Insurers 'sitting on massive cash pots'

MORE than £100bn of policyholders' money is languishing in closed with-profit funds, according to insurance expert Ned Cazalet.

Big insurers including Royal & SunAlliance, NPI and Equitable Life have pulled up the drawbridge on their funds because of strains on their capital strength.

Some experts warn that returns on such funds can suffer because they invest heavily in bonds, limiting the scope for future growth in bonuses.

The value of with-profit funds overall dropped £50bn last year to £330bn because of falling share prices.

Cazalet warns that Standard Life has a 'painfully thin' cushion of excess assets and its solvency position is 'emaciated'.

The mutual, which faces fresh calls to list on the stock market from a campaign led by retired teacher David Stonebanks, has seen its excess assets ratio fall from 18.9% last year to just 0.6%.