Category: media

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Age UK equity release deals under fire

In the Telegraph today.  Continues the story that began in Private Eye about Age UK inviting us to take out equity release with the help of its ‘Age Co UK Equity Release Advice Service’, provided by Hub Financial Solutions Ltd, owned by Just Group.

You can read the article for yourself, the crux of it is that, according to the article, Hub Financial routinely recommends equity release deals from its own parent company (i.e. Just).

While it makes clear that it offers only a selection of the plans sold by these firms, Telegraph Money can disclose that the way its advice process is structured means that in most cases a customer will be offered a deal by just one panel member – Just.

Precisely why the customer in most cases is offered the Just product is not disclosed. Hub claim that “The panel at any point reflects the attractiveness and competitiveness of each loan’s design, features, rate and service levels.” On the other hand, the Telegraph hints that “In 2016 Age UK was criticised by the Charity Commission for recommending an energy tariff, through a business partnership with E.On, which was not the cheapest available”.

Kevin and I are quoted.

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Minority of one?

Jonathan Ford’s article last week (Investors should beware the insurance magic money tree) predictably attracted a lot of comment. A few observers, noting Martin Taylor’s famous comment that the “actuarial convention” by which the composition of an insurer’s assets determines the size of its liabilities was “one of the weirdest emanations of the human mind”, suggested that poor Martin was out of kilter with the rest of the Bank, or the PRA.

Far from it.

Continue reading “Minority of one?”

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Matching adjustment open to abuse

FT letters today.

 It is unfortunate that John Taylor (Letters, April 18) elevates “one of the weirdest emanations of the human mind”, the matching adjustment, to the status of a “fundamental actuarial principle”.

Matching adjustment allows life companies to buttress their balance sheets by creating tens of billions in fake capital, and makes companies appear to be in much better financial shape than they are. There are companies whose capital would be wiped out but for matching adjustment.

It is also naïve to think that matching adjustment is not open to abuse merely because it is consistent with rules that the companies lobbied for. For life companies, matching adjustment provides the ultimate way to game the capital rules — in some cases, with no capital. The Prudential Regulation Authority should put a stop to it.

Dean Buckner

Kevin Dowd

The Eumaeus Project and Durham University, UK

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NoCA presentation

The NoCA talk scheduled for tomorrow has already been uploaded here. I will be talking through the slides for about 40 minutes, but there will be plenty of time for questions afterwards.

For those who like spreadsheets, our work in progress is here, which values an ERM using the Cairns-Blake-Dowd model. There are 6 stress tests given on slide 12 which are consistent with the spreadsheet. Please report any errors, questions etc. through the contact form.

Looking forward to discussing tomorrow.