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Clerical and Axa in orphan assets row

Clerical Medical and Axa are embroiled in a row over orphan assets.

The feud was sparked with Clerical Medical voicing its views on orphan assets this week exclusively in Money Marketing. Clerical questions insurers planning to unlock their unattributed assets.

Axa chief executive Mark Wood has written to Clerical chief executive Robert Walther inviting him to a meeting to discuss the issue.

Axa is being challenged in court by policyholders, backed by the Consumers&#39 Association, who believe they are entitled to a greater percentage of the orphan funds.

Clerical says life offices are wrong to give away assets which have been built up over generations of policyholders.

The £163;250m that Axa is planning to distribute from its orphan estate to policyholders and shareholders does not include money from current policyholders. The company says orphan asset ownership does not “sit firmly with policyholders”, as Cler ical suggests.

But Clerical believes the orphan funds are vital to the financial strength of a com pany, enabling a life office to smooth investment returns, protect liabilities and cope with unexpected events. The company is is encouraging IFAs to make their clients aware of the long-term implications of removing the assets.

Axa says an independent actuary has found that the security of its policies is not aff ected by the proposals.

Wood says: “I am surprised that Clerical Medical have now decided to voice their opinions. We announced our proposals at the end of July. Around 535,000 policyholders have chosen to accept the terms.

“We are aware that many of these policyholders took advice from IFAs before making an election. The court will ultimately decide on the fairness of the scheme.”

l Walther p14, Wood p44, Vincent Cable p46


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