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Standard defends equity weighting

Standard Life has defended its pro-equity weighting amid mounting controversy about the impact on its financial strength.

The company says its book of guaranteed business will not force it into selling more equities despite suggestions by life analyst Ned Cazalet that it might have to sell as much as £3bn in equities.

At a meeting with IFAs in London last week, Standard sales and development act-

uary Chris Hancorn came under pressure from advisers although opinion was sharply divided about how satisfactory Standard&#39s explanation was.

Standard has started the second phase of projection letters to its 1.7 million endowment customers but, stung by the negative coverage of its bonus cut last week, is not currently giving out figures for how many are off target.

Cazalet says Standard has at least £10bn of with-profits, with guaranteed bonuses of typically 4 per cent.

He says in conjunction with an investment loss of 12.5 per cent last year, this puts an increasing strain on Standard&#39s financial strength, leading him to now rate it as 6/10. Standard currently holds 55 per cent in equities, down from 76 per cent last year.

Bestinvest director John Turton says: “Standard last week became very defensive because it did not understand the hostility in the IFA community. The industry does not work on a trust-me basis any longer. If they do not give you data that stands up to scrutiny, it throws up the horrid gut feeling that they are hiding something negative.”

Standard managing director of marketing Simon Douglas says: “There is no change in our strategy to hold the highest amount of equities consistent with prudential management. The impact of the guar- antees does not mean we have to sell equities.”

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