Daily Insurance Industry News
 
 
Daily Insurance Industry News
Wednesday 23rd of May 2018
February 19, 2009

L&G slashes with-profits bonuses

by Gill Montia

Story link: L&G slashes with-profits bonuses

Legal & General (L&G) has followed other leading insurers in slashing bonuses for investors in its with-profits fund.

Holders of with-profits bonds will be worst affected with bonuses on investments begun in 2004 down 18.3% over the year.

The company has not been able to give an average rate cut because investor profiles are very varied.

However, based on an initial investment of £10,000 in 1999 a with-profits policy has a maturity value of £11,224 today, compared with £13,645 this time last year.

L&G says it is confident the £24.5 billion fund remains a sound investment, having achieved a return of 27% over the past five years, and says it is acting to preserve its long-term strength.

Both Norwich Union and Friends Provident have announced cuts to with-profits bonuses since the beginning of the year, by up to 15% and 20% respectively.

Last week, the Financial Services Authority observed in its 2009 Financial Risk Outlook report that “falling asset values combined with low interest rates are a particular issue for with-profits firms”.

The regulator is therefore on the lookout for companies that take “mitigating actions” to deal with today’s financial pressures and end up failing to treat policyholders fairly.

 

News posted:



Related stories to L&G slashes with-profits bonuses: