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Policyholders Unsatisfied with Prudential Decision
The policyholders of Prudential are expecting a letter stating that they are not entitled to a £9bn 'inherited estate' locked up in the insurer's with-profits fund. This led to a fall in share prices of the company on Friday.
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July 1, 2008 (FPRC) -- London (Ask4loan) June 30, 2008: Almost four million policyholders of Prudential will be informed by a letter stating that they should not expect any types of cash payments out of a proposed carve-up of the £9bn 'inherited estate' locked up in the insurer's with-profits fund.
As per the estimates, the potential windfalls were expected to be in the range of £600 and £1,200 per policyholder. This blow for the policyholders follows dithering on the part of the advisers and insurers. It is estimated that the total wealth of Prudential's with-profits fund is close to a massive £80bn. Out of this £80bn, the 'inherited estate' of £9bn is not required to be paid immediately as bonuses to the savers. The chief executive of Prudential, Nick Prettejohn, conveyed that the estate will be used for the business's purposes. But since the policyholders have a claim to 90 percent of the profits derived from cash, Prudential would be required to but the rights of policyholders by offering windfalls.
As per Prettejohn, the money will be used as an "extra reserve" and the news immediately led to a fall in the company's share prices. The Financial Services Authority is assumed to take the charge to carry an independent and rigorous review of the company's inherited estate and make distribution amounting to 90 percent to the policyholders.
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