Norwich Union makes changes to its Guaranteed Fund

Article date: 22 May 2003

Norwich Union is changing its Guaranteed Fund with effect from27 May 2003.

From this date, the Norwich Union Guaranteed Fund willoffer:

  • A higher Equity Backing Ratio than the current GuaranteedFund
  • 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 tothe fifth anniversary – they are not locked in
  • A management charge which remains the same as the currentGuaranteed Fund, and which is allowed for within the unitprice.

The revised Fund will be available for any new business onNorwich Union’s onshore investment bonds - Portfolio Bond andBond 2000. No other company in the UK currently offers access to aGuaranteed Fund via a life Bond.

The revised Fund will also be offered to current Norwich UnionGuaranteed Fund customers if their fifth anniversary falls on orafter 27 May 2003.


Norwich Union’s current Guaranteed Fund has been availablesince October 1995, historically investing mainly in UK equitiesand fixed interest, with only a small proportion in property andcash.

However, due to the worldwide fall in stockmarket returns,Norwich Union has managed down the equity content of the fund overthe last 12 months, so the costs of the valuable guarantees arefully covered for investors.

However, maintaining one single Equity Backing Ratio on theGuaranteed Fund is not appropriate for all generations ofpolicyholders.

The revised Guaranteed Fund from 27 May will be very similar tothe current Fund, however, it will include a broader mix of assetsgiving greater flexibility, including UK and overseas equities,property and fixed interest (the current Fund holds no overseasequities, and less property).

The ratio of real assets to fixed interest will be around 40:60at launch. The Fund will be actively managed, and therefore, thisratio is likely to change in the future.

The guarantee will continue to be based on the amount ofallocated premium used to purchase units in the Guaranteed Fund.The guaranteed amount will be reduced in proportion to unitscancelled to meet any withdrawals, additional life cover chargesand switches out of the Fund.

Commenting, Willie Mowatt, director of product development atNorwich Union, said: "The Norwich Union Guaranteed Fund has provedvery popular with investors since it was launched in 1995, witharound £1.2 billion now invested in it. When you look at thesituation in the financial markets over the last three years,it’s at times like this that investors can really see thebenefit of investment guarantees.

"Norwich Union will continue to place importance on products andfunds which not only provide the guarantees that are clearly indemand, but that also have a strong growth potential.

"Therefore, now is the right time to make changes to theGuaranteed Fund, to reflect recent and current market conditionsand to ensure that the Fund continues to be an attractive optionfor new and existing customers in such uncertain times."


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 aleading provider of life, pensions and investment products and oneof the leading IFA providers. IFAs provide around 70% of thecompany’s long- term savings business.
  • Norwich Union has strategic alliances with building societiesand other leading UK brand names including Tesco Personal Financeand The Royal Bank of Scotland Group.
  • Norwich Union’s news releases and a selection of imagesare available from Aviva plc's internet press centre
  • The value of an investment can go down as well as up and isnot guaranteed, apart from the guarantee applicable to the fifthanniversary.

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