HC Deb 24 July 1998 vol 316 cc750-2W
Mr. Derek Twigg

To ask the Chancellor of the Exchequer what is the Government's policy on the inherited estates of life offices. [52749]

Mrs. Liddell

The Government's position on the inherited estates of life offices was set out in a statement by the then Minister for Corporate Affairs in February 1995. The DTI, which was then the responsible regulatory authority, applied the principles set out in that statement in reaching agreement with four life offices for a restructuring of their long-term funds, and a clarification of the attribution of the interests of policyholders and shareholders in the long-term fund.

A common feature of these cases is that they involved a particular type of business known as "industrial business". Historically, there was a lack of clarity over the development of these companies' approach to dealing with surplus arising in respect of some industrial business policies written earlier this century. Consequently, there was no clear evidence as to how surplus which had built up from these policies should be properly attributed between policyholders and shareholders. The DTI therefore reached agreement with the companies on an attribution based on reasonable assumptions, in line with the February 1995 statement.

In considering any other proposals for clarification on unattributed assets, the Treasury will continue to be guided by the principles set out in the DTI statement of February 1995, and apply them to the particular circumstances of each case. In doing so, the Treasury will be particularly concerned to ensure that policyholders' interests are fully protected.