Prudential UK with profits bonus rates

Prudential has announced that it is reducing final bonus rates on its with-profits policies in response to the sustained downturn across world markets and the continuing poor investment environment.

The financial strength of the Prudential With-Profits Fund means that there is no need to change the annual bonus rates currently being added to policies.

In addition there will be no change to the company's approach to MVRs, although this is reviewed regularly in the light of emerging market conditions. David Belsham, Chief Actuary at Prudential said: "Today's change reflects the consistent way in which we have managed the Fund to ensure a fair approach to the setting of bonus rates. In an environment where markets have fallen significantly, our policyholders have benefited from the downside protection provided by our Fund. This demonstrates the benefit of being invested in Prudential's strong With-Profits Fund which is supported by an Inherited Estate of £6.2 billion as at 30 September 2008. It has never been more important to have a strong Inherited Estate to help support the security and ongoing financial strength of the Fund for the benefit of our current and future policyholders. Despite volatile markets, Prudential with-profits has delivered what it said it would - smoothed returns to policyholders, who will see only a small change in their year-on-year policy values.

"We believe today's move is prudent and will ensure the continuing long-term strength of the Fund and protect the ongoing interests of our long-term customers. It is the right course of action to take at this time.

"Our With-Profits Fund is the largest and one of the strongest in the industry and our overriding priority has always been to maintain the long-term financial security of the Fund and to continue delivering strong performance for the benefit of our policyholders. The Fund has outperformed the market and is providing our customers with good returns compared with many other investment options, especially during such challenging market conditions".