Phoenix Ireland




September 2005
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Dear << Salutation >>


I have recently been appointed as Chief Executive of Abbey’s Insurance and Asset Management Division, which is responsible for all of Abbey’s Life Assurance business. As part of this role, I also am a member of the Abbey Executive Committee.

One of my first tasks is to provide a greater level of service for all our With Profits customers.

My goal is to be completely open and transparent with you and your customers concerning their investments with Scottish Provident.

We will soon be writing to existing policyholders of Conventional With Profits business to inform them of certain changes in the investment strategy of our With Profits fund. This correspondence will be shortly available on our website ( and will consist of

  • A cover letter from myself

  • A report from the Scottish Provident Limited Supervisory Group in respect of fund performance and specifically reviewing 2004, and

  • A summary of the forthcoming changes to the Scottish Provident Limited Principles and Practices of Financial Management which will be implemented in January 2006.

As you know all too well, the prolonged fall in stock markets between 2000 and 2003 caused many issues for almost everyone involved in the investment industry. As a major provider of With Profits investments, we have had our own particular challenges.

This letter and enclosures are intended to let you and your clients know of the decisive and determined action we are taking to achieve the best possible outcomes for our customers, for intermediaries and for our Insurance & Asset Management division going forward

Enclosed, you will find some detail regarding With Profit misconceptions and our policy of commitment, openness and transparency.

You can also expect to receive more information from us over the coming months, helping you advise and support your With Profits customers.

Of course, the extent and duration of the recent stock market fall means that quick fixes are impossible. But nonetheless, significant progress has been made over the last two years, improving the future prospects for our customers.

Similarly, I would like to take this opportunity to clarify my own views. In the past, I have been an outspoken critic of the With Profits concept, focusing particularly on the ‘magic black box’ way in which the industry once encouraged the idea that these funds had access to some investment panacea. As we all know, the stock market falls laid that myth bare.

However, in some cases the pendulum has swung too far the other way. Some of you, I know, see no redeeming features in With Profits. Whatever your opinion of these products, my goal is to be completely open and transparent with you and your customers concerning their investment.

Some of the issues regarding With Profit contracts are complex but, in my view, a With Profits investment largely boils down to being a balanced managed fund, often with guarantees. It is fair to say that much of the industry under-priced these guarantees in the past, and we want to ensure our mutual customers are aware of the benefits of these guarantees when early surrender is being considered.

While there are no current plans to re-open Scottish Provident Ireland to new business, we are committed to open communication with you and with our mutual customers to tackle the crucial issues of customer understanding and perception of with profits contracts. We are also striving to deliver high standards of service.

If you would like to speak to someone directly about the information provided in this letter, you can contact Shay Hiney, Intermediary Relationship Manager, on 01 638 2905, email Shay or I at

Yours sincerely,

Paul Bradshaw

Chief Executive, Insurance & Asset Management Division - Abbey


Scottish Mutual International Limited is regulated by the Central Bank of Ireland.
Phoenix Life Limited is authorised and regulated by the Financial Services Authority in the United Kingdom .