Where will it all end? We have Resolution Life seeking to merge with Friends Provident, and then we have the Pearl Group teaming up with Royal London trying to takeover Resolution prior to the successful merger outcome. On top of that we have Standard Life and Swiss Re. threatening to make a bid for Resolution prior to the merger with Friends Provident. What a mix up!
At the root of all this, has to be the enormous surpluses created within these closed zombie funds, but we have to ask how have they been generated in the first place?
Closed funds traditionally are cheaper to run than active funds - to state the obvious, and with better management skills we would expect to see large savings in administrative costs etc. but to our mind this does not fully answer the question where has all this money come from.
Although Resolution's Chairman advocates "a compelling good reason" for shareholders to agree the merger with Friends Provident no mention is made of a similar good reason for "with profit"policyholders, the bedrock of any Life Office who let's face it without them investing in the first place down the ages, nobody would have anything to merge with!!!
Scottish Amicable a closed fund managed by Prudential have recently started to improve their bonus payouts to existing policyholders, and it is hoped this trend will continue, and be emulated right across the board.
Views on this blog article and/or more infomation is welcomed.