AMP claims a dozen UK rivals are in breach of solvency rules

AMP, the Australian financial services giant which owns Pearl in the UK, yesterday said at least 12 rivals have breached requirements for the minimum level of capital they must hold to satisfy City regulators. Pearl has for some months failed to meet the Financial Services Authority's funding threshold.

Andrew Mohl, who took over as AMP's chief executive four weeks ago, said the company was in talks with the FSA over how it would bring the fund back above the statutory solvency level before the end of the year.

He pointed to several competitors that are also talking to the FSA because they have fallen below this statutory benchmark. Mr Mohl said: "A dozen are in a similar if not worse predicament. It is unfortunate that our own fund is highlighted and customers are alarmed when we are one of a pack."

His statement raises fresh doubts about the UK life insurance sector's financial strength and comes after the FSA said recently that most companies could cope with further falls in the FTSE 100.

The FSA never comments on the individual companies it is monitoring closely. The regulator is understood to believe that while most life insurers could handle further declines in the value of their assets, a few would struggle badly.

Mr Mohl's comments came as he unveiled a radical overhaul of AMP's struggling British businesses. Five senior staff would step down including Tom Fraser, managing director of UK Financial Services.

AMP also owns London Life and National Provident Life in the UK. They will be bundled with Pearl into a new "mature" division that will be closed to new business from the end of next year. It will move some of its salesforce from the mature division to a new area, called its "contemporary" business that has growth potential, including the financial adviser Towry Law.