Standard Life suspends mortgage

In 2000, Standard Life said it would guarantee its endowment policies provided it met investment targets. However, due to what the firm described as a "cruel investment climate", policies maturing from 2006 will not be entirely covered by the promise.

Up to 600,000 investors may be affected by the insurer's move.

Standard Life said it has put £393m aside since 2000 to cover its policyholders' endowment shortfall, but the original promise depended upon "capital growth conditions being met". Stock markets have fallen sharply since the guarantee was made.

"During the past four years the industry has had to cope with a cruel investment climate," Jeff Newton, Standard Life spokesman told BBC News Online. "The investment return has not been enough for us to continue offering the mortgage promise."

The promise will still apply to policies which mature before 31 December 2005 but people with policies maturing after that date will still be in line to have some of their shortfall covered.

Norwich Union, which made a similar promise to some of its customers, told the BBC it still proposed to carry out its pledge.

Full story : http://news.bbc.co.uk/1/hi/business/3724102.stm

Oct 7, 2004
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