Selling An Equity and Law Endowment Policy

How is your insurer doing?

Check out its position in the list of winners and losers

Saturday March 16, 2002
The Guardian

We asked insurers to reveal how many of their endowments have fallen into the red and amber danger zones, where the amount projected may fall short of the cash needed to repay a mortgage.

sell equity and law endowmentsMany complied, and Allied Dunbar, Eagle Star and Royal London deserve praise for their openness.

Others refused to answer or gave out-of-date figures: readers can draw their own conclusions. The roll-call of refuseniks includes companies big and small. The biggest were Legal & General, which has 1.1m endowments, and Friends Provident, which has 700,000.

Is your endowment provider one with a good or bad record? Check the list below to find out.

Abbey National Life: Launched in 1993, it has around 200,000 policies. Refused to disclose figures.

Allied Dunbar: Has 190,000 policies. As of January 2002, these split into red 55%, amber 30%, green 15%. In June 2001, the date used by many other life offices when giving figures, the breakdown was: red 41%, amber 25%, green 34%.

Axa Sun Life (includes Equity & Law): Has 260,000 policies. At December 2001 it was red 8%, amber 51% and green 41%

Barclays Life: Has 100,000 policies. "We believe it is not helpful to release an overall picture," a spokesman says.

Britannia Life (recently renamed Alba Life): 100,000 policies. As of June 2001, red 45%, amber 36%, green 19%.

Cooperative Insurance: Has 187,114 policies. As of end 2000, it was red zero, amber 8%, green 92%. After a 15% cut in endowment values announced this week, these figures are likely to worsen.

Eagle Star: Has 190,000 poli cies. As of January 2002, red 42%, amber 44%, green 14%. In June 2001, the date used by many other life offices when giving figures, the breakdown was red 40%, amber 20%, green 40%.

Friends Provident: Has around 700,000 policies, many sold via a link-up with Abbey National. Refuses to disclose red, amber or green. In February it cut endowment maturity values by around 17%.

Guardian (formerly GRE): Policies are administered by Scottish Equitable group. Has 230,000 policies, which are: red 25%, amber 37% and green 38%.

Legal & General: Has 1.1m policies. Refuses to disclose how many are red, amber and green. "We are not publicising the split because there is a danger it will be misunderstood," a spokesman says. In February, it cut endowment maturity values by around 15%.

Liverpool Victoria: Has 7,500 policies. It promised that all endowments will pay off mortgages - and has not attached any investment return strings.

Lloyds TSB Life: Has around 300,000 policies. In June 2001, they were: red 31%, amber 58%, green 11%.

HSBC (formerly Midland Life): Has 80,000 policies. Refuses to disclose how many are red, amber and green. "We don't regard it as representative of our mortgage book. It is a challenging issue for us," a spokesman says.

Norwich Union (including General Accident, Commercial Union and other companies now under the CGNU group): Has 1.2m policies across the group. Does not disclose how many are red, amber and green, because it offered a promise two years ago to stand by endowments as long as investment returns are 6% a year - even if they are red policies currently needing growth of 8%-plus a year. But it has emerged that the promise only extends to policy values on December 31, 1999. If as a result of a review since then a shortfall emerges, it is not covered by the promise. "The numbers in shortfall are likely to have widened since then," says a spokesman.

Pearl: Has 140,000 policies held by 100,000 customers. Red 32%, amber 32%, green: 36%. Recently instituted an endowment "promise" to meet any shortfall as long as investment growth averages 6% a year.

Prudential: Has 230,000 policies. Of re-projection letters sent out over the past 12 months, the breakdown was: red 6%, amber 41%, green 53%.

Refuge Assurance: Has 25,000 policies. As of December 2001, red 52%, amber 28%, green 20%.

Royal London: Has 86,000 policies. None are red, 14% are amber and 86% are green.

Royal & Sun Alliance: Has around 600,000 policies. As of end 2000, red 14%, amber 39%, green 47%. Will begin new re-projection mailings this year.

Scottish Amicable: Has 778,000 policies. As of June 2001, they stand at: red 2%, amber 48.5%, green 49.5%. The next re-projection reviews will begin in April 2002.

Scottish Equitable: Has 50,000 policies. As of June 2001, the breakdown is: red 10%, amber 17%, green 73%.

Scottish Life: Has 120,000 policies. As of December 2001: red 13%, amber 41%, green 46%.

Scottish Mutual: Has 57,000 policies. As of June 2001: red 6%, amber 25%, green 70%.

Scottish Widows: Has 260,000 policies. In June 2001, red 7%, amber 61%, green 32%.

Standard Life: Has 1.6m policies. The insurer has promised to stand by all endowments as long as investment returns are 6% a year. It says around half of its policies would have fallen into red or amber categories. Standard Life's next mailing to policyholders with re-projections will be in 2003.

United Friendly: Has 12,000 policies. As of December 2001, their status is: red 50%, amber 25%, green 25%.