Norwich Union increases flexibility and adjusts pricing on with profits annuities

Article date: 20 July 2001

Norwich Union - the UK's largest insurance company - hasincreased the flexibility and introduced a new pricing structurewith effect from 2 July on its with-profits annuity policies.

  • Norwich Union's with-profits annuity can now be converted to aconventional annuity at any time after the first anniversary ofthe policy giving the customer increased flexibility. This meansthat if the customer has selected a with-profits annuity but thenneeds the security of a fixed income for life with no exposure toinvestment changes they can now do this.

  • To meet the needs of the changing work practices and financialrequirements of the consumer. Norwich Union's with-profits annuitynow enables the customer, both new and existing, to change theselected anticipated bonus rate. The number of changes to theannual bonus rate are unlimited but the first two changes can bedone without any additional costs.

In addition to the changes, Norwich Union has changed itspricing structure. These changes reflect the improvements in lifeexpectancy - particularly for males and in the longer term shouldenable us to continue to pay competitive regular and additionalbonuses. It is not only the starting income levels that need to beconsidered when purchasing a with-profits annuity the investmentperformance of the company must also be considered.

Commenting on the changes, Willie Mowatt, head of retirement andprotection at Norwich Union, said: "Consumers today areincreasingly on the lookout for flexible products which can adjustto meet their changing needs.

"The changes we are announcing to our with-profits annuityproduct are designed to reflect these changing requirements. Thishighlights our belief in the importance of with-profit annuities inretirement income planning."

An example of new and existing rates is shown in the table belowfor the joint life business.

Male 65/Female 60 joint life last survivor no reduction on firstdeath payable monthly in advance no guaranteed period

Purchase price £50,000.

Company0%
anticipated
bonus rate
3%
anticipated
bonus rate
5%
anticipated
bonus rate
    
Prudential
£1776.72£2691.00£3377.40
Standard Life
£1812.00£2670.00£3306.00
Previous Norwich Union   
Source Money£acts£1737.60£2623.80£3286.80
New Norwich Union
£1776.48£2677.8£3352.92

-Ends-

  1. Future bonuses cannot be predicted or guaranteed.
  2. The value of a with-profit annuity can go down as well as upand is not guaranteed.
  3. Full written details are available on request.

Notes to editors:

CGU plc and Norwich Union plc merged on 30 May 2000 to createCGNU plc, the UK's largest insurance group and one of the top-fiveinsurers in Europe with substantial positions in other marketsaround the world, making it the world's sixth largest insurer basedon gross worldwide premiums.

CGNU's principal business activities are long-term savings, fundmanagement and general insurance, with worldwide premium income andretail investment sales from ongoing business of over £27 billionand assets under management of more than £210 billion.

From October 2000, the combined life and pensions, generalinsurance and retail fund management businesses in the UK operateunder the Norwich Union brand, while the institutional investmentbusiness operates under the Morley Fund Management brand.

Norwich Union's news releases are available on the website.

Press office contacts:

  Out of hours
James Evans08703 66 68 7807790 487105
Louise Goffee08703 66 68 7007747 764342

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