Scottish Widows Financial Strength
Scottish Widows is strongly capitalised. We have been allocated the following ratings for financial strength:
- AKG B+ (Very Strong)
- Moody's Aa1 (Excellent)
- Standard & Poor's AA- (Very Strong)
Moody's ratings as at 22/05/08, Standard and Poor's rating as at 15/05/08, AKG rating as at 01/09/07.
AKG company profile and financial strength report (PDF 297kb)
Scottish Widows Position of Strength presentation (PDF 120kb)
Read Standard and Poor's latest outlook on Scottish Widows (PDF 24kb)
Scottish Widows' position of strength - Realistic balance sheet
Large with-profits offices, including Scottish Widows, publish realistic balance sheets within their FSA returns. Two ratios are available from the realistic balance sheet forms - the Working Capital Ratio and a Risk Capital Margin Cover ratio.
The Working Capital Ratio shows what proportion of realistic assets are held over and above realistic liabilities.
The Risk Capital Margin Cover shows how many times the Risk Capital Margin 'stress' buffer is covered by excess assets. This ratio is a guide to the firm's resilience to adverse conditions.
The court-approved Scheme of Transfer, which defines how Scottish Widows' business is run following demutualisation, explicitly provides that capital (surplus assets) held outside the With-Profits Fund supports the with-profits business. It is therefore more appropriate to view the Long Term Fund position as a whole, rather than the With-Profits Fund in isolation, when considering the financial strength of Scottish Widows. Scottish Widows' position as at 31 December 2007 was.
| Long Term Fund | With Profits Fund + Support Account* | |
|---|---|---|
| Working Capital Ratio | 12.2% | 5.3% |
| Risk Capital Margin Cover | 30.9 times | 12.4 times |
* The Support Account represents part of the capital that is held outside the With-Profits Fund that supports the with-profits business. This Account, a subset of the total support capital, is included in the published FSA With-Profits Fund realistic balance sheet.
Our Free Capital Ratio is 14.2%. The ratio, which is similar to the old free asset ratio, shows excess (or 'free') capital resources as a proportion of liabilities.
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