Pearl Group announced today that it will start distributing Pearl Assurance’s inherited estate* to its one million with-profits policyholders. Distribution will take place through enhancements to policyholder asset shares** on payouts with the first estate distribution being included in claim payments as early as July 2007. The most recent valuation estimates the Pearl estate to be worth more than £500million of the £10billion fund.

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Pearl believes that it is leading the closed with-profits funds sector in designing and implementing a fair approach to distributing its estate to policyholders. Pearl’s innovative approach to risk management will enable the estate to be distributed to policyholders earlier and more fully than is common industry practice. Pearl’s plans have been agreed in principle with the FSA.

Earlier this month (ref January 3rd press release) Pearl announced it has increased the equity backing ratio (EBR***) to 50% in the Pearl with-profits funds in a move that can potentially increase investment returns. The EBR has increased to 50% from 25% in the past 18 months as the fund has gained renewed capital strength.

Hugh Osmond, Pearl Group Executive Director said, “The release of the estate and the re-risking of Pearl in the last 18 months are both unprecedented in the closed fund sector. This demonstrates how the new skills and techniques we are applying to closed life books have quite dramatically changed the prospects for Pearl policyholders in a short time.”

Jonathan Moss, Pearl Assurance Managing Director said “The estate distribution will enable Pearl Group policyholders to benefit from tangible increases in payouts when their policies mature. Pearl is unlocking value for policyholders in ways new to both open and closed life companies.”

If you are a member of the press or media, please visit www.pearlgrouplimited.co.uk for further information.

* The inherited estate is the assets held by the with-profits fund in excess of liabilities.
** ‘Asset Share’ is a policyholder's share of the with-profits fund. It is the policyholder's money paid in, plus the investment return it has earned, less the expenses charged.
*** The equity backing ratio (EBR) is the level of investment in equity and property. The Increases in EBR should therefore improve long term investment performance of the funds for policyholders as assets such as equities and property have historically generated higher returns than fixed income investment.