The One Minute Briefing

  1. More money has accumulated in two of Norwich Union with-profits funds than is needed to meet the liabilities of those funds.
  2. This money forms what are called the inherited estates. Norwich Union calculates that the total amount in the estates concerned was about £5billion at the end of 2006.
  3. The money helps support the funds but it can also be used by the company for other purposes. It is important that the inherited estates are managed carefully and wisely in the interests of policyholders.
  4. There are two ways in which any of this money can be released from being used as it is now. First, under what is called a ‘distribution’, 90 % of part of the inherited estates would go to policyholders in the form of bonuses and 10% would go to shareholders.
  5. But, second, under a different process called a ‘reattribution’, Norwich Union is proposing that shareholders buy out the interest that policyholders have in the whole of the inherited estates. This would allow the company more freedom in how it uses the money. (It is possible for there to be both a reattribution and a distribution.)
  6. Clare Spottiswoode is the independent person (called the Policyholder Advocate) appointed by the company and approved by the Financial Services Authority to champion the cause of policyholders.
  7. She and her advisers are discussing with Norwich Union how much money is in the inherited estates, what it will be used for in future, and how likely it is that there will be 90 % distributions in future. She is also examining, as is the Independent Expert, Norwich Union’s detailed plans for the future security of your funds.
  8. Negotiations have begun about the size of any payment to be offered to policyholders for giving up their interest in the inherited estates.
  9. Once negotiations are complete both Norwich Union and Clare Spottiswoode will write to eligible policyholders explaining the result and they will be offered a payment by Norwich Union.
  10. If an offer is made policyholders will be asked to say what they want to do and the High Court will be asked whether it approves the reattribution. If the High Court agrees, policyholders who vote to accept will receive a payment.