Free asset ratios
, which measure the extent to which a life office's assets exceed its liabilities, have traditionally been used as a measure of financial strength.
L&G's free asset ratio
in 2001 is likely to decrease following the market trend, reflecting the underperformance of the equity markets, but it will remain in line with other leading UK life groups.
Chairman David Newbigging said Friends' free asset ratio
, the key measure of a life company's solvency, was ten per cent at the end of June, down from 12.
The company said its free asset ratio
- the level of assets it has after meeting its liabilities and solvency requirements - remained strong at 13.
But then yesterday a report by Money Marketing Online and actuaries KPMG found the average free asset ratio
, which measures the level of life insurance companies' assets not needed to meet liabilities and solvency margins, had fallen from 10.
On a standalone basis, at December 1997 NUL&P also exhibited an improved nonlinked free asset ratio
The traditional measure of financial strength in the life and pensions' sector is a group's free asset ratio
- ie, the relationship of its freely-available assets to its total assets.
Good capitalization: SMA's published solvency is comparable with peers, with a non-linked free asset ratio