View more on these topics

R&SA admits it needed loans as payouts slide

Royal & Sun Alliance has revealed it called on contingent loans from its general insurance parent last year and in January to maintain regulatory solvency and admits some of its with-profits policies are not keeping pace with inflation.

In its annual bonus declaration, the company slashed payouts on with-profits by up to 22 per cent. All contracts with terms of under 10 years and some 10-year pension contracts will have no terminal bonus because they have built-in guarantees.

The company also says it has limited ability to smooth. The latest cuts follow two interim declarations last year which reduced bonuses.

A £50 a month endowment with the Sun Alliance and London Assurance Company fund will now pay out £55,165 compared with £70,714 last year. A £50-a-month endowment policy in the stronger R&SA Life & Pensions fund will pay £66,262, down from £82,685 last year.

A £10,000 with-profits bond taken out five years ago now has a surrender value of £10,961, down from £13,865 last year.

R&SA Life finance director Keith Greenfield says: “It is well documented that our funds are not as strong as others and we are smoothing as much as we think is prudent. We have a contingent loan arrangement and we have called on it last year and in January.”

Insurance analyst Ned Cazalet says: “R&SA was a top seller of with-profits bonds in the late 90s and now has little prospects for the future. It has very little capital and very little room to pay bonuses or smooth.”

Recommended

TD Waterhouse – Protected Investment Plan

Thursday, 6 February 2003 Type: Capital protected bond Aim: Growth linked to the performance of FTSE 100 index Minimum-maximum investment: £3,000-£1m Term: Five years Guarantee: Capital returned in full regardless of performance in index Return: Up to 75% growth at end of term Closing date: March 18, 2003 Commission: Initial 3% Tel: 0845 6010402

Backing for CML proposals

Mortgage broker MX Moneyextra Mortgages has welcomed the Council of Mortgage Lenders&#39 initiative to keep the level of house repossessions low. The company warns there will be more repossessions if interest rates rise to 6 per cent or 7 per cent. It suggest that the most practical app-roach for homeowners would be to consider how […]

Older and wiser

One of the key themes of the Government&#39s Pensions Green Paper was the need to encourage greater labour market participation among older workers. Our analysis shows that delayed retirement could ind-eed have a significant impact on the savings gap but only if there is a massive shift in attitudes towards older workers. The Green Paper […]

Sandler will not work with price cap warns IMA

The Investment Management Association has warned the 1 per cent cap proposed by the Sandler review for the stakeholder suite of products will not work. In its response to the Treasury consultation on the Sandler products, the trade body says if the Government is to be successful in attracting lower earners of the market to […]

IHT: What were you doing in 2009?

One of the best sources of new business is your existing clients and, if they are estate planning clients, regular reviews are needed because people’s inheritance tax (IHT) problems tend to only get worse. Now, not a lot of things remain at the same rate as in 2009. If we turn the clock back, it […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    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

    Email: customerservices@moneymarketing.com