MGM Assurance has announced a 3% cut on 25-year endowment maturities, despite making returns of around 10.1% during 2003. MGM stated that it had moved its equity holdings from 30% to over 40% over the last 12-months.
Our View
As always, maturity cuts will hit endowment mortgage holders hardest, especially if the maturity date is close. We do welcome the fact that MGM Assurance is assessing its equity position regularly. This obviously added to the 10.1% increase.
Whilst MGM did make double-digit returns on its investments last year, it still has to account for the few years previous, where returns were negative.