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Life offices say waiver would let them buy equities again

Norwich Union and Standard Life are claiming that applications for solvency waivers from the FSA would give them the flexibility to start buying equities again.

There is speculation that the regulator is concerned about the drag of life companies on the stockmarkets and it believes that relaxing the rules will help a recovery in the markets as well as ease solvency pressures.

In a speech in Edinburgh last week, FSA managing director John Tiner invited companies to apply for the waiver. He said the changes to the capital system for insurers were “significant and urgent”.

Other life offices applying for waivers include Scottish Widows, Legal & General, Britannic and AMP.

But Prudential, Scottish Equitable, Clerical Medical, Axa, CIS, Zurich Financial Services and Royal London say they have no immediate plans to apply. Friends Provident was unable to comment.

NU executive chairman Philip Scott says: “The FSA&#39s position is to be welcomed. The current rules can lead to overreserving and loss of investment flexibility.”

Standard Life deputy chief executive Sandy Crombie says: “The existing statutory basis is unhelpful, forcing companies to sell in weak markets. The waiver gives companies investment freedom.”

FSA spokeswoman Karin Loudon says: “We do not want companies to be forced into a technical selling or to be in a position that is detrimental to policyholders in the long term.”

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