Axa Sun Life cuts bonus payments

Life insurer Axa Sun Life has lowered annual bonus payouts for up to 50,000 with-profits investors.

Regular annual bonus rates on former Axa Equity & Law with-profits policies are to be cut from 2% to 1% for 2004. Axa blamed a poor stock market performance for the cut, adding that recent gains have not yet offset the market falls seen in 2001 and 2002. The cut will hit an estimated 3% of Axa's policyholders. The rest will know their fate in March.

The cuts on Axa's policies will mean a policyholder who had invested £50 a month into an endowment policy for the past 25 years would see a final maturity payout of £46,998. This equated to a annual investment growth rate of 8% Axa said. With-profits policies are designed to smooth out the peaks and troughs of stock market volatility. However, heavy stock market falls throughout 2001 and 2002 forced most firms to trim bonus rates on their policies. "The stock market has grown over the past 18 months, however not enough to undo the damage that occurred during 2001 and 2002," Axa spokesman Mark Hamilton, Axa spokesman, told BBC News. Axa cut payouts for the same investors last January.