry News
Sunday 21st of January 2018
October 30, 2008

Standard Life cuts final bonuses

by Gill Montia

Story link: Standard Life cuts final bonuses

Standard Life cuts final bonuses

Standard Life has become the latest insurer to announce cuts in its final bonus payments on with-profits policies.

Around two million customers could be affected by reductions of between 9% and 13%.

In the case of a 25-year £50-a-month mortgage endowment policy, the maturity value will fall to £32,932 from £34,701 prior to the cut; the maturity value of a 20-year £200-a-month pension plan will fall to £88,655 compared to £91,198.

In addition, policyholders who want to cash in their savings early will be faced with stricter penalties, in some cases cutting the value of investments by up to 30%.

The insurer says it is reviewing its market value reductions, which are applied when the value of a policy is less worth than the underlying assets, including all bonuses.

The company’s chief executive, Sandy Crombie, describes Standard Life’s balance sheet as both resilient and strong, owing to the group’s conservative investment strategy.

Its capital cushion fell by only £100 million, to £3.4 billion, in the three months to the end of September, a significant achievement given the volatility of stock markets during the period.

In related news, Norwich Union reintroduced exit penalties for around 1.2 million with-profits customers last week and Legal & General announced that it is cutting final bonuses on its with-profits policies, by between 5% and 9%.

 

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