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Cash for life firms as solvency fears grow

Tumbling stockmarkets are forcing companies to pump cash into their life insurance subsidiaries as they scramble to maintain solvency.

AMP is to inject £400m to shore up the solvency of Pearl. AMP chief actuary Peter Carr says the money is likely to go into either Pearl&#39s with-profits shareholder fund or a separate holding company.

Abbey National has injected another £150m into its Scottish Mutual subsidiary. It made a similar £150m injection into ScotMut following events on September 11.

Last week, Credit Suisse put £750m into its Winterthur Life and Pensions subsidiary worldwide but did not disclose the amount allocated to the UK.

The moves follow recent stockmarket falls coming on the back of a third successive year of poor stockmarket performance which have put life insurance company finances under strain.

Abbey National Group spokesman Matt Young says: “We keep our life offices&#39 capital-lean and inject money into them as and when it is needed either to write new business or to boost solvency in falling markets.”

Carr says: “Most companies will be concerned about their solvency at the moment, given the extraordinary investment environment. We are a strong company and we are in the UK market for the long haul – we will ride through any turbulence in the markets.”

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