R & SA is meeting with the FSA to discuss plans to use its orphan estate to fund its GAR liabilities, following the recent announcement that it is closed to new life, pensions and unit-linked business.
Mike Kipling, Chief Actuary,says it is likely to hit the with-profits funds in the Sun Alliance & London fund, where most of the liabilities reside, by about 2-3% of their asset share. IFAs have been prompted to question why life offices should once again make policyholders bear the brunt of their mistakes.
R & SA Policyholders, along with Equitable Life members, face the dilemma whether they stay and face dwindling returns or suffer big transfer penalties.
R & SA, although closed to new with-profits business, will ensure that it meets its solvency requirements by at least £50 million. Mr Kipling confirmed that the Sun Alliance fund has 17% in equities and that market value reductions are unchanged at up to 25%. The value of the orphan fund has not been disclosed.