By Andrew Verity BBC personal finance correspondent

The growing problems in the UK insurance industry could be worse than feared, according to a leading insurance company.

And that could spell disappointment for millions of life insurance policy holders, who face the increasing risk of losing billions of pounds through further cuts to the value of their policies.

At least a dozen British life insurers are breaching official solvency requirements, the chief executive of a major UK life company has alleged.

We find it interesting that we are virtually alone in disclosing that particular fact when quite obviously there are at least a dozen firms in a similar if not a worse position

Andrew Mohl, chief executive, AMP

Andrew Mohl, the new chief executive of AMP - which owns the British life insurers Pearl, NPI and London Life - said the Financial Services Authority (FSA) informed his company that a number of its rivals were also breaching the rules.

"We find it interesting that we are virtually alone in disclosing that particular fact [of breaching the solvency rules] when quite obviously there are at least a dozen firms in a similar if not a worse position," Mr Mohl said.

"We certainly find it unfair that our fund is named and customers are alarmed when we are pretty much one of a pack."

Worries mount

The Financial Services Authority has denied Mr Mohl's claims that it has a list of at-risk life insurers.

"We have no idea what Mr Mohl is referring to or where he is getting his information - certainly not the FSA," it said in a statement.

The authority reassured investors that even if insurers did suffer a shortfall, they were far from bankrupt.

Insurance groups Prudential and Standard Life defended their own positions, with Prudential telling BBC News Online that it had "one of the strongest free asset ratios in the sector".

Standard Life said "Our solvency is absolutely rock solid and secure".

However, many ratings agencies have downgrading their view of the UK life insurance industry, warning investors that insurers were in a financially weak position.

Impact

With the stock market at barely half its peak value, there is no doubt it has had a devastating impact on life insurers funds, which have lost more than �130bn.

Most life insurers have already made cuts in the value of customers' policies by slashing the non-guaranteed element of their investments - the so-called "terminal bonus".

Neither the life insurers nor the FSA has revealed exactly how hard that has hit customers' funds.

But if the present trends continue, many millions of policy holders will find that their terminal bonuses - which in some cases make up a substantial portion of their policies - are cut further.

Twenty million people have their life savings tied up in endowment, pension, and investment policies run by life insurers.