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The group said its capital surplus had dropped by just 3% to £3.4 billion at the end of September — during the height of the financial storm. It said if equity markets were to fall a further 40% it would still have a capital surplus of £1.9 billion.

However, Standard Life followed Norwich Union and Friends Provident in increasing its exit penalties. Despite already having the highest penalties at 25%, customers could now face a 30% reduction in their payouts. It also cut final bonus payments by up to 13%.

Friends Provident

Friends Provident’s share price has fallen 50% this year. Last week it reported surplus capital of £1 billion, and scrapped plans to sell its F&C asset-management unit. It will instead spin off its 52% stake in F&C, valued at about £100m, against £500m last year.

“The main question is how long Friends can stay independent, and how long [chief executive] Trevor Matthews has to turn things round,” JP Morgan Chase analyst Andrew Hughes said in a note to clients.

Prudential

Prudential reported a surplus of £1.2 billion last month. However, fears surround its financial health. Its credit-default swaps — a measure of the financial strength of a company with the lower the better — remain among the highest applied to global insurers at just under 300 basis points. Aviva’s are around 150 basis points.

Legal & General

L&G is said to hold more capital in reserve than almost any other life assurer at £2.9 billion.However, last week, 800,000 with-profits savers with Legal & General suffered a cut in final bonus rates of up to 9%.

Scottish Equitable

Policyholders and investors can breath a sigh of relief after the €3 billion (£2.4 billion) recapitalisation of Scottish Equitable’s parent company, Aegon NV, by the Dutch government. Alex Wynaendts, Aegon chief executive, said: “There should be no doubt whatsoever about Aegon’s ability to fulfil its long-term obligations.”

Should I stay or go? Do not cash in simply because of solvency fears. There may be tax advantages to sticking with your endowment or valuable guarantees on your pension.

If not, and you have another five to ten years to run before cashing in, you could get a surrender value from your insurer and discuss whether you could get superior returns elsewhere.

Costs put couple off Pru bonds

In August Gordon and Andree Grant, of Buckie, Moray, cashed in their £50,000 Prudential with-profits policy and invested in a discretionary portfolio managed by Towry Law, their wealth adviser.

Grant, 67, said: “I became aware of the enormous amount of commission being paid to advisers who sell the bonds, and I thought they were rather opaque — you never knew where you stood. There was always a change of market value reductions being applied and I wanted to get out before there were exit penalties.

“We were too exposed to the stock market for our comfort and all our money was tied up in the insurance company. I wanted a better spread-out portfolio.”

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