Legal & General with-profits returns slump

Thursday, 19 February 2009 12:00

Returns on Legal & General's with-profits policies have declined, as sharp falls in the stock markets hit investments.

Investors have seen the value of their savings fall over the year, despite paying in monthly premiums.

A man who took out a savings endowments policy 25 years ago at the age of 29, investing £50 per month would have received a surrender value of £40,898 had he cashed in the policy on March 1st last year.

However, despite making another £600 in payments over the year, the value of the fund as of March 1st this year will be £37,594 - 9.5 per cent less.

Some policies have still delivered, Legal & General said.

A 25 year, £50 a month mortgage endowment maturing on 1 March 1st 2009 will have delivered an investment value £2,036 above the target amount of £34,378 at £36,414.

Carl Dowthwaite, finance director of Legal & General's with-profits business, said:
"With profits continues to provide attractive long term returns and has given customers genuine protection from market volatility.

"In current market conditions, the core features of with profits mean that it remains a good choice for investors. Our investment strategy puts us in a strong position to benefit from market recovery."

Rival insurers Friends Provident, Standard Life and Norwich Union have also announced a fall in the value of their with-profits funds after the FTSE 100 had its worst year on record, falling 31.3 per cent.

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