Insurance firms to be grilled by MPs

The Treasury Select Committee is questioning the heads of Aviva, Legal & General, Prudential, Royal & Sun Alliance and Standard Life as part of its investigation into restoring confidence in the long-term savings industry.

It is not know what MPs will ask the chief executives but it is thought their questions will revolve around with-profits funds, particularly ones taken out as endowment mortgages.

There are currently around 8.5m endowment policies in existence, of which around 6.8m are still linked to mortgages.

But following several years of poor stock market performance many people are facing a shortfall in the maturity value of their policy.

Figures from the Association of British Insurers show that in September 2003 around 51.7% of people had been warned that the maturity value of their policy would not be large enough to pay off their mortgage, while 23.1% were told it would probably not be large enough.

MPs are also likely to question David Prosser, chief executive of L&G, about weekend press reports concerning the way the group marketed its endowment policies. The allegations, which appeared in the Mail on Sunday, are refuted by L&G.

The hearing will be the first major public outing for Sandy Crombie, who became chief executive of Standard Life, on January 13. He is likely to be asked about the impact new "realistic" accounting standards will have on the company's balance sheet, following discussions between Standard Life and City watchdog the Financial Services Authority.

MPs may also question him about Standard Life's plans for the future after the insurer said it had launched a review looking at changing its structure, including demutualising and floating on the stock market.