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Naive view of free-asset ratios

I find Patrick Connolly&#39s article last week to be naive in the extreme. There is little doubt that the free-asset ratios of most insurance companies are now in single figures and vulnerable to further stockmarket decline.

There is no doubt that reserves need to be replenished and that means poor bonuses over the next few years, whatever happens to share prices.

It is laughable that Connolly considers Standard Life as one of the more solid investments because in June before the latest crisis, a senior Standard Life actuary visited me claiming that free reserves were down to 9 per cent last year, a figure they were comfortable with and they were continuing to invest over 80 per cent of funds into equities.

The figure must surely be nearer 0 per cent now and I wonder whether they are now investing in bank deposits.

Andrew Harwood by email

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