Reputation
For many years with-profit funds were very popular and large numbers of such policies were sold within the United Kingdom and in the United States.
Recently with-profit funds have had a large amount of negative press due to the introduction of MVRs. This has led people to question the opacity in setting bonus rates and the over-complexity of the product in general. Simple to understand products have been encouraged recently and the nature of the conventional with-profit fund does not fit with such simple policies. Alternatives such as a more fund-type product, CPPI or smoothed managed funds are yet to show a significant popularity amongst consumers.
Secondly the Equitable Life company sold a large number of policies with guarantees in the contract. After a series of court cases the company was required to meet these guarantees, which it did not have the money to meet. This resulted in a reduction of the value of all the policies issued by the company. This reduction received considerable negative publicity and damaged the reputation of with-profit policies.
Read more about this topic: With-profits Policy
Famous quotes containing the word reputation:
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—Oliver Wendell Holmes, Sr. (1809–1894)
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—Oscar Wilde (1854–1900)
“A prince must be prudent enough to know how to escape the bad reputation of those vices that would lose the state for him, and must protect himself from those that will not lose it for him, if this is possible; but if he cannot, he need not concern himself unduly if he ignores these less serious vices.”
—Niccolò Machiavelli (1469–1527)