Axa has stopped issuing with-profits bonds in a move that is being viewed as the beginning of the en...
Axa has stopped issuing with-profits bonds in a move that is being viewed as the beginning of the end for with-profits investments, reports this morning's Daily Telegraph.
Axa said in May it was restricting exposure to with-profits for new bond issues. Falling markets and increasing unpopularity of with-profits following the Equitable Life scandal and potential shortfalls in mortgage endowments have put pressure on life offices.
Scottish Provident and Royal & Sun Alliance have already stopped selling with-profits bonds.
Axa, which has a £9.5 billion with-profits fund, has particularly strong reserves and is the third-strongest life office in Britain.
The solvency of insurance companies is under severe strain after the latest falls in equity markets and an escalation in the likely cost of meeting claims arising from the World Trade Centre's destruction, says the Times.
Shares in Britain's leading insurers fell to their lowest level in five years yesterday, with investors seeking refuge from problems on several fronts.
The bad news sent Prudential shares falling 11½p to 562½p. CGNU closed 13p lower at 526½p and Britannic fell 20p to 552½p. Many insurance shares have halved in value during the past 12 months. On Tuesday Sir Howard Davies, chairman of the Financial Services Authority (FSA), said he could hear "the alarm bells ringing" over the insurance industry.
The European Union looks set to abandon its rigid interpretation of the Growth and Stability pact amid increasing pressure from France, Germany and the UK, says the Scotsman.
It is understood that the EU is set to water down its insistence that member countries balance their budgets by 2004, by agreeing that this will now be dependent on the rate of economic growth within the eurozone over the next few years.
The move, which comes ahead of today's meeting of EU finance ministers in Madrid on the eve of tomorrow's EU summit in Seville, comes at the same time as the euro reached a 17-month high against the dollar, hitting 95.70 and climbing closer to parity with greenback.
Analysts say the UK might be able to enter into the single currency without meeting stringent EU economic requirements, providing the EU implements these changes.
And Misys, the software and financial services firm, left full-year trading forecasts unchanged after seeing market conditions stabilise in a key division, continues the Scotsman.
The group said it had been encouraged by the strength of its banking order book following the recent award of a number of large contracts. That means trading since the interim results announcement in January has remained in line with the company's expectations.
Misys has three core divisions - banking, healthcare and financial services - but during the past 20 months has overhauled their structure. In the banking and securities division, Misys said customers had continued to be cautious about the timing and placing of orders, although it now appeared that market conditions had stabilised.
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