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Life office free asset ratios fall but sector secure says report

Life office free asset ratios fell 2 per cent to 5 per cent from 7 per cent in 2002 leaving two to three companies feeling significant pressure on their margins according to research from consultancy Mercer Oliver Wyman.

It says despite the fall from 2001, many of the recent concerns over the sector&#39s solvency have been significantly exaggerated. The research points out that if every life office makes use of implicit items such as future profits, then the average free asset ratio for the sector improves to 6.5 per cent.

Mercer Oliver Wyman also says the predictions about various life offices becoming technically insolvent at various levels of the FTSE-100 are overly simplistic and don&#39t necessarily represent the actual situation.

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