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MM survey shows 25-year WP values falling by 19%

The trend in falling maturity values for 25-year with-profits endowments continues unabated, according to the latest Money Marketing Online with-profits survey.

The survey shows that the average maturity value of a 25-year endowment with a monthly premium of £20 has dropped by 19 per cent to £27,707 from £34,371 last year.

It also reveals that of the 20 life offices providing information on the number of endowment mortgages on track to meet target payouts, CIS has the lowest percentage of red letters as a proportion of its total endowments in force – 6 per cent. Nationwide has the highest at 86 per cent.

Skandia had the lowest percentage of amber letters at 5 per cent.

AMP Pearl has the highest percentage at 66.2 per cent and this figure is likely to increase in light of the announcement by AMP to switch investments from equities to fixed interest.

Over 25 years, Red Rose Friendly Society is the top performer with a maturity value of £37,743, including the terminal bonus, and worst performer is Scottish Amicable at £22,458.

CIS says its success is based on realistic pricing and running an efficient low-cost operation.

Nationwide says it has a comparatively small number of endowment policies, all of which are relatively young and have not benefited from longterm exposure to the market.

Survey editor Sandra Grandison says: “With wide variations in performance between providers and market value reduction factors to take into account, investors should not take decisions on whether to surrender endowments without proper independent advice.”

•Special Report, p33

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