View more on these topics

With-profits endowments still a safer bet, says IPTC

IPTC (The Insurance Policy Trading Company) claims there is a vast difference between the performance of unit-linked and with-profits endowments.

There has been much recent hype about the poor performance of endowments, falling surrender values and maturity shortfalls. IPTC says this is relative to the type of endowment, and relative to the performance of investments in general, in the current financial climate.

The company acknowledges that it has been a shock to see somany bonus cuts on with-profits endowments but says that their performance compares well to that of unit-linked endowments.

IPTC&#39s valuations department quotes an Allied Dunbar unit-linked endowment which started 1/7/93, maturity 1/7/2018. A total of £8317.93 has been paid in premiums and the surrender value at 5/8/02 was £3523.58. In comparison is a Friends Provident conventional with-profits endowment. The start and maturity dates are the same. Total premiums paid to date are £6762.36 and the surrender value at 10/8/02 was £6190.04.

The unit-linked endowment will always fluctuate in value, in line with stock market performance. The with-profits endowment will grow in value with each successive bonus year. IPTC adds that, at nine years old, the product has not yet started to build up the “meat” created by the bonus structure which is designed to create a sharp rise in the latter years of the term.

Recommended

Housing market enters cooling-off period, claims Rightmove

Rightmove&#39s first ever Real-time Property Report shows that the housing market has entered a natural cooling-off period after the strong growth of the past 12 months. The report found that the rate of growth of asking prices nationally has fallen in four consecutive months, with monthly price inflation declining from 4.5% in April to 0.8% […]

PMI Europe insures £1.8 billion mortgage credit default swap

PMI Mortgage Insurance Company Limited (PMI Europe) has announced the insurance of a mortgage credit default swap agreement between the KfW group, Germany&#39s leading promotional bank, and Aareal Bank AG, a leading international property bank. PMI Europe is providing a £63.6 million layer of credit protection in connection with the £1.8 billion Aareal Bank mortgage-backed […]

SPML introduces proactive fax notices for packagers

Southern Pacific Mortgage Limited (SPML) has enhanced its service to packagers by introducing an automatic fax notification every time a condition stipulated on a mortgage offer has been satisfied. This &#39real-time&#39 fax notification is triggered by the data being entered on SPML&#39s own computerised case tracking system, and it is already being viewed as a […]

OFT bans estate agents

Estate agents Robert Michael Cheslett and Paul Pacelli Quigley have been banned from estate agency work. Mr Cheslett, and Mr Quigley, who have both worked as estate agents, received Prohibition Orders in separate actions by the OFT. They are the fourth and fifth estate agents to be banned by the OFT this year. Stockport Trading […]

Newsletter

News and expert analysis straight to your inbox

Sign up