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Wesleyan Assurance outperforms with-profits rivals

Wesleyan Assurance Society has reported a 20.1 per cent gross investment return on its with-profits fund for 2009.

The Birmingham-based mutual, which provides financial services to doctors, dentists, lawyers and teachers, says the performance is down to a higher than average investment in equities.

Wesleyan outperformed competitors including Prudential and LV=. The Pru returned 18.7 per cent last year and LV= produced a return of 15.4 per cent.

Legal & General followed with 14 per cent and Friends Provident with 9.3 per cent while Aviva returned 9 per cent and Standard Life returned between 7.3 per cent and 8.6 per cent, depending on asset mix.

Wesleyan investment director Mike Lewis says: “We believe that investment in quality equity holdings over the long term can contribute significantly to market-leading payouts for policyholders. 

“That is why, despite the poor performance of the stockmarkets in late 2007 and 2008, we maintained our high exposure to equities. Our significant financial strength allowed us the flexibility to do this. 

“The result is that we were extremely well placed to take advantage of the upturn in the markets in the second half of last year.”

The Wesleyan Group has in excess of £4bn of funds under management as at 31 December 2009.

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. kev Silverthorne 15th March 2010 at 3:23 pm

    With profits policies have always been advertised as a lower risk profile, to have the majority of your money in equities surely goes against this?
    The most important point not raised is exactly how much of the growth will be returned to plan holders?

  2. To make money you have to speculate and if a fund has a good positive return this will benefit the fund and the investors can be sure of a good annual bonus whilst the fund itself is able to look after future bonuses. With Profits Funds that invest mainly in cash and fixed interests have a poor return, so they have to use the markets whilst they are growing to give investors good returns

  3. Once again a strong performance from Wesleyan, outperforming the ‘ big guns ‘, just shows what prudent management allied to financial strength can return, and another mutual society showing up well

  4. To make money you have to speculate and if a fund has a good positive return this will benefit the fund and the investors can be sure of a good annual bonus whilst the fund itself is able to look after future bonuses. With Profits Funds that invest mainly in cash and fixed interests have a poor return, so they have to use the markets whilst they are growing to give investors good returns

  5. What we need to know is the returns of the fund in the previous years. With profits funds smooth and consumers need to know the reserve to at bonuses as a result of previous positive or negative returns.

  6. Congrats to the Wesleyan. Now once they take the cost of the salesforce and the directors payrises and extra pension allocation out of the fund it will be interesting to see what sort of bonuses the policy holders will get. Not much I would think because they will use the smoothing of the last two years negative returns (because of their higher than average equity content). Smoke & Mirrors I would call it.

  7. No ‘smoke & mirrors’. You can’t expect to get 30% if the markets rise that much, but then not expect to lose30% if they drop by that much. With-profit funds take out the ‘peaks & troughs’ of norml equity based investments. You can’t have your cake and eat it!

  8. I have been a saver in the with profits pension fund for over 25 years. I can say that at the moment my fund is worth about 50% of what the directly employed salesman promised me when I took it out. I for one am very disappointed in the Wesleyan and wish I had never fell for their lies!!
    Long term save cash and blow assurance companies.

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