Norwich Union launches Guaranteed Capital Plan

Article date: 3 October 2005

Plan links return to property market, FTSE 100 anddeposit account

Norwich Union is to launch a new savings plan. The GuaranteedCapital Plan gives investors exposure to the property and stockmarkets and guarantees to return at least the originalinvestment.

The plan links investors’ money to the Halifax House PriceIndex, FTSE 100 and a one-year fixed rate deposit account. Toprovide the potential for growth without risking capital, the plansplits investors’ returns into three elements:

  • 34% is invested in a one-year fixed rate account paying 8%gross. After one year returns will be paid to the investor
  • 33% is linked to the Halifax House Price Index. After sixyears investors are guaranteed all their original investment plus75% of any growth in the index subject to averaging in the finalyear
  • 33% will be linked to the FTSE 100. Investors are guaranteedto get their original investment back plus 75% of the growth ofthe index over the six years subject to averaging in the finalyear.

It will be available from 10 October 2005, the minimuminvestment is £3,000 and the plan’s start date is 16 December2005.

Neil Davies, head of investment at Norwich Union, said: “Theplan is ideal for those investors who are reluctant to move theirsavings from a deposit account, but would like the opportunity tobenefit from investing in a range of assets without risking theircapital. It will appeal to those investors who remain cautiousabout the investment markets but who seek potentially higherreturns backed by a guarantee.”

-ends-

Press office contacts: 
David Gwyer 01904452828 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 CapitalPlan
The Guaranteed Capital Plan is designed to beheld for the full six-year term. Investors’ capital isguaranteed to be returned only on maturity of each of the threeelements. Investors who with draw their money before maturity willbe liable to an early withdrawal fee.

How the plan might work
The following scenarios areexamples only and give an indication of how the plan could workover six years

Example 1 – Both indices rise
Initial investment£10,000
Total return: £12,054
Total gain £2,054

Element

Initial amount

Calculation of return

Return after 1 year

Return after six years

1yr fixed rate

£3,400

8% gross

£3,672

  

FTSE linked

£3,300

27%*

  

£4,191

HHPI linked

£3,300

27%

  

£4,191

Totals

£10,000

  

£3,672

£8,382

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

Example 2 – Both indices fall
Initial investment£10,000
Total return: £10,272
Total gain £272

Element

Initial amount

Calculation of return

Return after 1 year

Return after six years

1yr fixed rate

£3,400

8% gross

£3,672

  

FTSE linked

£3,300

-27%

  

£3,300

HHPI linked

£3,300

-27%

  

£3,300

Totals

£10,000

  

£3,672

£6,600

Even though both indices have fallen in this example, theinitial capital from the FTSE and HHPI elements is still guaranteedat maturity.

Example 3 – FTSE 100 rises and HHPI falls
Initialinvestment £10,000
Total return: £11,163
Total gain £1,163

Element

Initial amount

Calculation of return

Return after 1 year

Return after six years

1yr fixed rate

£3,400

8% gross

£3,672

  

FTSE linked

£3,300

27%*

  

£4,191

HHPI linked

£3,300

-27%

  

£3,300

Totals

£10,000

  

£3,672

£7,491

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

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

Norwich Union has strategic alliances with building societies andother leading UK brand names including CIS and The Royal Bank ofScotland Group. Norwich Union’s news releases and a selectionof images are available from Aviva's internet press centre atwww.aviva.com/media.

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