Surrender values
Sir: There are several points raised in the article on surrender values in 'A Spectator's Notebook' in the issue of January 11 on which I should like to comment.
So far as the Prudential is concerned, there has been no 'run on surrenders. The severe reduction in the market values of underlying securities has made it essential for us to reduce surrender values. Failure to do so would have unfairly penalised policyholders who maintain their contracts until the end of the agreed term of the contract. The extent of the reduction in surrender values varies from one office to another and is influenced, among other things, by the length of time since the last revision took place, but certainly •as far as the Prudential is concerned your statement that the probable extent of the reduction is 70 per cent is far from the truth.
Contrary to the statement in the article, the practice of this Company is to make full allowance in the surrender value for the cash value of the reversionary bonuses which have already been allotted to the policy. Whilst the cash value is less than the nominal value, by no stretch of the imagination could it be said that someone who surrenders "forgoes all the bonuses. accrued to him."
Finally, I am surprised at the statement in the last sentence of the article for, so far as the Prudential is concerned, the net return to a policyholder who pays all the outstanding premiums to maturity prior to surrendering his policy would be no greater than by taking the normal surrender value. It is clear that the writer of the article misunderstood some of the facts. We are pleased to talk to the press, and if on another occasion the writer would like to approach us before writing an article we should be pleased to talk to him.
W. G. Haslam Chief General Manager, The Prudential Assurance Company Limited, 142 Holborn Bars, London ECI
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