The 2013 bonus declaration season is in full swing with two of the major players in the UK insurance sector showing their hands at the start of 2013.
Standard Life declared new bonuses across their range of products on the 31 January. Margaret Flaherty, Standard Life's with-profits communications manager, said: “We're pleased to say that customers have seen a year-on-year increase in the value of their plan. In the last year, a typical endowment customer has seen a return of 5%”.
Whilst this is a positive message for policy holders, Surrenda-link analysis shows there has actually been a 2% reduction from the equivalent Standard Life payout from February last year.
Dan Johnston, Portfolio Services Manager at Surrenda-link said, “This is not surprising from Standard Life and reinforces our ongoing analysis that suggests Life Offices may not necessarily be passing through With-profit returns fully into payouts. With equity markets performing well over the last six months of 2012, policy holders could well have expected to see increases in payouts.”
Aviva have also declared new bonus rates for their range of products including brands, Norwich Union, General Accident, Commercial Union & Provident Mutual. Aviva report that a 25 year, £50 per month mortgage endowment in the main Aviva with-profits fund, taken out on 1 January 1988, has a maturity value of £29,765. Although this is up by £1,740 or 6.3% from the payout last year, it falls behind the quoted Aviva 2012 return of 7.3% for the fund.
Dan Johnston said, “This difference can be mostly attributed to tax and costs. However, AVIVA payouts have suffered higher cuts than other major Life Offices over recent years, so the apparently more favourable AVIVA declaration needs to be considered against this backdrop.”
Aviva’s Propositions & Pricing Director, Savings and Investments, Tim Orton commented: “Our with-profits funds continue to perform well for our customers. With bank and building society accounts yielding low returns and stock market volatility an on-going concern, the great strength of with-profits is its ability to invest in assets that provide income and growth whilst protecting from the full effects of volatile markets”.
Surrenda-link will continue to monitor the situation closely.