AXA cuts with-profits returns

13 April 2012

AXA with-profits customers have seen the maturity value policies plummet compared to last year's payout.

A 25-year £50-per-month mortgage endowment policy with AXA Sun Life is worth £42,827 today, £7,026 less than a year ago.

The same policy with the Sun Life Assurance Society is worth £44,225, compared to £50,307 in March 2003.

The company joins a growing band of insurers that have cut rates. Last week, Liverpool Victoria said its policies were also worth less than a year ago, while heavyweights, such as Norwich Union, have also cut with-profits payouts.

Peter Shelley, AXA chief actuary, said: 'A year of improved stock market conditions - where our funds returned positive growth of over 11% - has helped to start to reverse the recent downward trend in with profits returns.'

He added: ' As with-profits funds work on a medium to long term basis due to the smoothing element within them, it is likely to take a further period of positive stock market performance before regular bonus rates could begin to climb again.'

Regular bonus rates were maintained at last year's levels on around two-thirds of AXA Sun Life's 1.6m policies, while the remainder were reduced by between 0.25% and 0.75%.

Tom McPhail, head of pensions research at Hargreaves Lansdown, said the announcement was predictable.

'AXA's pre-tax returns of 11.8% and 11.1% are reasonably respectable. The results are not as good as Prudential, but are in line with expectations.'

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