UK: Norwich Union launches second tranche of Guaranteed Capital Plan

Plan links returns to property market, FTSE 100 and deposit account

Norwich Union is to launch a second tranche of the Guaranteed Capital Plan. It gives investors exposure to the property and stock markets, and guarantees to return at least the original investment The new tranche will be available from 16 January to 10 March 2006, and the minimum investment is Ł3,000.

The Guaranteed Capital Plan links investors’ money to the Halifax House Price Index, FTSE 100 and a one-year fixed rate deposit account. To provide the potential for growth without risking capital, the plan splits investors’ returns into three elements:

• 33% is linked to the Halifax House Price Index. After six years investors are guaranteed all their original investment plus 75% of any growth in the index subject to averaging in the final year
• 33% will be linked to the FTSE 100. Investors are guaranteed to get their original investment back plus 75% of the growth of the index over the six years subject to averaging in the final year
• 34% is invested in a one-year fixed rate account paying 8% gross. After one year returns will be paid to the investor

If investors withdraw their money before maturity they are likely to get back less than their original investment.

Neil Davies, director of investments at Norwich Union, said: “The first tranche of the Guaranteed Capital Plan was a success and proved popular with our customers who want to potentially benefit from rises in the stock and housing markets without risking their capital.”

-ends-

Press office contacts:
David Gwyer 01904 452828 Out of hours 07800 699508
James Evans 01904 452791 Out of hours 07800 699525
Rob Pell 01904 452659 Out of hours 07800 699563
Cheryl Cox 01904 452617 Out of hours 07800 695275

Notes to editors:

About the Norwich Union Guaranteed Capital Plan
The Guaranteed Capital Plan is designed to be held for the full six-year term. Investors’ capital is guaranteed to be returned only on maturity of each of the three elements. If investors withdraw their money before maturity they are likely to get back less than their original investment.

How the plan might work
The following scenarios are examples only and give an indication of how the plan could work over six years:

Example 1 – Both indices rise
Initial investment Ł10,000
Total return: Ł12,054
Total gain Ł2,054

Element	Initial amount	Calculation of return	Total return after 1 year	Total return after six years
1yr fixed rate	Ł3,400	8% gross	Ł3,672
FTSE linked	Ł3,300	27%*		Ł4,191
HHPI linked	Ł3,300	27%		Ł4,191
Totals	Ł10,000		Ł3,672	Ł8,382

*This figure assumes that the index has grown by 36% over the term (allowing for the 12-month final averaging).

Example 2 – Both indices fall
Initial investment Ł10,000
Total return: Ł10,272
Total gain Ł272

Element	Initial amount	Calculation of return	Total return after 1 year	Total return after six years
1yr fixed rate	Ł3,400	8% gross	Ł3,672
FTSE linked	Ł3,300	-27%		Ł3,300
HHPI linked	Ł3,300	-27%		Ł3,300
Totals	Ł10,000		Ł3,672	Ł6,600

Even though both indices have fallen in this example, the initial capital from the FTSE and HHPI elements is still guaranteed at maturity

Example 3 – FTSE 100 rises and HHPI falls
Initial investment Ł10,000
Total return: Ł11,163
Total gain Ł1,163

Element	Initial amount	Calculation of return	Total return after 1 year	Total return after six years
1yr fixed rate	Ł3,400	8% gross	Ł3,672
FTSE linked	Ł3,300	27%*		Ł4,191
HHPI linked	Ł3,300	-27%		Ł3,300
Totals	Ł10,000		Ł3,672	Ł7,491

* This figure assumes that the index has grown by 36% over the term (allowing for 12 month final averaging)

Norwich Union is one of the UK's biggest insurers. It is a leading provider of life, pensions and investment products and one of the largest Financial Adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.

Norwich Union has strategic alliances with building societies and other leading UK brand names including CIS and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.