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&#39Prudent&#39 Britannic suspends bonus payments

Britannic is to suspend with-profits bonuses and shareholder dividends in

an emergency action brought on by a third year of falling equity markets.

The news comes as the CBI warns that financial services companies reliant

on stockmarket performance might have to shed ten of thousands of jobs.

Britannic Group managing director Bryan Portman says its with-profits fund

has not breached solvency requirements and could still sell equities,

reinsure or use derivatives if it comes under further pressure. The

£6bn fund has a free-asset ratio of 6 per cent, of which 3 per cent is

future profits to lift it above the regulatory minimum of 4 per cent.

Britannic says it has had to bolster reserves as it has misjudged annuitant

mortality along with the rest of the industry. However, there will be

bonuses for policies maturing this year. One million policyholders are


The fund&#39s equity backing ratio has reduced to 42 from 72 per cent. Shares

in the company have halved following the announcement to 164p from 332p.

A senior industry source says: “Deferring bonus sounds like a nicer way of

passing up on bonus. The FSA could be pushing them to do this rather than

shave solvency too closely.”

Portman says: “We believe the markets will be choppy and volatile and these

are prudent actions taken to maintain the financial strength of the fund.

We will be updating the market on strategy in March.”


Irish Life International – Secured Growth Bond 10

Tuesday, 7 January 2003 Type: Guaranteed equity bond Aim: Growth linked to the performance of the FTSE Eurotop 100 index Minimum investment: Lump sum Euro 10,000, £10,000 Place of registration: Dublin Investment split: 100% linked to the performance of the FTSE Eurotop 100 index Guarantee: Option A &#45 100% capital returned in full regardless of […]

Revenue review sparks fears over trustees

The threat to Sipps and SSASs in the Inland Revenue pension taxation reviewcould spell the end for much of the work carried out by pensioner trustees,pension experts are warning.Advisers&#39 concerns have been raised by a paragraph in the review that saysSSASs and Sipps will have to adopt the same prudential investmentapproaches as all other pension […]

Three year discount at 4.15 per cent from Derbyshire

Derbyshire Building Society is launching a fee-free remortgage product offering a three-year discount of 1.54 per cent off its standard variable rate, currently 5.69 per cent, giving a payment rate of 4.15 per cent.Borrowers can repay up to 20 per cent of their capital each year on the product that is available for loans up […]

IFAs&#39 compensation levy looks set to be £800,000

The IFA sector can expect to pay a levy of about £800,000 towardsFinancial Services Compensation Scheme costs in the 2003/2004 financialyear, equating to roughly the same amount paid last year.The FSCS will have a budget of £12.4m to cover its fixed costs and ifcompensation costs are similar to this year – £43.5m – excludingpension misselling […]


What employers should expect over the next five years

A major feature of our articles is looking into the Jelf Employee Benefits crystal ball to predict changes and trends that may influence the short and medium term shape of UK employee benefits.  By flagging such changes early we aim to provide our followers with the tools to make sensible and informed decisions on their benefits offerings.


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