Norwich Union has reduced the final bonus on its with profits life and pension policies in the light of the continuing poor performance of the UK stock market. The FTSE 100 index has fallen by around 14% during 2001 with the prospect of further volatility and uncertainty.
Norwich Union has reduced the final bonus on its with profits life and pension policies in the light of the continuing poor performance of the UK stock market. The FTSE 100 index has fallen by around 14% during 2001 with the prospect of further volatility and uncertainty.
Reductions in final bonus rates have been made to bring payouts more closely in line with the investment performance of the with profits fund. However payouts to policyholders continue to compare well with other types of investment. All policies continue to receive bonuses in excess of our investment earnings.
The reduction in returns – as a result of lowering the final bonus - will mean total payouts on maturing policies being up to 5% lower than those previously paid. There are no changes to the regular bonus rate.
The underlying financial strength of its with profits fund has enabled Norwich Union to smooth the performance of its with profit policies resulting in a lower reduction than actual investment conditions would dictate.
Commenting on the changes, Chief Actuary Mike Urmston said: “The current state of the stock market has affected all investment related products – not just with profits. The changes we have implemented in relation to the final bonus are part of the prudent management of with profits funds and are as a direct consequence of investment markets.
"Customers with policies maturing in 2001 will still enjoy good rates of return on their investment - for example 25 year with profits mortgage endowments are on average producing a return of 12% a year compared to inflation of 4.6% over the same period."
Notes to Editors
- CGU plc and Norwich Union plc merged on 30 May 2000 to create CGNU plc, the UK’s largest insurance group and one of the top-five insurers in Europe with substantial positions in other markets around the world, making it the world’s sixth largest insurer based on gross worldwide premiums.
- CGNU’s principal business activities are long-term savings, fund management and general insurance, with worldwide premium income and retail investment sales from ongoing business of over Ł27 billion and assets under management of more than Ł200 billion.
- From October 2000, the combined life and pensions, general insurance and retail fund management businesses in the UK operate under the Norwich Union brand, while the institutional investment business operates under the Morley Fund Management brand.
- CGNU’s news releases are available on the internet on this site
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