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Top life offices reveal scale of policy shortfalls

Pearl Assurance and Royal & Sun Alliance have admitted 40 and 20 per cent of their endowment policies respectively are in the red category.

But three giant IFA life offices, Scottish Amicable, Scottish Widows and Standard Life, together with Prudential&#39s direct operation, all claim their red category endowments are in single percentage figures.

The admissions put the spotlight on leading IFA life offices with a large number of endowments on their books, including Legal & General, Friends Provident, Norwich Union, Axa Sun Life and Eagle Star. These offices refuse to reveal publicly how many of their endowments are likely to underperform.

Money Marketing revealed last week that 40 per cent of the 10 million letters going out to consumers are understood to be in the red or “definite” risk category, with another 20 per cent amber or in “some danger” of a shortfall.

Pearl&#39s figures mean its endowment book matches the industry average, with another 20 per cent in the amber category and 40 per cent green or absolutely safe out of 140,000 policies.

R&SA admits to 20 per cent red and 40 per cent amber among its 600,000 endowments, while Prudential says 2 per cent of its 275,000 letters are red and 37 per cent amber.

Widows says it has 2 per cent red and 65 per cent amber out of a total of 260,000. Standard Life says it has only 11,000 policyholders or less than 1 per cent in the red category out of 1.2 million endowments. It says 530,000 or 44 per cent are amber.

Consumers&#39 Association senior policy adviser Mick McAteer says: “We suspect there is a serious problem with endowments.”

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