THE DAILY TELEGRAPH says the job cuts announced by Royal & Sun Alliance yesterday are the result of ...
THE DAILY TELEGRAPH says the job cuts announced by Royal & Sun Alliance yesterday are the result of the company's failure to get City backing for a rights issue.
The decision to sell off our outsource business will limit the company's ability to take advantage of what is expected to be one of the best insurance markets in the past 40 years as the industry ramps up to take advantage of soaring premiums, the paper says.
Analysts are not impressed by yesterday's announcements, as they see R&SA having repeatedly made promises that it has not kept, The Telegraph adds.
A NEW REPORT into endowments mis-selling says most homeowners deserve nothing in compensation because interest rates have been working in their favour and mean they have suffered no losses as a result, the Telegraph reports.
The Home Buyers Advisory Service report headed by Andrew Tait, former chairman of the National House Building Council, has been rejected by both the FSA and the Consumers Association.
But Tait argues that the FSA and others have misunderstood how endowments work, arguing that only a minority of each monthly payment goes into the investment part of an endowment, with the majority paying off interest.
That means that most of the 5 million endowment policy holders affected have made a net gain from the steep fall in interest rates.
"Except where guarantees were falsely given, charges of widespread mis-selling are not supported by the evidence. Payment for absence of gain takes the compensation culture into new areas. Not even the US has gone this far," Tait says.
THE FEDERAL RESERVE Bank scored an own goal with its 0.5% rate cut because investors are now selling shares in banks that they fear will be hit by margin squeeze due to the extremely low rates they will be able to charge customers, the FT says.
"Markets generally like interest rate cuts, but rates have fallen so far that many investors are navigating uncharted waters. The last time rates were this low was during the Kennedy administration," the FT says.
And banks may not be the only ones to suffer, as some analysts believe fund managers could see their incomes fall too as they may have to waive fees in order to keep funds in money market accounts.
INTEREST RATES also get their due in today's The Times, which reports on the cries from UK industry following the Band of England's decision to leave rates unchanged.
The fact that the European Central Bank also dug its heels in has left investors in limbo too, the paper says, because there is little evidence that leaving rates unchanged will help UK or European industry much at present.
EARNINGS AT Insurer Aegon fell 28% in its third quarter according to results published yesterday, but the company still performed better than analysts expected following its shock profits warning earlier this year, the FT says.
Net income from its UK business fell to £20m from £36m in the same period last year.
Higher provisions for bond defaults, higher amortisation costs and higher provision for costs associated with guaranteed benefits products cut a deep swathe through profits during the first nine months of the year.
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