Insurance

Is there any end to the pain endured by holders of With Profits funds and policies?  The relentless downward spiral of these once great investments is a sad indictment of the way insurance companies have treated their policy holders over the last twenty years and they (by which I mean WP funds but it could apply to the insurance companies) seem to be in terminal decline.  The inherent lack of transparency and flexibility of With Profits funds have left them struggling for relevance in the modern world and with the possibility looming that the regulator will turn off the commissions tap, there seems little left to sustain them.  Unloved and misunderstood by most, we should not mourn their passing.

Below is a graph showing the history of annual bonuses awarded to the ever suffering investors by a 'leading' insurance company.  Not a pretty sight.

Zombie Funds, so called because the money in them is living in a dead fund, have been hitting the business headlines of late.  In particular, Resolution Life has become the subject of a tug of love between Pearl and Standard Life.  For millions of savers this is of more than a apssing interest because Resolution takes care of many billions of pounds of their money and is itself worth more than £2bn.

Resolution was formed as an acquisition vehicle for funds lying in closed life funds with insurers such as the Royal and Sun Alliance.  These companies had decided that they would be better off getting out of the business of running pension and life funds and simply shut up shop.  Having decided to abandon their many policy holders they then sold off the funds to save them the bother of running them and dealing with disappointed investors.

Whether I would be happy with my life savings being in a Zombie Fund is a moot point, it hard enough keeping track of who exactly is running this unloved pot of cash, let alone being sure they are acting in your interests.  Whoever owns it, it seems to be more profitable than being an investor.