Perceived wisdom historically tells us stock market success is all about reinvesting earnings from dividends, so why therefore did this Company recently cut its dividend. We are told by the L&G management because of the need to preserve capital to maintain solvency margins, which is exemplary and necessary, but why is it other majors have not felt the need to do so, and in the case of the Prudential they actually increased their dividend payment to shareholders.
As we write Assurers capital bases are being stress tested by the FSA, and we hope none are found wanting, which should auger well for the future, and return some semblance of respectability to this sector of the financial community.
Although it would be too optimistic to imagine the "with profit" funds are performing well, at least they should still be with us in a few years time, and not done a Madoff.