View more on these topics

NPI under fire over MVA policy

NPI has come under fire for encouraging IFAs to sell with-profits bonds while it was being forced to cut policyholder payouts.

The pensions specialist wrote £295m worth of with profits business in 1998 despite having a free asset ratio of only 4 per cent.

NPI was forced to use a market value adjustment to reduce the face value of its with-profits units in a bid to claw back some of the money earmarked for with-profits policyholders.

The reduction, imposed on October 1 1998, is revealed in the life office&#39s latest Treasury returns. It was closely followed by NPI&#39s decision to put itself up for sale.

Market value adjusters are deterrents designed to stop policyholders surrendering policies early when the value of their investment dips due to market forces.

The MVA reduction was 3 per cent to units issued in the second half of 1997, 6 per cent to those issued during the first quarter of 1998 and 9 per cent to those issued in the second quarter of 1998.

In his report on life office financial strength entitled the &#34Wolf&#39s at the Door&#34, analyst Ned Cazalet says: &#34Such action seems quite remarkable in the context of the heavy promotion by NPI of its with profits bond offering during the period in question.&#34

NPI corporate actuary Andrew Walton says: &#34The MVA was applied after the stock market took a tumble in October 1998 – the more business you write the more exposed you become in that situation.

&#34It was applied irrespective of financial strength, we were just following a consistent policy. You could say it was a matter of principle.&#34


EU proposes forum for money laundering

The European Union commissioner for justice and home affairs wants a forum on financial regulations reports the Financial Times.The former Portuguese defence minister Antonio Vitorino says the forum would aid the fight against organised crime by allowing police to share information on money laundering.The report says Vitorino will raise the issue of hi-tech money laundering […]

Wesleyan appoints new managing director

Wesleyan Assurance has appointed James MacDonald as its new managing director.MacDonald was previously managing director of Rover Cars UK and of BMW Financial Services.He will take up the role in December.Wesleyan chairman and acting managing director Lowry Maclean says: &#34This appointment demonstrates the Wesleyan&#39s commitment to differentiate itself in the financial services industry by taking […]

Stakeholder setback as Government loses vote

The Government&#39s stakeholder pension project has suffered a setback after it lost a crucial vote.Tory peers won a vote to raise the 75 year age limit for stakeholder annuity purchases during a House of Lords reading of the Welfare Reform and Pensions Bill.During the debate Baroness Hollis accepted the Government has three options for dealing […]

IFAs slam L&G over credit scored policy loans

By Adrian CammidgeIFAs have slammed Legal & General over its &#34bizarre&#34 decision to credit score loans made against with-profit endowment policies.The move follows the life office&#39s transferral of the running of policy loans to its banking subsidiary.Policy loans enable policyholders to borrow a percentage of a plan&#39s surrender value. Loans are guaranteed as they 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