GA provides for claims on pensions: Less than pounds 5m allocated by insurer with only small share of market in personal policies
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Your support makes all the difference.GENERAL ACCIDENT yesterday became the latest insurer to set aside money to compensate investors caught up in the personal pension transfers scandal.
Barrie Holder, general manager, said General Accident had made a provision of less than pounds 5m. Mr Holder said this sum was 'extremely prudent' and included an amount to cover the costs of handling claims expected from only a small number of policyholders.
General Accident has only a small share of the investors who have transferred their benefits from an occupational pension scheme.
Mr Holder said the company withdrew from the market about three years ago after introducing a transfer analysis system. 'On very few occasions could we beat either the old scheme or the competition,' he said.
The insurer thought its computer software was defective because it believed it ought to have been able to justify many more transfers.
'We gave it all up as being too difficult,' said Mr Holder. 'With hindsight, it is one of the best decisions we made - but probably for the wrong reasons.'
The Securities and Investments Board is drawing up plans to compensate the thousands of investors who it believes have been disadvantaged by transferring to personal pensions. Compensation costs are expected to run into hundreds of millions of pounds.
General Accident was reporting record pre-tax profits for last year of pounds 294.9m, a turnaround from a loss of pounds 29.3m in 1992. The 1993 result was struck after setting aside pounds 8.9m for a staff profit-sharing scheme.
Large increases in premium rates allowed the UK general insurance business to make an underwriting profit of pounds 59.7m, more than half of it in the final quarter. Reduced catastrophe losses in the US arm, which paid up pounds 48m for Hurricane Andrew in 1992, cut US underwriting losses by a third to pounds 140.4m.
This helped to reduce the worldwide underwriting deficit by more than half to pounds 229m. Despite lower interest rates, investment income edged slightly higher to pounds 509.1m.
Nelson Robertson, chief executive, said the company was not applying any overall premium increases, but there was still scope for some selective rate rises.
A final dividend of 17.8p increases the total payout by 3 per cent to 27.5p.
Bottom Line, page 34
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