Norwich Union launches second tranche of Guaranteed Capital Plan

Article date: 9 January 2006

Plan links returns to property market, FTSE 100 anddeposit account

Norwich Union is to launch a second tranche of theGuaranteed Capital Plan. It gives investors exposure to theproperty and stock markets, and guarantees to return at least theoriginal investment The new tranche will be available from 16January to 10 March 2006, and the minimum investment is£3,000.

The Guaranteed Capital Plan links investors’ money to theHalifax House Price Index, FTSE 100 and a one-year fixed ratedeposit account. To provide the potential for growth withoutrisking capital, the plan splits investors’ returns intothree elements:

  • 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
  • 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 arelikely 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 asuccess and proved popular with our customers who want topotentially benefit from rises in the stock and housing marketswithout risking their capital.”

-ends-

Press office contacts:
David Gwyer 01904 452828 Outof 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. If investors withdraw their money before maturity theyare likely to get back less than their original investment.

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

Total return after 1 year

Total 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

Total return after 1 year

Total 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

Total return after 1 year

Total 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.

Back to top