Liverpool Victoria surplus brings endowment cheer

Millions of endowment policyholders are braced for further cuts to bonus rates and payouts in the coming weeks - but for customers of one insurer, life is looking good.

Liverpool Victoria, Britain's biggest friendly society, yesterday bucked the gloomy trend by revealing that all of its endowment holders whose policies are maturing now are enjoying a cash surplus on top of what is needed to pay off their mortgages.

In many cases these surpluses are running into five figures.

In fact, Liverpool Victoria can boast that none of its endowments has ever suffered a shortfall on maturity - and it is guaranteeing to top up any shortfalls that do emerge.

That is in sharp contrast to its bigger rivals, many of which are paying out less than the hoped-for amounts and have warned people whose policies have some way to go to expect further cuts.

A typical Liverpool Victoria 15-year endowment maturing this month and with a target amount of £50,000 is paying out £64,403 - which means a lump sum windfall of £14,403 for the holder.

A typical 10-year endowment with a similar target sum is delivering a £2,285 cash surplus on top of the £50,000 needed to pay off the home loan.

However, the company only has 6,000 mortgage endowment customers and its longer term endowments have yet to reach the end of their term as the company did not start selling the controversial policies until 1985.

Liverpool Victoria, which manages £6.9bn of customers' money, put its success down to its member-owned status, which means it has no shareholders to support, and the strong performance of its with-profits fund, about 60% of which is invested in equities.

A spokesman added that it probably priced the policies more conservatively at the outset, which may have meant customers' monthly premiums were slightly higher.

During the next two months, millions of people holding with-profits endowments, pension plans and investments will find out how much - or, rather, how little - their policies have grown.

Most experts expect bonuses to be trimmed again and final payouts to be lower than last year, despite the FTSE 100 index rising 7.5% last year.

Britain's biggest insurer Norwich Union will announce its bonuses and payouts on January 18, with Standard Life following soon afterwards.