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Settling for the next best thing.

Publication: Financial Adviser
Publication Date: 04-OCT-07 		Format: Online
Delivery: Immediate Online Access
Full Article Title: Settling for the next best thing.(reports of Prudential Assurance Company Ltd. and Aviva PLC)

Article Excerpt
Byline: Reattribution of with profits funds' estates is back in the news with Prudential and Aviva's announcements

This article looks at what reattribution is all about, how it arose and how it is being dealt with today. Consider a bookmaker accepting bets. He may offer 1000 to 1 on Elvis Presley being alive when everyone knows he is dead. Money for old rope. However, he may also offer 100 to 1 on a rank outsider winning a race.

The true odds might be 200 to 1 so the bookie is on to a good thing. Once in a while the unexpected can happen, that horse might actually win.

If the bookie had accepted AGBP100,000 in bets on that horse, he now has to find AGBP10m to pay out. A fair proportion can come from the bets laced on other horses in that race.

However, the rest has to come from other reserves. A bookie must always have adequate capital to settle his obligations. When he first starts out he has some capital and he limits his book to make sure that his...



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