Norwich Union today advises that it has temporarily deferred settlements on its unit-linked property fund.
Norwich Union today advises that it has temporarily deferred settlements on its unit-linked property fund.
The Norwich Union Unit-Linked Property Fund (Life and Pensions) invests in UK commercial property. Trading conditions in the commercial property market have tightened significantly over the past 12 months. The shortage of credit has reduced the number of buyers and property assets are taking longer to sell. During this time, a number of other UK funds have introduced periods of deferral.
Protecting investors
Deferral is a temporary measure to protect all investors in a fund. It means that requests to redeem are held on file and executed up to six months later. This gives the fund a longer period in which to sell the properties it holds at an acceptable price.
How the deferral period works
While the deferral period is in place transactions including surrenders, switches, partial surrenders, transfers, and new requests for automatic partial withdrawals will be deferred for up to a maximum of six months.
There are a number of circumstances where eligible customers will still be able to instruct redemptions as usual or where the deferral period will not apply:
- Policies with a contractual maturity or retirement date (eg: pensions and endowments)
- Regular withdrawals that have already been set up (eg: bond investors who take a regular income from their investment)
- Critical illness, terminal illness, and total permanent disability claims
- Claims where the policyholder has died.
Contacting investors
Norwich Union will be contacting existing investors who make regular payments into the fund and independent financial advisers who represent a client who has invested in the fund. Further information is also available on norwichunion.com.
David Barral, marketing director at Norwich Union, said: "We recognise that this will be disappointing for some investors who may want immediate access to their capital. However, this action is in the best interests of investors by protecting the long-term value of their investment and avoiding having to sell properties below their market value.
"In the last 12 months a number of other UK funds have introduced deferments. During this time we have actively managed the fund to support those investors requiring immediate access to their investment. However, as a result of the difficult conditions in the commercial property market, we have taken the decision to defer settlements to enable us to manage redemptions appropriately.
"Despite the current short-term difficulties, we are confident of the long-term prospects for commercial property. It remains an important part of a balanced, long-term investment portfolio."
The changes apply only to the Norwich Union Unit-linked Property Fund (Life and Pensions) available through life onshore bonds and pensions. Other UK property funds offered by Norwich Union, including Aviva Investors Property Trust (formerly Norwich Property Trust), continue to trade as normal. Norwich Union's equity and bond funds are also unaffected by this change.
-ends-
Press office contacts
The Norwich Union press office can be contacted on:
David Gwyer: 01904 452617/ 01904 452791/ 01904 452828
Out of hours: 07800 693187 / 07800 699665
Notes to editors:
Please note that the value of property is a matter of the valuers opinion rather than fact.
About Norwich Union
Norwich Union is one of the UK's biggest life 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
In the summer of 2009 Norwich Union will change its name to Aviva. Aviva is the world's fifth largest insurance group and operates in 27 countries. Aviva is to become the customer brand worldwide, thus enabling the company to compete even more effectively on a global scale for the benefit of customers, staff, business partners and shareholders.