AGE CONCERN, the charity for elderly people, is at risk of losing £3 million on a joint venture with Norwich Union selling long-term care and life assurance products.
Age Concern Financial Partnerships has run up losses of at least £1.3 million since it was set up in 1999. Age Concern additionally faces repaying £1.7 million in start-up funds to Norwich Union. The funds must be repaid if financial targets are not met.
Sources blame the losses on the high running costs of the venture, which is staffed by lawyers and actuaries who previously worked for AXA PPP, the healthcare group. Some managers are said to draw salaries of more than £100,000 and drive expensive corporate cars.
Age Concern defended the salaries, saying that it was obliged to pay market rates.
Most insurers have pulled out of the market for insurance-based care products, which provide funds to cover the cost of nursing home or medical care in old age. The plans have high front-end charges and purchasers may get nothing back if they cancel within five years. Norwich Union no longer offers this type of plan and AXA PPP withdrew last year, citing poor sales.
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Age Concern Financial Partnerships made a loss of £188,994 in 2000, £585,103 in 2001, and £559,025 in 2002.
One former business associate, who wanted to remain anonymous, questioned the need for such an expensive operation: “Age Concern Financial Partnerships is selling a branded Norwich Union product and doesn’t need lawyers and actuaries. It is running up losses estimated at £50,000 a month. This is all money that is lost to Age Concern, a registered charity that should be helping little old ladies.”
Age Concern played down the impact of the losses, saying that Age Concern Enterprises, the charity’s commercial arm, had generated profits of more than £80 million over the past five years. A spokesman said: “Age Concern is not at risk of losing moneys of the magnitude suggested. We understood that this venture involved an element of risk; however, we judged this investment to be appropriate.”