Article date: 2 July 2007
- MVRs removed from all with-profits policies
- Unitised final bonus rates increased by up to 6%
- Independent members appointed to new With-Profits Committee
Norwich Union has carried out a mid-year review of its with-profits policies and as a result is pleased to announce the following changes have been implemented with effect from 1 July 2007:
Due to the general improvement in the stock market and the strong investment performance of the with-profit funds, Market Value Reductions (MVRs) will be removed from all remaining with-profit policies (those where money was invested in 1999 and 2000). This means that from 1 July 2007, all Norwich Union with-profit policies are MVR-free.
For unitised with-profit investments, final bonus rates will be increased, leading to policy maturity values increasing by between 4% and 6%. For conventional with-profit investments, final bonus rates will be maintained at current levels.
Regular bonus rates will be maintained at current levels reflecting our expectation of future investment returns and the significant value of existing guarantees.
Independent members appointed to new With-Profits Committee
As part of the company's drive to further increase the transparency and governance of its with-profits funds, Norwich Union is pleased to announce the appointment of three independent members to its new With-Profits Committee. Sir Nicholas Montagu KCB, Harriet Maunsell OBE and John Hylands will join the committee during July 2007.
The new committee is made up of a majority of independent members and will oversee the future operations of the with-profit funds - ensuring the interests of all policyholders continue to be represented.
John Lister, chief actuary, Norwich Union Life, said: "The main with-profit funds have returned a performance ahead of expectations over the first half of 2007. This has allowed us to remove MVRs completely from all with-profit policies - the first time we have been able to do so since 2001. As a result of the good investment performance we are also able to increase unitised final bonus rates and maintain all other bonus rates".
Mark Hodges, chief executive, Norwich Union Life, said: "I am pleased to welcome the three new independent members to the new With-Profits Committee. The committee's role is to ensure the continuing fair treatment of all our with-profit customers and the extra insight and experience that these members bring will further enhance this.
"Today's announcement of MVRs being removed, unitised final bonus rates being increased and the new With-Profits Committee, is good news for our with-profits policyholders and firmly underlines our commitment to the with-profits market."
Aviva plc is continuing to progress the potential reattribution of the inherited estate of the CGNU and CULAC with-profit funds. Negotiations are currently underway with the independent Policyholder Advocate, Clare Spottiswoode. Aviva expects to announce the outcome of these negotiations late summer/early autumn 2007. Aviva has not yet made a decision as to whether it will proceed with a reattribution and will proceed only if it is clear that any negotiated outcome is fair to its policyholders and shareholders. It is important to stress that eligible customers will be completely free to choose whether or not to participate in any offer.
Press office contacts:
Louise Soulsby 01904 452617 Out of hours 07800 699526
James Evans 07800 699525
Notes to editors:
Policy payout examples for with-profit policies are available on request.
An MVR is a mechanism used to ensure fair treatment to all members of the with-profit fund. It is designed to ensure that people who choose to the leave the fund do not take more than their fair share of assets at the expense of those who remain in the fund.
MVRs were introduced in 2001 as a result of the stock market falls. Should markets fall again in the future then MVRs may be reintroduced.
Future bonus rates are not guaranteed and may vary, as they depend on profits yet to be earned. Past performance is not a guide to the future. The value of investment linked funds can go down as well as up and is not guaranteed.
Estimated investment returns of the main with-profit funds (to mid June 2007).
NUIL € 5%
NUIL $ 5.6%
Members of the new With-Profits Committee
Nicholas Montagu KCB: Non-executive director of Xafinity and of the Pension Insurance Corporation, and adviser to PricewaterhouseCoopers. A civil servant for 30 years, ending his career as chairman of the Board of the Inland Revenue 1997-2004 (also chairman of the Civil Service Benevolent Fund 1998-2003, and permanent secretary diversity champion 1999-2004). He was appointed a Knight Commander of the Order of the Bath in the 2001 Birthday Honours list.
Harriet Maunsell OBE: Non-executive director of the Serious Fraud Office and former chairman of the Occupational Pensions Regulatory Authority. In 1994 she was awarded the OBE for services to pensions.
John Hylands: Joined Standard Life in 1979. He was group finance director from 2001 until 2005 and then led the demutualisation of the company. He retired from his position as an executive director of Standard Life plc in March 2007. He has recently been appointed chairman of the trustees of the Standard Life staff pension scheme. He is an actuary.
Stephen Mann: business change director Norwich Union Life
Crawford Davidson: marketing director Norwich Union Life
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 15%, 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