Whilst other insurers are cutting their with profits bonus rates, Prudential has decided to keep its 2004 Prudence Bond bonus payments at the same level as in 2003. This is 3.25%. The news for other Prudential with profits policyholders could be bitter-sweet as the insurer will not be announcing on other with profits bonus rates until February 2004.
Our View:
Prudential made a number of with profits bonus cuts early on in 2003. The Prudence Bond with profits bonus rates were cut from 4% to 3.25% at that point. Many other policies had their maturity values cut. If the bonus cuts at AXA are anything to go by, policyholders should not expect miracles this year. If rates are kept the same it is obviously better than them falling. As most people know, the stock market has grown healthily over the last twelve months. However, with profits providers have lost money and their reserves are low. These will have to be built up again before bonuses start to increase.