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&#39Standard is playing with-profits roulette&#39

Influential analyst Ned Cazalet has made a blistering attack on Standard Life&#39s with-profits strategy, calling it the man that will not leave the roulette wheel and is praying for a win to get him out of trouble.

Speaking at a round table meeting organised by F&C in London last week, Cazalet said the Scottish mutual has seen reserves plummet from about £10bn to just over £1bn.

He said the company&#39s dogged adherence to a high equity backing ratio for its with-profits fund has transformed its risk profile.

He said: “It has gone from boring beige to being a psychedelic hedge fund.”

Cazalet said Standard&#39s current payout policy, thought to be 130 per cent of asset share, without a market value reduction was unsustainable. Despite three consecutive years of stockmarket falls, Standard, along with Liverpool Victoria, is one of the few companies not to have imposed an MVR.

Standard deputy group financial director David Bentley says: “We are only one of six life companies worldwide to have a triple-A rating from Standard & Poor&#39s and Moody&#39s. It is the right policy to be heavy in equities – we would not want to sell equities when the markets are low.”

He declined to comment on surplus, payout policy and what action it could take to shore up solvency in the future but said the position regarding imposing an MVR is being monitored very carefully.

Cazalet said: “Standard is taking riskier and riskier bets – it is the man who cannot leave the roulette table and is praying for a win.

“Eventually Standard is going to have to sell – it is not the Sultan of Brunei. But if they sell out of equities now, they will never get back in.”


AMP Pearl and London Life close to new with-profits business

AMP Pearl and AMP London Life are closing their doors to new with-profits bond and annuity business. The product range will be plugged with new products from AMP NPI.AMP says that the Pearl fund has been selling equities since the beginning of the year and currently has an equity exposure of 35 per cent. It […]

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Mr and Mrs Davis are aged 66 and 67 and have been retired for about five years. They asked for an overview of their investments and retirement planning portfolio. How did I think they should proceed? I explained to my clients that I felt the balance of their portfolio was not correct and that we […]

American Express launches seven new funds

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VAT is key to Sandler pay plans, says Sofa

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Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


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