# = pounds sterling

HM Treasury News Release
214/98                                       21 December 1998
----------------------------------------------------------------

                   GUARANTEED ANNUITY OPTIONS
                                
       Treasury Provides Guidance to Insurance Companies
                                
                                
The Treasury has written to all life insurance companies on
the issue of how the costs of guaranteed annuity options
should be met.

The letter provides guidance to companies on the principles to
be taken into account in determining their approach to meeting
the costs of guaranteed annuity options. It is designed to
ensure consistency in factors taken into account by life
offices, rather than to prescribe the approach to be taken.

The letter makes clear that different approaches are likely to
be appropriate depending on the nature of contracts involved
and how they have been presented to policyholders. It
emphasises the importance of the approach adopted being
consistent with policyholders' reasonable expectations.

NOTES TO EDITORS

1.   The text of the letter is attached.

2.   If you have access to the Internet, you can find this
     news release and other Treasury information at
     http://www.hm-treasury.gov.