View more on these topics

Mid-year cuts by R&SA as NU reduces its MVR

Royal & Sun Alliance is slashing the bonuses of one million with-profits policyholders in mid-year with payouts on conventional with-profits reduced by 10 per cent and annual bonus rates on unitised with-profits cut by 1 per cent.

But Norwich Union is reducing its MVR from 11 per cent to 7 per cent in response to the small upswing in stockmarkets. The 5 per cent payout cuts made in July remain.

Life companies traditionally only review bonus policy annually but the stockmarket slump has brought mid-year changes. R&SA has hit back at claims that only it and Equitable Life have cut annual bonuses in mid-year. Axa, Friends Provident and Norwich Union have all made mid-year cuts to their annual bonuses this year. Equitable suspended its annual bonus in 2000.

An R&SA 25-year £50 a month endowment will now pay out £70,746 compared with £78,705 previously. Annual bonus rates will range from 2.5 to 4 per cent.

R&SA UK life public relations manager Jay Aitken says: “It really reflects the difficult market conditions. It is important that bonus rates reflect the low-inflation, low-interest-rate environment. We are not cutting terminal bonus on unitised with-profits. Cutting annual bonuses gives us more flexibility as annual bonuses have to be reserved for.”

NU senior actuary David Riddington says: “We are responding to the fact that the market seems to have sustained an upward movement. Many companies are wary about doing too much too soon.”

Informed Choice managing director Nick Bamford says: “I am always keen to see how quickly providers respond to positive movement in the market. In a time of negative investment returns, bonuses can only come from previous returns or reserves.”


Independent view

Have we got more now than when we started? Products? Regulation? Guidance? Respect? Expertise? Opinion? Qualifications? There is today a sense of impending revolution about financial services. That is precisely the point – it is always “impending”. We have had Sandler and Pickering and we have endured a ferocious bear market that suddenly turned very […]

Share play

So far in this series of articles covering the main stages in the process of introducing a share purchase arrangement to a limited company, we have looked at identifying the need for such an arrangement (if, indeed, a need exists in a particular company) and identifying the quantum of that need (that is, placing a […]

G E Life – Income Option Plan

Friday, August 30, 2002Type: Guaranteed equity bondAim: Income and growth linked to the Dow Jones Euro Stoxx 50indexMinimum-maximum investment: £7,000-£1mTerm: Three years two monthsGuarantee: Capital returned in full provided index does not fall bymore than 20% for option 1 and 30% for option 2Return: Option 1 – 0.78% a month, 10% a year or 33% […]

Pru bids to undercut rivals in loan protection sector before rebrand

Prudential is cutting premiums on its Scottish Amicable mortgage protection products in a bid to improve its market share before its rebrand next year. It only entered the market 20 months ago, selling through IFAs and mortgage brokers. Market share in this sector is traditionally driven by price. The Scottish Amicable name is set to […]

Happy while you work

Well we’ve had scorching weather (yes even up here in Scotland!) and now the Euros 2016 are on – you can’t blame people for wishing life was just one big holiday.  With all these distractions it sometimes feels like work just gets in the way of having a good time! But sunny day skivers are […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm