View more on these topics

NU looks at guarantee charge to boost equity backing ratio

Norwich Union is considering bringing in a charge for guarantees on its NU life & pensions with-profits fund to allow it to increase its equity backing ratio and avoid closing it.

NU says it expects a number of life offices to follow suit as the only serious way to increase equity exposure under the new FSA realistic reporting regime.

In January, Standard Life introduced charges from 0.25 per cent to 0.75 per cent across existing and future business on its with-profits policies to increase investment flexibility.

NU says charging for guarantees would mean it would be able to run the NUL&P fund to recovery rather than have to close it. It will make an announcement as to whether it feels this is in policyholders&#39 interests on April 30.

The NUL&P fund has an equity backing ratio of 52 per cent which compares favour-ably with most of the UK with-profits sector although the fund has a below industry average risk capital margin coverage ratio of only 1.6.

NU says charging for guarantees would give it greater flexibility to invest in equities and could increase the long-term prospects of the fund.

Chief actuary Mike Urmston says: “We are considering guarantee charges on the NUL&P fund. We would rather run it to recovery than to close and charging for guarantees would allow us to do that.”

Independent insurance analyst Ned Cazalet says: “I would not be surprised if a lot of other big names as well as not so big names will start to charge for guarantees. People should bear in mind that there is a lot of negotiation still to go so come the 2004 year-end results, the effects of the realistic reporting regime will be more extensive.”


Swip seeks opportunities after rethink on equities

Building societies are pushing for an appeal process to challenge Financial Ombudsman Service decisions. Speaking in a BBC Radio 4 interview on the Money Box programme last week, Building Societies&#39 Association director general Adrian Coles said society chief executives are pushing the Government for a change to the appeal process. The BSA wants a process […]

FSA expects flood of applications

The FSA is anticipating a surge in applications for mortgage and general insurance regulation ahead of its 30 April deadline With little more than a week to go, FSA is expecting another peak in application levels. Applications have to be submitted at this time for a firm to be certain the FSA can process it […]

London Scottish new team moves into sub-prime

London Scottish Mortgages has appointed a new management team ahead of a planned relaunch of the operation next month as a nationwide sub-prime lender rather than a packager. The sub-prime mortgage specialist subsidiary of London Scottish Bank will become a lender with a wide range of products covering residential and commercial customers. The new team […]

GMAC-RFC scraps 25-year fixed rate loan after just two months

Lender GMAC-RFC is dropping its 25-year fixed rate mortgage product after just two months on the market, blaming a lack of interest from borrowers. GMAC-RFC offered the loan at 5.49 per cent but, despite an enthusiastic launch, marketing director Jeff Knight says the product just did not pick up enough interest. The company says swap […]


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