On Wed, 24 Jun 2009 12:23:28 +0100, "Tim" wrote:

"Mark" wrote
IMHO any such "inherited estates" should
be used to pay current policy holders. ...

"Tim" wrote:
Would you be saying that if it had turned out that the inherited
estate wasn't needed, in order to pay the current policyholders
their guaranteed benefits and a reasonable return -- would you be
happy in that case to have paid *all* the IE to the shareholders?

"Mark" wrote
No. I meant what I said. All money from the IE should go to
policy holders, none, 0%, nothing should go to shareholders.

"Tim" wrote:
Why do you think that?

"Mark" wrote
Because it was paid for by the policyholders...

... just as *any* company's profits are effectively paid for by its
customers...
[What's the difference here?]

"Mark" wrote
... and intended for them.

I don't agree - where did you get that from?

Because they are the ones paying the premiums.

"Mark" wrote
There is a case, if anyone in the past was underpaid,
for them to be traced and given a share...

"Tim" wrote:
Ahem - the IE exists *because* higher bonuses were not declared
in the past on old policies. But if higher bonuses *had* been declared,
then the shareholders would have got their cut at the time - the classic
"90/10 gate" (90% goes to WP policyholders' bonuses, 10% to shareholders).

"Mark" wrote
How so?

Eh? Are you asking how the 90/10 gate works? Basically, whenever
With Profit policyholders get bonuses, the shareholders get one-nineth of
that value. So if p/h's get £900 in bonuses, then shareholders get £100.

"Tim" wrote:
So - if it had been paid to the old policyholders previously,
the shareholders would have got their share then. Why
do you think they *shouldn't* get their share now, if past
policyholders were traced and got their share now?

"Mark" wrote
Do shareholders automatically get 10% of every payout?

Yep, under the 90/10 gate (see above).

I was not aware of this. In my mind shareholders should get a
divident based on the overall profitability of the company and not
directly 10% of my endowment policy.

"Mark" wrote
... One of the reasons we are in this mess is they didn't
smooth properly and paid out too much in the past.

"Tim" wrote:
Eh? If they *had* paid out too much in the past,
then there wouldn't *be* any inherited estates!!

"Mark" wrote
Looking at it from the other side: why are there many policies with
shortfalls when they have a big pot of money for this very purpose?

"Tim" wrote:
What 'purpose' do you think the "big pot of money" (IE) is for?

"Mark" wrote
It is a reserve of money to pay out to policy holders
when times are lean. Like now.

Not really. (Most of) it is a reserve of money that
**should have** been paid out to *past* policyholders.

At what point does the money become an inherited estate? Surely it's
a continuous process of collecting money from policyholders, investing
it and then paying out. In other words why does all this money
"belong" to past policyholders only and not in any way to present
policy holders?

"Tim" wrote
It wasn't created deliberately; it has arisen because no-one knew
exactly what level of bonuses should have been declared in the past...

"Mark" wrote
And it has a use now.

Fair enough. That's one of the reasons why they are
doing the attribution process now - so that the IE can
be used without going through the formal 90/10 gate.

I thought that the proposals were precisely this and to give
shareholders more than 10%

"Mark" wrote
Going back to the original topic shareholders
often get a lot more than 10%.

Howso?
Think about it: if they could get at more than 10%
normally, then they wouldn't need to be going through
the process of attributing part to shareholders now!!

In the AXA case a few years ago the shareholders got 55% and the
policyholders only 45%.

--
(\__/) M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
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