28th Nov 2007 08:01
Prudential PLC28 November 2007 08.31am, Wednesday 28 November 2007 Update on possible Reattribution of the Inherited Estate of the PrudentialWith-ProfitS Sub-Fund In March 2007, Prudential plc (Prudential) announced it was considering areattribution of the inherited estate held in the With-Profits Sub-Fund (WPSF)of The Prudential Assurance Company Limited (PAC) if it was in the bestinterests of policyholders and shareholders. Prudential continues to explore thepossibility of a reattribution. No decision has yet been taken to proceed with reattribution and policyholdersneed take no action at this stage. Nick Prettejohn, Prudential UK CEO, said: "This is an extremely complex process.We are providing Peter Bloxham, the nominated Policyholder Advocate (PHA), withdetailed briefings regarding both the life fund and inherited estate and we arealso discussing our progress with the FSA. "We aim to be in a position to determine whether reattribution is in the bestinterests of policyholders and shareholders in the first half of 2008." Since March, Mr Bloxham has established his own independent office and engagedlegal and actuarial advisers to assist him with his due diligence. His main taskof reviewing and analysing Prudential's with-profits business is underway, witha programme of regular meetings with both Prudential and with the FSA. The PHA'soffice is also preparing plans for consulting with policyholders should thereattribution proceed. Peter Bloxham said: "I am pleased to report that we have made progress and I amconfident that if Prudential does proceed to appointment we will be ready tomove quickly to the consultation stage." ENDS Enquiries: Media Investors/AnalystsJon Bunn +44 20 7548 3559 James Matthews +44 20 7548 3561William Baldwin-Charles +44 20 7548 3719 Notes to Editors: 1. Policyholders with questions on the reattribution proposals can call Prudential's dedicated Reattribution Service Centre on 0845 300 2641, 8am - 6pm Monday to Friday. Alternatively policyholders can write to Prudential, Stirling, FK9 4UE. More information on the proposed reattribution process can be found at www.pru.co.uk/reattribution 2. The Policyholder Advocate has established a website at www.prupolicyholdersadvocate.com 3. Eligibility In order to protect the interests of existing policyholders of Prudential'sWith-Profits Sub-Fund should reattribution proceed, the Eligibility Date hasbeen set at the close of business on 14 March 2007, the day before we announcedour intention to explore the possibility of a reattribution of the inheritedestate. To be eligible to benefit from this possible reattribution, policyholders must: (i) have held an eligible policy in the With-Profits Sub-Fund as at the Eligibility Date; (ii) and continue to hold that policy at the effective date of the reattribution. New with-profits policies taken out after 14 March 2007 will not carry anyinterest in any possible future distribution of the inherited estate in theWith-Profits Sub-Fund and therefore will not qualify for any payment from thispotential reattribution of the inherited estate, should it occur. Further details on eligibility can be found on Prudential's UK website at http://www.pru.co.uk/existing_customers/wp_subfund/ 1. About the Inherited Estate and reattribution The inherited estate - or 'estate' as it is often called - is money that hasbuilt up in the With-Profits Sub-Fund over many years from a number of sources,including contributions from shareholders. It is essentially an amount of moneyin excess of the amount we expect to pay out to existing policyholders. It isavailable to support current and future business by providing the benefitsassociated with smoothing and guarantees, permitting investment flexibility forthe fund's assets and maintaining the solvency of the fund. Reattribution of theinherited estate benefits policyholders in the With-Profits Sub-Fund in theshort term, by way of a payment, in return for giving up the possibility ofsharing in any potential future distribution from the estate. Reattribution willoccur only if it is in the interests of policyholders and shareholders. 2. FSA Guidelines on Reattribution The FSA's Conduct of Business Rules include rules and guidance on the processwhich a regulated firm, such as Prudential, should adopt if it is seeking toreattribute an inherited estate. They can be found in full in COB 20.2.39 toCOB20.2.52. Under these rules, a firm must nominate, then appoint an independentPolicyholder Advocate. After his appointment, the policyholder advocate shouldconsult with policyholders in order that he can adequately represent them innegotiations with the firm on the details of the proposed reattribution scheme.Following the conclusions of the negotiations, the PHA should write a report onthe negotiations which the firm should send to policyholders with the proposedreattribution scheme. By their nature, these activities need to be sequentialand are likely to stretch over a period of time. 3. Peter Bloxham Peter Bloxham retired as a partner in the international law firm, FreshfieldsBruckhaus Deringer in October 2006. Peter founded the Restructuring & Insolvencypractice at the firm in the mid-1990s, and headed it until 2005. His workinvolved complex investigations and negotiations with very large organisations. He qualified as a solicitor in 1977, joined Freshfields in the same year andbecame a partner in 1983. Peter worked on many high profile cases, including BCCI, Barings, BritishEnergy, Boo.com, Enron and Eurotunnel. He was a regular adviser to Lloyd's ofLondon, including major involvement in the formulation and implementation of theReconstruction and Renewal proposals. Peter's clients included the Bank of England, the Royal Bank of Scotland and UBSand he has advised the Financial Services Compensation Scheme. About Prudential Prudential plc is a company incorporated and with its principal place ofbusiness in England, and its affiliated companies constitute one of the world'sleading financial services groups. It provides insurance and financial servicesdirectly and through its subsidiaries and affiliates throughout the world. Ithas been in existence for over 150 years and has £256 billion in assets undermanagement as at 30 June 2007. Prudential plc is not affiliated in any mannerwith Prudential Financial, Inc, a company whose principal place of business isin the United States of America. Forward-Looking Statements This statement may contain certain "forward-looking statements" with respect tocertain of Prudential's plans and its current goals and expectations relating toits future financial condition, performance, results, strategy and objectives.Statements containing the words "believes", "intends", "expects", "plans", "seeks" and "anticipates", and words of similar meaning, are forward-looking. Bytheir nature, all forward-looking statements involve risk and uncertaintybecause they relate to future events and circumstances which are beyondPrudential's control including among other things, UK domestic and globaleconomic and business conditions, market related risks such as fluctuations ininterest rates and exchange rates, and the performance of financial marketsgenerally; the policies and actions of regulatory authorities, the impact ofcompetition, inflation, and deflation; experience in particular with regard tomortality and morbidity trends, lapse rates and policy renewal rates; thetiming, impact and other uncertainties of future acquisitions or combinationswithin relevant industries; and the impact of changes in capital, solvency oraccounting standards, and tax and other legislation and regulations in thejurisdictions in which Prudential and its affiliates operate. This may forexample result in changes to assumptions used for determining results ofoperations or re-estimations of reserves for future policy benefits. As aresult, Prudential's actual future financial condition, performance and resultsmay differ materially from the plans, goals, and expectations set forth inPrudential's forward-looking statements. Prudential undertakes no obligation toupdate the forward-looking statements contained in this statement or any otherforward-looking statements it may make. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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