L&G Bonus Rates
Legal & General Group PLC
25 October 2002
LEGAL & GENERAL BONUS RATES
===========================
Legal & General announced today that it is reducing the final bonus rates paid
on most with-profits policies from 28 October 2002.
Because of the significant falls in the UK and other major stock markets since
the beginning of 2002, Legal & General has reduced final bonus rates so that
maturity proceeds are more in line with the value of underlying assets. Legal &
General has taken this action in order to balance the interests of different
with-profits customers and to maintain the fair and prudent management of its
with-profits business. Annual and interim bonus rates remain unchanged at
present and will be reviewed as part of the usual end of year process.
Most with-profits maturity payments will be affected. Payouts will typically
reduce by up to 7.5 per cent for life policies and up to 9.5 per cent for
pension policies, reflecting differences in the taxation of investment returns
for life and pensions business. The actual reductions in payouts for individual
customers will depend on the length of time their policy has been in force and
the type of policy.
Legal & General's UK long term fund, which includes with-profits business, has
an extremely broad mix of investments and was accredited with the highest
possible rating (AAA) for its financial strength by Standard & Poor's in 1988.
This rating has been held continuously since then.
Ian Gibson, Actuary (UK) said, 'We have taken this action so that payouts more
fairly reflect the value of the underlying assets and so balance the interests
of customers whose policies are due to mature now and those whose policies are
due to mature in the future.'
For further information:
========================
Media: Investors:
Peter Timberlake Peter Horsman
PR Manager Head of Investor Relations
01737 374037 mobile 07710 806465 020 7528 6362
Notes to editors:
=================
1. FTSE 100 levels
-----------------
Index
End 1999 6930.2
End 2000 6222.5 down 10.2% since end 1999
End 2001 5217.4 down 16.2% since end 2000
Closing value on 24/10/02 4103.7 down 21.3% since end 2001
(40.8% since end 1999)
2. Example of revised payout.
-------------------------------
The changes to final bonus mean that the payout on a typical 25 year term
endowment policy (for a male aged 30 next birthday at inception and paying £50 a
month) maturing on 28 October becomes £66,348 (previously £71,423). This
represents an annual rate of return of 10.4% (previously 10.9%) and a real rate
of return of 6.2% per annum (previously 6.7%).
Note: The real rate of return represents the yield obtained in excess of the
return earned if the premiums had grown in line with the RPI (increases in RPI
for the period August to October 2002 remain at the same level as August 2002).
3. Legal & General recognises that some customers who have already received
written details of their anticipated maturity payouts will be making plans based
on the quoted figures and so the company will not apply the reduced final bonus
rates to these customers.
4. Customers who want more information on their own policies should call Legal &
General on 08700 106020 for pension policies and 08700 104080 for life policies
and bonds.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 16 hours ago Savannah Energy
- 17 hours ago Buccaneer Energy PLC
- 17 hours ago Savannah Energy
- 17 hours ago Carclo
- 18 hours ago Schroder Japan Growth Fund