Treasury Committee: Inquiry


Report and oral and written evidence | Press Notice | Response

The Treasury Committee decided to undertake an inquiry into the Inherited estate, held by life assurance companies’ with-profits endowment funds.

Inherited estate (or ‘orphan assets’) is money that has built up in with-profits funds. This money accumulates because, from year to year, insurers can withhold a portion of policyholders’ payments to smooth returns between good and bad years. Despite these funds being contributed by policyholders, some insurance companies use some of these funds for the benefit of their shareholders rather than policyholders. Some insurers have also decided to buy these estates from policyholders, which has caused consumer concern about the fairness of the distribution of funds between shareholders and policyholders. In 2000, AXA paid out 31% of its inherited estate to policyholders, following which the Financial Services Authority created the post of Policyholder Advocate. The holder of that post in respect of Norwich Union policyholders is Claire Spottiswoode, who is currently engaged in negotiations with Norwich Union about the proposed distribution of their inherited estate.

Press notice announcing the inquiry (includes terms of reference).

The following evidence sessions were arranged as part of the inquiry:

Tuesday 22 April:

At 9.45 am: Mr Peter Vicary-Smith, Chief Executive, and Dominic Lindley, Principal Policy Advisor, Which?
At 10.15 am: Clare Spottiswoode CBE, Policyholder Advocate for Norwich Union
At 11.00 am: Mr Hector Sants, Chief Executive and Sarah Wilson, Director and Insurance Sector Leader, The Financial Services Authority

Wednesday 30 April:

At 2.30 pm: Mr Mark Hodges, Chief  Executive, Norwich Union, and Mr Nick Prettejohn, Chief Executive, Prudential Plc