Clerical Medical has improved the market value reduction (MVR) on its with-profits funds but may have to cut bonus rates again if the stock market does not produce a sustained recovery.
A statement issued by the Bristol-based life insurer says terminal bonuses have been reintroduced on Clerical’s new with-profits bonds as part of the £569m 2003 payout and the with-profits income fund will see unchanged bonus rates of 4.5%.
However, bonds will see regular bonuses cut to 1.5% while pension policy regular bonuses are being cut to 2%.
With-profits bonds bought between 1998 and 2001 also still carry much higher average MVRs than life and pensions policies, although the firm point out MVRs and surrender values have improved, albeit the amount received will depend on duration held, amount and type of policy, says Richard Myers, appointed actuary at Clerical Medical Investment Group.
"This bonus and MVR announcement allows us to ensure that all policyholders continue to receive their fair share of the fund whilst we continue to manage the fund prudently.
"Although the equity market has risen by about 11% over the past year it is still over one third lower than its 1999 peak. We may have to review bonus rates again, if the stockmarket does not show signs of a sustained recovery," he adds.
Regular bonus rates from 1st February 2004
|UK unitised business||01/8/03||01/2/04|
|Life regular premium||2.5%||1.5%|
|Flexible Growth Bond||2.2%||1.2%|
|Pension regular premium 1% AMC*||3.0%||2.0%|
|Pension single premium 1% AMC*||3.0%||2.0%|
|Offshore with-profit* business||01/8/03||01/2/04|
|Year of entry||With-Profit Bond||Regular premium, life||Regular premium, pensions|
'Right thing to do'
£69m spent on upgrades
European fintech market 'underserved'