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Standard slams rivals on &#39manipulated&#39 FARs

Standard Life has hit out at rival insurers for manipulating free asset ratios while accepting that it has used new bases for calculating its own.

Analyst Ned Cazalet has criticised Standard for using different criteria to calculate this year&#39s FAR despite admitting to an investment loss of £4bn.

Standard&#39s FAR has increased to 8.9 per cent excluding future profits from 5 per cent last year.

Group actuarial director Bob King says the company is using the new calculation favoured by the FSA to calculate the with-profits rather than company-wide FAR.

King says other companies such as Norwich Union and Prudential can put non-profit business in separate companies to flatter their FAR but accepts Cazalet&#39s observation that a with-profits FAR for L&G would be significantly higher.

King says: “There are a hundred ways of calculating a free asset ratio. Calculating the FAR on a company basis puts us at a disadvantage and I challenge other companies to give FARs on a with-profits basis. We are broadly in a group with Scottish Widows, Aviva, Clerical Medical and Prudential.”

Norwich Union executive chairman Philip Scott says: “Our FAR has been calculated on a consistent basis. Should anyone wish to calculate it in a different way, the figures are available.”

Prudential actuarial director David Belsham says: “Everyone knows that the FAR is only one measure of a company&#39s financial strength. Our FAR as at December 31, 2002 is estimated to be 8.4 per cent and does not include future profits, contingent loans or financial reinsurance.”


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