Norwich Union is changing its Guaranteed Fund with effect from 27 May 2003.
Norwich Union is changing its Guaranteed Fund with effect from 27 May 2003.
From this date, the Norwich Union Guaranteed Fund will offer:
- A higher Equity Backing Ratio than the current Guaranteed Fund
- Unlimited growth potential (no upper limit cap)
- A money back guarantee at fifth anniversary of the Fund
- Flexibility for investors to switch to other funds prior to the fifth anniversary – they are not locked in
- A management charge which remains the same as the current Guaranteed Fund, and which is allowed for within the unit price.
The revised Fund will be available for any new business on Norwich Union’s onshore investment bonds - Portfolio Bond and Bond 2000. No other company in the UK currently offers access to a Guaranteed Fund via a life Bond.
The revised Fund will also be offered to current Norwich Union Guaranteed Fund customers if their fifth anniversary falls on or after 27 May 2003.
Rationale
Norwich Union’s current Guaranteed Fund has been available since October 1995, historically investing mainly in UK equities and fixed interest, with only a small proportion in property and cash.
However, due to the worldwide fall in stockmarket returns, Norwich Union has managed down the equity content of the fund over the last 12 months, so the costs of the valuable guarantees are fully covered for investors.
However, maintaining one single Equity Backing Ratio on the Guaranteed Fund is not appropriate for all generations of policyholders.
The revised Guaranteed Fund from 27 May will be very similar to the current Fund, however, it will include a broader mix of assets giving greater flexibility, including UK and overseas equities, property and fixed interest (the current Fund holds no overseas equities, and less property).
The ratio of real assets to fixed interest will be around 40:60 at launch. The Fund will be actively managed, and therefore, this ratio is likely to change in the future.
The guarantee will continue to be based on the amount of allocated premium used to purchase units in the Guaranteed Fund. The guaranteed amount will be reduced in proportion to units cancelled to meet any withdrawals, additional life cover charges and switches out of the Fund.
Commenting, Willie Mowatt, director of product development at Norwich Union, said: "The Norwich Union Guaranteed Fund has proved very popular with investors since it was launched in 1995, with around Ł1.2 billion now invested in it. When you look at the situation in the financial markets over the last three years, it’s at times like this that investors can really see the benefit of investment guarantees.
"Norwich Union will continue to place importance on products and funds which not only provide the guarantees that are clearly in demand, but that also have a strong growth potential.
"Therefore, now is the right time to make changes to the Guaranteed Fund, to reflect recent and current market conditions and to ensure that the Fund continues to be an attractive option for new and existing customers in such uncertain times."
-ends-
Press office contacts:
Ian Beggs - 08703 66 68 71 / 07790 487 533
Notes for editors
- Norwich Union is the UK’s largest insurer. It is a leading provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 70% of the company’s long- term savings business.
- Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group.
- Norwich Union’s news releases and a selection of images are available from Aviva plc's internet press centre at www.aviva.com/media.
- The value of an investment can go down as well as up and is not guaranteed, apart from the guarantee applicable to the fifth anniversary.