New guarantee on MVR free anniversaries

Article date: 15 June 2005

  • Policyholders to be notified three months prior to anyMVR free anniversary

Norwich Union, the UK's largest insurer, is to introduce a newcarry forward guarantee on its existing with-profit bonds where anMVR (market value reduction) free anniversary exists. This meansthat policyholders who decide not to cash-in their policy on an MVRfree anniversary can still take advantage of this guarantee at alater date (please see worked example below).

In addition, Norwich Union intends to start writing towith-profit bond policyholders three months prior to any MVR freeanniversary, if an MVR applies to a policy. Out of NorwichUnion’s 500,000 with-profit bonds, approximately 50% have anMVR free anniversary – usually after ten years.

At present MVRs only apply on monies invested between 1998 to2001. Therefore, any with-profit bond that has an MVR freeanniversary in 2005, 2006 and 2007, currently does not have anMVR.

Worked example: An investor has a with-profitbond worth £50,000, an MVR free date after ten years and a currentMVR of £1,500. On the MVR free date they can take out the £50,000without an MVR. However, with the new carry forward guarantee the£1,500 MVR free allowance will still apply even if they do notcash in the policy on the MVR anniversary. If they cash in thepolicy, for example a year later, then the £1,500 will be offsetagainst any MVR that might apply at that time.

So if the MVR at the time they cash in, has reduced to £1000they can cash in MVR free. If the MVR has increased to £2000 whenthey cash in, the MVR will be reduced to £500 (£2000 less thecarry forward guarantee of £1500).

(Example is not based on an actual policy)

Commenting on the new guarantee, Mike Kirsch, operationsdirector, said: "We wanted to look at how we could introduce moreflexibility for our customers after they had reached their MVR freedate and we believe this is a good way of doing it. While somepolicyholders may want to cash in their with-profit bonds at theMVR free date, others may not. We did not feel it was right thatthese people should then be penalised for not taking the benefitand therefore we have introduced the carry forward guarantee.

"We believe that the combination of this guarantee and givingpeople timely notification if they have an MVR free benefit is thebest way forward and underlines our commitment to treatingcustomers fairly."


Press office contacts
James Evans 01904 452791 Out of hours 07800 699525
Louise Soulsby 01904 452617 Out of hours 07800 699526
David Gwyer 01904 452828 Out of hours 07800 699508
Rob Pell 01904 452659 Out of hours 07800 699563

Notes to editors

  • Norwich Union is the UK's largest insurer. It is the UK'slargest provider of life, pensions and investment products andone of the leading IFA providers. IFAs provide around 75% of thecompany's long-term savings business in the UK.
  • Norwich Union has strategic alliances with building societiesand other leading UK brand names including Tesco PersonalFinance and The Royal Bank of Scotland Group. NorwichUnion’s news releases and a selection of images areavailable from Aviva's internet press centre at

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