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Standard sparks questions over value of rating agencies

Some insurers and IFAs are starting to question the value that big rating agencies such as Standard & Poor&#39s and Moodys offer to financial advisers in the wake of the Stan- dard Life strategic review.

Both S&P and Moodys moved to downgrade Standard after announcements that the firm had been in discussions with the FSA over calculations of its realistic balance sheet and was launching a strategic review which could lead to its demutualisation.

One industry expert says this is the third time that these agencies have acted after the fact, pointing to previous examples of Equitable Life, AMP NPI and now Standard, leaving questions over the costly ratings.

However, others say agencies carry out vigorous analysis of insurers&#39 financial acc-ounts but spotting misinformation or even fraud is not their job but the regulator&#39s role.

Independent consultant The Abacus partner Philip Martin says: “Clearly, the agencies&#39 belief that their ratings reflect a deep understanding of life company financial positions has been shown to be utterly flawed.”

John Joseph Financial Services managing director John Joseph says: “I would put more faith in Ned Cazalet at the moment than I would in Standard & Poor&#39s.”

S&P communications director Lisa Hall says: “Back in January 2003, Standard & Poor&#39s downgraded Standard Life to AA, then in July, AA with a negative outlook before the latest downgrade to A+ with a negative outlook. These are indicators to the market of S&P&#39s changing opinion on Standard Life which reflects concerns over the group&#39s ability to manage its reputation with policyholders and investors.”


Frudd to build financial services business at law firm

Commercial law firm Beachcroft Wansbrough has appointed former Scottish Amicable group legal director Nigel Frudd as head of financial services, a new position created to develop the firm&#39s financial services business.Frudd has worked previously at St James&#39s Place International and as a corporate financial partner at chartered accountant Robson Rhodes.Partner Simon Hodson believes Frudd&#39s appointment […]

Survey reveals long delay for term cover

A term insurance policy takes an average of 48 days to be put on risk, according to research by IFA Torquil Clark.Torquil says it sold term policies from 15 providers last year and the average time for a policy to be put on risk was just under seven weeks.Scottish Widows and new player Bright Grey […]

Berkeley Morgan Group back in healthy profit

Berkeley Morgan Group is back in the black, turning a loss of £1m in 2002 into a profit that reached nearly £0.5m last year.The Ofex-traded group includes 65-RI IFA division Berkeley Morgan and RE Gee & Co. This area of the business produced a turnover of £2.4m despite “adverse investment conditions” that directors blame for […]

New network from Tenet

Tenet is starting a new mortgage network, Lime, as an extension of its existing network, Independent Mortgage Adviser, launched in July 2000.Lime – Lifetime Insurance Mortgage Experts – will continue to provide exclusive products along with compliance support and regular training.It will also provide professional indemnity insurance support, life and general insurance panels, mortgage and […]


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