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Phoenix boosts with-profits annual bonus payouts

Over three quarters of closed-book insurer Phoenix’s with-profit policies will receive an annual bonus this year as a result of improved investment performance, the firm says.

This represents a significant increase on 2013, when 62 per cent of policies received an annual bonus. In 2012 this figure was just 39 per cent.

Phoenix says final, rather than annual, bonuses remain the priority but that a “steady” year of investment returns has given “more headroom” over guarantees, allowing it to increase annual bonuses.

Phoenix Life with-profts actuary Andrew Burke says: “Seven or 10 years ago bonus rates would have been nil across the board but now the majority of customers are getting an annual bonus. ”

In addition, the insurer says policyholders in eight out of its 13 with-profits funds will benefit from ‘estate distribution’ where assets built up above what is needed to pay benefits are handed out to customers.

Market value reductions have been scrapped for “almost all”  funds, says Burke: “MVRs are virtually nil apart from the National Provident Life fund – that is largely the only one left.

“The product was sold with very generous guarantees but the premiums that we’ve received and invested have not been enough to growth the fund at the right rate.”

MVRs on the National Provident Life fund for 10 year policies are -27.3 per cent, 15 year policies are -41.5 per cent and 20 year policies are -30.3 per cent.

Phoenix Life chief executive Andy Moss says: “The ability to distribute inherited estate is a key differentiator between open and closed funds.

“We are pleased to have again increased the levels of estate distribution at the start of 2015 in most of our funds, which boosts the payouts we make to our policyholder. It is also pleasing to see increased amounts of annual bonus being added to many of our policies.”

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