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With-profits bonus battle

Prudential, Legal & General and Liverpool Victoria are vying to prove their market-leading credentials.

With-profits providers are battling each other to prove they generated the best returns for policyholders after bonus declarations from Prudential, Legal & General and Liverpool Victoria.

Pru says it has increased year-on-year payouts by more than 10 per cent across the majority of its with-profits policies and the company has maintained its annual bonus rate.

Legal & General says it generated an 11.2 per cent return for customers on its with-profits fund and announced 596m in with-profits bonuses for 2006.

Liverpool Victoria’s with-profits fund also posted a return of 11.2 per cent and the friendly society says it will be maintaining its annual bonuses for all with-profits life policies for the second year running.

Pru says its life fund generated a 12.4 per cent return in 2006, with an investment performance of 63.8 per cent over five years.

But Liverpool Victoria says its policyholders with maturing 25-year conventional with-profits life policies are at least 14,413 better off than similar policyholders with other major with-profits providers.

For a man who has paid in 50 a month, Liverpool Victoria says it would pay out 63,905 compared with 49,492 from Prudential and 47,904 from Norwich Union.

Cazalet Consulting principal Ned Cazalet says: “On the investment front, the Pru has got some big market calls right and its tactical asset-allocation decisions have paid off big time, leading to massive investment outperformance relative to its peers, with the knock-on effect showing up in its market-bucking bonus payments – we score it nine out of 10.”

Cazalet Consulting gave Liverpool Vic’s with-profits fund a 10 out of 10 rating.

Legal & General says over five years its fund has returned 55 per cent, beating the FTSE Allshare.

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