Zurich bails out deposit funds

Zurich has been forced to bail out its fixed-interest deposit funds after exposure to potentially toxic mortgage securities.

Both the fixed-interest deposit pension fund and the fixed-interest deposit life fund have received a total of £18m directly from Zurich to compensate for problems with mortgage-backed securities.

The pension fund is worth around £375m, with a 10% exposure to the risky assets, while the life fund is 5% invested in mortgage securities.

Both funds are managed by Threadneedle, which has seen its own money market fund plunge more than 10% over the past three months.

Zurich's pension fund was also exposed to Lehman Brothers, with shareholders required to make a one-off payment to prop up the value of the fund at no cost to investors.

As a result of the recent payments, the fund's value has flatlined, recording no growth over the past three months.

The move follows similar problems with Standard Life's Pension Sterling Fund. Standard Life's shareholders paid £100m to bail-out the fund, which had invested in toxic mortgage assets.

Contact: John Bakie, Tel: 020 7484 9805, e-mail: John.Bakie@incisivemedia.com