Standard Life today became the latest insurer to cut the bonuses it pays on long-term savings policies, reducing rates for the fifth time in two years.

Europe's biggest mutual life insurer said the move would reduce payouts on its with-profits policies by an average of 7%.

The company defended its decision to make the cut despite assets in the with-profits fund rising by an estimated 14% during 2003, saying bonuses had been reduced to reflect long-term investment conditions going forward.

It added that last year's increase followed three years of falling stock markets.

But the move is further bad news for people who took out an endowment mortgage with the company, more than 70% of whom were already facing a shortfall in the projected maturity value of their policy.

With-profits policies are long-term investments which aim to smooth out stock market volatility, and are often taken out as a pension or endowment mortgage.

Today's announcement comes just over two weeks since Standard Life said it was looking at the options for changing its structure, including a possible stock market flotation.

It also warned policyholders that following discussions with City regulator the Financial Services Authority over the implication of a new ''realistic'' accounting regime, it would no longer be able to include the benefits of being a mutual when calculating future policy values.