How does all this turmoil affect Skandia customers?
The assets you hold as a Skandia investor, whether in a pension, ISA or other product, are in the form of units in collective investment funds. Their value is worked out daily, based on the changing market value of their underlying mix of investments (eg stocks and shares, property and bank deposits).
The value of your units will typically go up and down over time, whatever the prevailing market conditions. But remember that any loss or gain is only ‘crystallised’ when you sell your units.
Skandia offers a wide range of funds that you can switch between without cashing-in your pension, ISA or other product. (We don’t currently make any administrative charge for switching.) The funds available for you to choose from offer different levels of exposure to all the various asset classes (stocks and shares, bonds and government gilts and cash) and different geographical opportunities across the world’s economies. Depending on market conditions and your attitude to risk, your adviser will be able to recommend the right mix of investments for you and switch between funds as your attitude changes.
What should I do if I am worried about the current situation?
Investments are usually for the long term, so short-term volatility is not necessarily a reason to make drastic changes. If you are concerned about the impact of market conditions on the performance of your portfolio, you should contact your financial adviser in the first instance. They can assess the current risk profile of your fund holdings and if necessary adjust it to ensure that it matches your own attitude to risk. You can get an up-to-date policy valuation by using our secure online customer services at www.skandia.co.uk.
What if I need my money now or I am about to retire?
There are a number of options that you can consider in the current climate. Whatever your immediate aims, you should speak to your financial adviser to determine the best approach for your circumstances.
Is the picture really as bleak as the headlines suggest?
Looking forward, considerable uncertainty remains. It is unclear how much of a pick-up we will see in the global economy in the second half of the year, and the debt problems in the eurozone remain far from resolved.
On the other hand, corporate earnings reports continue to show strong growth despite the weak overall backdrop. In addition, recent market falls make stocks and shares even cheaper relative to bonds and cash. European stocks in particular look very cheap on a historic basis.
How is Skandia itself affected?
Skandia's business model is almost exclusively built around providing investors with access to a wide range of funds from third party fund managers. As a result we do not rely heavily on borrowing or the use of derivatives like some more traditional insurance companies.
Skandia's minimal exposure to with-profit and guaranteed products means we are very well placed to withstand the current market turmoil.
Skandia remains profitable and its robust business model and tight control on costs is evidenced by its operating profit of £53 million for the first half of 2011.
We have robust financial strength and hold substantial surplus capital in all our UK companies, in case of an unforeseen 'rainy day' or general financial market turmoil. This surplus capital is held in safe assets such as cash and governments bonds. The table below summarises the latest financial position for each company in Skandia UK, as of 30 June 2011, since when there has been no material change despite recent market volatility.
| |
Skandia Life |
Skandia MultiFunds Assurance |
Skandia MultiFunds Ltd |
| Regulatory Capital |
£62.0 million |
£6.2 million |
£11.6 million |
| Surplus Capital - above regulatory capital |
£92.7 million |
£21.1 million |
£39.9 million |
| Solvency Ratio - above regulatory capital |
250% |
442% |
445% |
Skandia's customers benefit from the different investor protection schemes in the regulated areas in which we operate.
What protection would I have if Skandia were to get into financial difficulty?
Generally, Skandia UK customers are protected against Skandia going into liquidation through the Financial Services Compensation Scheme (FSCS). This is an industry-funded organisation which provides customers of UK financial firms with a safety net should any regulated firm be unable to meet its financial obligations.
What protection would I have if one of the fund groups (as opposed to Skandia) were to become insolvent?
Investors with Skandia MultiFUNDS:
If you have invested into a fund group that goes into liquidation, Skandia MultiFUNDS Limited can claim against the Financial Services Compensation Scheme (FSCS) on your behalf. You will be covered up to a maximum of £50,000 for the money you hold with each fund group, as above.
Fund groups are also covered by the FSA's regulations regarding segregation of client and company money, so in the event of liquidation there shouldn’t be any client financial loss provided the accounts are in good order.
Investors with Skandia Life Assurance Company Limited and Skandia MultiFUNDS Assurance Limited:
If you have invested into a fund group that goes into liquidation, then Skandia Life Assurance Company Limited and/or Skandia MultiFUNDS Assurance Limited are unable to claim compensation from the FSCS on your behalf as you are not the legal owner of the funds.
Fund groups are also covered by the FSA's regulations regarding segregation of client and company money, so in the event of liquidation there shouldn’t be any client financial loss provided the accounts are in good order.
I am an investor in the Skandia Self-Invested Personal Pension (SIPP). What level of protection do I have for my holdings in the SIPP cash account?
Sippdeal Trustees Limited is the trustee of the Skandia SIPP scheme. The primary SIPP cash account is held with Bank of Scotland (BOS), part of Lloyds TSB, and in the name of Sippdeal Trustees Limited.
In the event of any default, Sippdeal Trustees Limited would be able to claim on behalf of the beneficiaries as if they were a direct depositor in BOS, ie each SIPP holder would have protection of up to £85,000 assuming they had no other investments with BOS.
Skandia SIPP customers should contact the Skandia SIPPcentre on 0870 060 3999 or their financial adviser for clarification on their investments.
How is the Old Mutual Group affected?
Old Mutual is an international financial savings and wealth management group with a wide range of businesses. Internationally its main operations cover asset management, banking, life assurance and general insurance. It is the parent company of the Skandia Group.
Despite the falls in stock markets, the Old Mutual Group remains well capitalised and has sufficient liquidity to support regulatory and operational needs for the foreseeable future. The capital surplus of the Old Mutual Group remains strong at £2.0 billion as at 30 June 2011.
Each of the companies in the group has investments to meet the fund or savings objectives of customers. These will be affected by volatility in the markets depending on the asset type, sector, and any protection offered. Each of the companies in the group has sufficient capital and liquidity to support their regulatory and operational needs.