| Standard Life
breaks its endowment mortgage promise |
8 October 2004 |
| By
Mortgage Strategy staff |
|
| Standard
Life last week dropped its endowment mortgage promise, while Liverpool
Victoria promised endowment surpluses with zero shortfalls. |
|
Standard
Life says: "The capital growth condition required for our promise has
not been met, nor do we anticipate it being met in the foreseeable
future. Since announcing the promise in September 2000 we have,
however, made provisions of approximately £100m each year.
The board has now reached the decision that it would be inappropriate
to continue making further provisions so long as the capital growth
condition continues not to be met.
"So long as it is satisfied that it is fair and prudent to do so, the
company currently intends that the existing provisions already set
aside for the promise, £393m will be used to pay top ups to
eligible customers. Policies maturing between now and December 31 2005
will receive maximum top ups."
Liverpool Victoria has announced that all of its currently maturing
mortgage endowment policies are receiving a surplus on top of the
mortgage amount covered. In addition, the leading mutual has confirmed
its unequivocal guarantee that none of its mortgage endowment
policyholders will suffer a shortfall, whatever happens to future
investment returns.
Liverpool Victoria's unconditional mortgage endowment guarantee
guarantees unequivocally that the maturity value of members' mortgage
endowment policies will be at least equal to the policy death benefit,
i.e. the mortgage amount covered. Liverpool Victoria has already made a
financial provision to cover this guarantee so it will not have any
adverse impact on future financial performance. Liverpool Victoria has
just over 6,000 mortgage endowment policyholders.
Malcolm Berryman, group chief executive of Liverpool Victoria, says:
"The strong performance of our with profits fund has ensured a surplus
for all of our mortgage endowment policies that have matured or are
currently maturing. In addition, our unconditional guarantee gives
total peace of
mind to our members for the future."
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