Norwich Union says Legal & General has a better risk capital margin ratio for its with-profits fund because it uses different assumptions and does not mean that its fund is stronger.
NU says L&G's risk capital margin coverage ratio – a measure of how well a life office can deal with sudden falls in the markets – has been boosted by including shareholder capital which is not ringfenced for the exclusive benefit of the fund.
NU says comparisons between life offices can be misleading because some are at different stages of development of their methodology for the FSA's new realistic reporting requirements.
But L&G says it is correct in including shareholder capital, being able to include it because of the flexibility of its business model. It says NU also uses different accounting assumptions that benefit its figures.
Under the new realistic rep-orting regime, L&G says its risk capital margin is covered by assets by 4.7 times.
NU's CGNU life fund has a coverage ratio of 3.05, its CULAC fund is covered 4.71 times and its NUL&P fund is covered 1.6 times.
NU chief actuary Mike Urmston says: “If companies such as L&G are going to use that shareholder capital to support the fund, then OK but I suspect they are not. Consumers and advisers should focus on the strength and resilience of the companies and the equity backing ratio to judge the prospects for a new or existing with-profits policy.”
L&G head of media relations John Morgan says: “These risk capital margin coverage ratios are a guide and IFAs who have faith in the ratings systems should have faith when looking at them. Norwich Union should be careful. Do we use Tiner waivers? No – they do.”
NU figures, p16
Aifa has criticised the Financial Services Skills Council for being vague, calling its work so far inadequate and confusing.
In its response to the FSSC's consultation into appropriate exams, Aifa says it is concerned that the Skills Council's role in developing a skills framework is vague and that its actions risk producing an “inadequately skilled sector with no consistency between the various groups of those who are called advisers”.
Aifa also says the allocation of responsibilities bet-ween the FSSC and the Qualifications and Curriculum Authority has not been properly defined.
It says the Skills Council needs to ensure that there is a consistent app-roach to qualifications which are clearly recognisable by the industry and consumers.
Director of public affairs Tracey Mullins says: “Our number one concern is that the Skills Council is not assuming responsibility for setting the level of qualification and it should.”
FSSC spokeswoman Kate Saunders says: “This reflects genuine concern that we are aware people have. We underwent this consultation to get feedback from the industry and we believe these views will be helpful.”