Fool News: Flood Households Could Be Refused Cover by Finance News Bulletin
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Published: 17/10/07
Homeowners livelihood in flood-prone areas may not be able to protect themselves against such disasters in the prospect, insurers have warnedFollowing the Pre-Budget account , The Association of British Insurers (ABI) has attacked the government for not allocating enough money to develop flood defencesInsurers have so distant spent around £3 billion repairing the damage caused by the summer's floods Norwich Union, Britain's main insurer, warned back in August that premiums for homes in areas with high flood danger could rise by some ten per cent
In yesterday's account, the chancellor announced that £215 billion would be exhausted on flood defences between next year and 2011According to the ABI, this shape is "less than we were asking for, even before the floods" and shows that the Treasury has "completely unsuccessful to grasp the importance of civilizing Britain's flood defences"The Association also emphasised its intention to "appraisal" its commitment to continuing to provide cover for homeowners in high danger areas
Unless the government rethinks the amount it is willing to entrust to flood defences, it seems that those people in high-risk areas - some 570,000 households - may become unable to defend their properties no matter how much they are willing to disburse© Copyright 1998-2007, The Motley Fool incomplete All rights reserved This material is for individual use only
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More pension opt-out complaints - Published:08/12/07
The figure of complaints about opt-outs from the state second pension (S2P) blast up during the past financial yearAbout eight million populace are thought to have left the S2P or its precursor Serps at some time since opt-outs were first obtainable in 1988Earlier this week, the Financial Services Authority (FSA) said 120,000 people might have been mis-sold the option private pensionsHowever, it finished that the issue was not clear cut and that people who might, in theory, have been too old to benefit from contracting out might still have had some valid reasons for doing so"The main communication we have is, if a consumer has got a complaint, get in touch directly with us"The idea of encouraging populace to leave Serps and then the S2P was first put forward by the Conservative administration in the 1980s as a way of encouraging private pension savingIn exchange for giving up the correct to the second state pension, populace are given a rebate on their national insurance contributions, which are then salaried into an alternative private pensionTwo years before, the FSA concluded that most populace would have been better off staying in Serps or the S2P rather than contracting outAnd some large insurance firms, such as Norwich Union and the Prudential, have advised.
Read More: More Pension Opt-Out Complaints >>Liquidity question hangs over leading property funds - Published:04/12/07
All times are London time look for News in the FTcom siteSearchSearch speech marks in the FTcom sitespeech marksYOUR MONEY Your investmentsBreadcrumb trail navigation:FT house > Your money > Your investmentsServicesThe natural impulse of investors to flee a commercial property marketplace going through its worst period since the near the beginning 1990s has begun to test liquidity levels in sure UK fundsThere are worries that UK property funds will not have the money to pay exiting investors, and will be unable to sell possessions fast enough in what is a tough transactional market to lift the money“There is obviously a mismatch between the illiquidity of the asset and the liquidity of the faith structure, which investors could find to their price,” says Mike Prew, Lehman Bros property analystThis week, FT cash contacted every fund manager in the sector to measure sentiment, and ask whether liquidity levels had reached a crisis pointReassuringly, none said there was any immediate danger of preventing investors from send-off – although many reported that they are now selling properties to make sure liquidity levels are maintained saver flows are now flat or unenthusiastic in almost all fundsMost admitted worries for the short term, particularly if investor sentiment continued to acid, but expressed expect that investors would stand by property as a long-term asset and an important portfolio diversifier They also said the overall return this year will be flat, with a alike performance predictable next yearOn the face of it, the market does not inspire self-assurance In September there was the first monthly decline in total income since 1992, with income then sliding between 2 and 5 per cent in the last few months and forecast to carry on to decline for anywhere between six to 24 monthsClosed-ended funds and property companies have knowledgeable crashing net asset values, and even more disastrous share price performances Shares in Real Estate asset Trusts (Reits) have dropped some 38 per cent in the day to date, suggesting the marketplace is pricing in further falls in asset valuesThe performance of open- broken funds invested in property shares has been similarly dismal, but while they undergo by having to sell shares into a miserable market, at least they can lift cash to pay departing investors The new worry is that unrestricted funds invested directly in property will struggle with thisTo date, the awful news has all come from institutional funds Last week, M&G said institutional investors in an offshore property fund would need to stay three months to exit, while Schroders put a similar time boundary on a property faith and cut the value by more than 12 per cent William mount, head of property at Schroders, admits “the market has moved and there is nothing to be gained by us putting our heads in the rub down and pretending otherwise”Charles Cade, analyst at Winterflood Securities, expects the investor exodus to continue and believes that the main retail funds could now also be compulsory to impose limits on redemptionsTo do so, funds would have to apply to the Financial armed forces Authority (FSA) for the right to defer payments, something that was last called on in the property sector by a housing fund run by Henderson in the early 1990sThere are around 20 authorised property component trusts easily available to the UK investor The main, run by Norwich Union, has seen fluid assets drop from 184 per cent at the finish of July to 124 per cent at the finish of October The fund’s dimension has dropped from £41m to £36mNorwich Union would not comment on whether it would need to sell possessions, but others are less shy Barry MacLennan, director at Standard existence Investments, says its fund has built up a healthy 28 per cent in liquid possessions, partly through property sales since the summerLegal & General’s property faith has seen liquid possessions drop from 192 per cent at the finish of July to 17 per cent this week But unlike most in the sector, Mike Barrie, manager of fund organization at L&G, says investor flows are still positive, although the last few weeks have seen redemptions rise The fund has already sold property to uphold a “prudent” cover for exiting investors, he saysThe SWIP property trust has around 7 per cent in cash, down from 115 per cent at the finish of July A spokesperson says that it “has money within the fund to meet redemption levels”New Star has sold some equities from its possessions trust, raising the cash place The fund now allocates 152 per cent to shares, from 173 per cent at the finish of July, and 95 per cent in cash, up from 78 per cent There have been total redemptions of around 5 per cent since JulyM&G says flows have lately turned negative in its possessions fund, with daily withdrawals at around £1m last week, but adds there is a liquidity shock absorber of some £70mJohn Willcock, manager at Threadneedle, would not comment on the exact level of liquidity within its finance, only saying it was “healthy”Jonathan Polin, a manager at Resolution, says flows have turned “slightly unenthusiastic but stressed that overall redemptions had proved quite small so farLike most in the division, Resolution’s fund moved to its “cancellation price” some time before, he adds, which means that exiting investors receive the lowly possible unit pricePolin says the fund has a liquidity level of around 10 per cent, which has been quite static He stresses that property is still a good investment in malice of the cyclical slumpMacLennan of Standard Life says predicts a “short, pointed shock”, rather than a sustained slump “The sentiment is worse than realism at the moment,” he adds Copyright The Financial Times Limited 2007collide could be even worse than 1990s - Oct-26Property derivatives point way in wake of credit press - Oct-26Invista tactics to sell off more assets - Nov-30M&G to limit possessions fund redemptions - Nov-22London tops possessions survey - 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Read More: Liquidity Question Hangs Over Leading Property Funds >>The without-profits funds - Published:18/01/07
Anyone still clutching a mortgage endowment might have hoped that payouts would start increasing again, especially as the stock marketplace has been rising with scarcely a pause for almost four yearsSo they will have been sadly disappointed by figures shaped by Norwich Union and Friends Provident over the history week Norwich Union controls four with-profits funds and they are all paying out less to investors than last dayIncredibly, half of all the Norwich Union 25-year endowments growing this year won't have grown by enough to pay off the mortgage This is inexcusableHard-pressed homeowners will of course wonder what on earth happened to all those years of stock market enlargement: the last quarter-century has been a bumper one for the market and it is frankly incredible that they have suffered such deprived returnsThe flagship Norwich Union finance, known as the CGNU finance, will this year disburse £46,829 to someone who has saved £50 a month for 25 natural life, assuming they were 29 when they took it out Those who were older will receive even less because part of their premium pays for life pledge, which is more expensive for older peopleA similar policy maturing at the begin of 2006 would have paid £50,295 This 7% fall in payout comes after a day in which the stock marketplace, as measured by the FTSE All split, rose by 119% and Norwich Union's fund grew by 117% before taxThose with reasonable memories will recall when this fund (formerly recognized as General Accident) returned more than £120,000 for a £50-a-month asset in the late 1990sThe reason for these money existing now is tenuous to say the least What is more extraordinary is that anyone should be taking out new with-profits savings - but they are, and often under encouragement from monetary advisersEndowments were supposed to smooth ups and downs in the stock market over a long-lasting period, but they have done nothing of the sort Three bad investment years from January 2000 to demonstration 2003 have scuppered the whole proposal, and the actuaries and investment managers have unsuccessful to deliver on the promises made to millions of investorsThe ride promises to be bumpy for the predictable future as more emphasis is put on fatal bonuses and less on the bonuses additional annually to policies So smoothing, which was the only selling point of with-profits, is deadInvestors are also told that you shouldn't evaluate one year's policies with the previous ones because they are over dissimilar investment periodsFor instance, a 25day policy maturing at the start of 2006 would have been invested from the start of 1981 to the end of 2005, whereas one maturing now would have been invested from 1982 to 2006 Fair enoughExcept the total return from shares in 1981 (which a rule maturing this year will have misplaced was 72%, while the return in 2006 (which this day's policy will have gained) was 168% So why are policies maturing this day paying less than those maturing last yearTo blame the downturn at the begin of the century, as many insurers continue to do, is pathetic These policies have had 20 years' optimistic stock market returns against five years of negative ones, precisely the same figure as a policy maturing at the start of 1998 Yet the 1998 policy paid more than twice as muchThe only truthful explanation is they got it badly wrong by paying out far too much in the 1990s in order to be at the top of tables read by financial salesmen who were too thoughtless and dumb to see the writing on the wallIt's not now homeowners who are pain in with-profits funds Millions of people have their pension trapped in these ailing funds and will be strike with cruel penalties if they attempt to retrieve them They will suffer the consequences of insurance company misconduct for the whole of their retirements The situation has not been helped by stupid civil servants and ministers who have played into the hands of the cover industry and almost routemarched investors into their armsPensioners investment with-profits bonds have suffered a similar fate, with some still trapped by marketplace value adjustment penalties because insurers haven't managed to break even on their savings This is an extraordinary example of poor organization because even an asset in a FTSE tracking fund made when the stock market was at its peak in December 1999 would now be in profit gratitude to income from dividendsBut I suppose someone has to pay all that task to salesmen, bonuses to finance managers and directors' pensions - and that someone is you, even if it does mean your own pension won't deliver the comfy retirement you had hoped forLast week's Bank of England bottom rate rise not only took everyone by surprise, it also sparked a stampede for mortgages Not surprisingly everyone is touting set rates to protect borrowers from further increases There's a logic to this, particularly if further speed rises would put the family budget under serious stress But if you have plenty of financial leeway then you might want to consider whether now, when we've already had three bottom rate rises and could be moving towards the peak in the cycle, is really the best occasion to fix your borrowingchoose a loan term 12 months (1 year) 24 months (2 natural life 36 months (3 natural life 48 months (4 natural life 60 months (5 natural life 72 months (6 natural life 84 months (7 natural life 96 months (8 natural life 108 months (9 natural life 120 months (10 natural lifePlease select a type of insurance Life insurance Home and contents Car stop working services Health - medical Health - dental Travel Pet - afflict Pet.
Read More: The Without-Profits Funds >>