Norwich Union launches capital protected plan

Article date: 4 June 2008

Norwich Union is launching an investment plan for customers who want to benefit from any increase in the FTSE 100 while protecting their initial investment if the plan is held for the full term.

The Norwich Capital Protected Plan is designed to return two-and-a-half times the increase in the FTSE 100 index, up to a specified maximum, and protect customers' initial investment. Two versions of the Norwich Capital Protected Plan are available giving customers a choice of investing for three or six years, with an ISA option available for the six-year plan.

The three-year plan offers the return of the initial investment plus two-and-a-half times  the percentage rise in the FTSE 100 index, with the total amount paid capped at 24%. (See example below).

3 year plan

Index increases moderately over three years

Index doubles over three years

Index falls over three years

Plan start date

Index level

6,000

6,000

6,000

End date

Index level

6,480

12,000

5,500

Return on plan maturity

120%

124%

100%

If you had invested £1,000 you would get back

£1,200

£1,240

£1,000

Notes

Return based on 250% participation in the index increasing from 6,000 to 6,480

Return based on 250% participation in the index increasing from 6,000 to 12,000 but capped at 124%

As index has fallen only investment is returned

The six-year plan offers the return of the initial investment plus two-and-a-half times the percentage rise in the FTSE 100 index, with the total amount paid capped at  60%. (See example below).

6 year plan

Index increases moderately over six years

Index doubles over six years

Index falls over six years

Plan start date

Index level

6,000

           

            6,000

6,000

End date

Index level

7,200

              

               12,000

5,500

Return on plan maturity

150%

160%

100%

If you had invested £1,000 you would get back

£1,500

£1,600

£1,000

Notes

Return based on 250% participation in the index increasing from 6,000 to 7,200

Return based on 250% participation in the index increasing from 6,000 to 12,000 but capped at 160%

As index has fallen only investment is returned

For both plans capital protection and 250% participation (or 2.5 x Index Growth) applies only if the plan is held for the full term. If the plan is cashed in early the investor will receive the underlying value of the investment at that time, which could be less than the amount originally invested. Partial encashment during the term is not permitted.

Minimum investment is £1,000. There is no maximum investment, but usual ISA limits apply if the investment is held in an ISA (6 year Plan only). Returns are subject to income tax, unless held within an ISA.

Customers' money is invested in a medium term note. A medium term note is a type of corporate bond which is effectively a loan to a company.  At a set time, the company pays back the loan and provides a return linked to the FTSE 100 Index. The Company we've selected to provide the Notes is financially strong. However, there is a possibility that the Company could fail. In the unlikely event that the Notes provider defaults or becomes insolvent, the customer's investment would be at risk and they could lose some or all of their investment.

Customers do not invest directly in the shares that make up the FTSE 100 Index and will not benefit from dividends.

Norwich Union calculates the end value of the FTSE 100 Index by taking an average of the value over the last six months for the three-year plan and the last 12 months for the six-year plan. This means that the final value used for the Index may be less than the actual value it achieves at the maturity date.

-ends-

Press office contacts:  
David Gwyer                          
07800 693187

Notes to editors:

About Norwich Union
Norwich Union is the UK's largest insurer. 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 is the UK's largest general insurer with a market share of around 14%, with a focus on insurance for individuals and small businesses.

Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media

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