Despite rumours of Lloyds TSB planning to sell off Scottish Widows, the insurers Chief Executive Mike Ross has denied the plans.
Mr Ross said "The Lloyds TSB group is fully supporting of what we are doing. We are one of the top five insurance companies in the UK and we have got one of the strongest capital bases of any UK life assurer".
Despite news that sales of Scottish Widows products through independent financial advisers had grown by almost 40%, falling stock markets have hit hard. Many Lloyds TSB investors have called for Scottish Widows to be sold off in order to maintain profits. When news of the speculation broke, Lloyds TSB's share price rose.
Our View
Over the last few days it has been reported that Lloyds TSB may cut their dividend to shareholders so that funds can be pumped into Scottish Widows. Much of the money needed is in respect of endowment mis-selling. There are a number of companies in the Lloyds TSB group, such as Abbey Life and Hill Samuel that also carry endowment mis-selling problems. It is not just a problem for Scottish Widows. Many insurance companies are facing problems due to stock market falls but some recoveries have been made.
If the sell off did happen then on the face of it the Lloyds TSB group may become more profitable. However, in times such as this, what price a sale?