Rumours of Scottish Widows sell-off, again - papers 21st August

SCOTTISH WIDOWS and its place inside the Lloyds TSB Group is at the centre of takeover rumours again, says this morning's Scotsman newspaper, but it is this time suggested Prudential is keen to buy the Edinburgh-based life company.

Sources have told reporters at the Scotsman that meetings took place last week between officials from all three companies for what could be a multi-billion pound sell-off.

The Scotsman points out that it is affecting staff morale, as it was only recently suggested that it might be Scottish Widows Investment Partnership that may be up for sale.

THERE'S more doom and gloom in the Telegraph today as a call from former Office of Fair Trading official John Chapman, to wind up with-profits funds hits the mainstream press.

It's unlikely to do much to help keep investors in with-profits once readers also see the editorial, as Chapman points out homeowners with endowments are likely to see continuously falling payouts.

Given the state of some with-profits funds, Chapman has called on the £318bn with-profits sector to be wound up, so the Telegraph editorial team continues the theme by suggesting that with-profits funds are dying from a combination of "over-enthusiastic payouts, uncontrolled costs and the three-year bear market".

The Telegraph comment suggests that it would take a miracle to raise WP funds and make them feasible again, but it is those investors inside closed funds which are now likely to be hit even harder than the losses they currently face. The Telegraph's advice seems to be 'bail out'.

A great angle by the Telegraph on AMP's financial results reveals the UK flotation of Henderson has caused some embarrassment because it has been discovered that AMP does not actually own the money to finance the deal.

AMP bought Henderson for £380m in 1998 but now wants to distance itself by floating the firm in Sydney and London.

The problem, it seems, is the Henderson acquisition was in fact financed by a large loan from the with-profits fund at Pearl Assurance, which has now been closed to new business.

That means Pearl owns a majority stake in Hendersons and may require a public flotation after all to try and complete the deal if funds have to be paid back to Pearl in cash.

AND ZURICH FINANCIAL SERVICES is finally back in the black, says this morning's Times newspaper, after a tough time of job cuts was required to pull back from a £1.3bn loss at the same time last year.

Results unveiled yesterday show the insurance group returned a first-half income of £442m, as the rise is thanks to a 29% increase in general insurance premiums and strong life insurance gains.

In order to get here, however, Zurich has sold its Threadneedle, its asset management arm, to American Express earlier this year and last month sold part of its UK life book of business to Swiss Re.

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