Rival insurers say Standard Life isolated over solvency problems

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The Independent Online

Standard Life was looking increasingly isolated from its peers yesterday over its solvency difficulties, after rival insurers said they had adopted the regulator's new regime with relative ease.

Friends Provident, Prudential, Britannic, Aviva and Legal & General all said they had already reported numbers on a "realistic" basis to the Financial Services Authority. The regulator is introducing a new set of rules for calculating solvency that is supposed to give an enhanced understanding of financial strength. The new rules require companies to calculate their liabilities differently. It emerged this week that Standard is in urgent negotiations with the FSA in calculating its balance sheet liabilities.

Rival insurers, however, have said they are comfortable with the new rules. A spokesman for Pru said: "We have managed our fund on a realistic basis for some time and are very comfortable with the strength of our life fund."

Britannic said it too had already switched to realistic solvency. Friends Provident also confirmed it had no concerns over its capital position under the new rules.

A spokeswoman for Aviva said: "We have welcomed the introduction of realistic solvency calculations and are quite happy with the approach."

Market analysts believe Standard may be having particular difficulties with the new regime because it has given a large number of policyholders guarantees that have become a significant liability. It also stayed heavily invested in equities throughout the stock market downturn and held back on cutting bonuses.