January Update 3

Dear Policyholder,

This morning Norwich Union has announced that it is making a pre-reattribution distribution of £2.1 billion in the form of additional bonuses. This is a 90/10 distribution from the estates. This is welcome although there are strings attached which we have argued against.

The discussion over the remainder of the estate continues. Payment for any reattribution would be cash which the company would have to find. Norwich Union has put in a new offer and this is described in the media release.

The amount of the estate left is £3.2 billion. This is the amount we are now negotiating on your behalf. This money has accumulated entirely from policyholders and we are trying to make sure that policyholders get a fair share of it. We want the offer to go to you for you to make a choice. We can all then judge if the offer is fair. I will put the Norwich Union announcement on the site in a little while.

Yours faithfully,

Jonathan Haslam

 

 

Media release from the Office of the Policyholder Advocate

Media release from Clare Spottiswoode

5 February 2008

 

Spottiswoode welcomes pre-reattribution payout of £2.1 billion for Norwich Union with-profits policyholders but disappointed by three-year phasing

The payout of £2.1 billion in extra bonuses to be added to policies announced today for Norwich Union with-profits policyholders has been welcomed by Clare Spottiswoode, policyholder advocate in the proposed reattribution of inherited estates.

She said today:

'This payout comes about because there are excess funds now in the inherited estates in the two Norwich Union funds that are being discussed for a possible reattribution. The negotiations have helped identify that there is an excess surplus for distribution now and I am pleased that policyholders will benefit by getting 90 per cent of it (see notes to editors 1.) Shareholders will receive £230 million as their 10 per cent share.

I am disappointed, however, that the payment is to be made over a three year period. The surplus funds are available now yet policyholders whose policies mature before the end of the three years will not be paid the full amount. I have also pressed for this pre-reattribution special distribution to be backdated to those policyholders whose polices matured naturally after 21 November 2006 as a matter of fairness. Bringing the eligibility for the pre-reattribution special distribution into line with the eligibility for the proposed reattribution itself would have included those policyholders who will lose out under this arrangement. I have raised these matters with the company, Sir Nicholas Montagu (chairman of the with-profits committee) and the Financial Services Authority, but my views have not been adopted.

Nonetheless, overall this is a positive development arising from the proposed reattribution. Norwich Union notes in its statement that it has made a further offer in respect of the possible reattribution to be paid in cash. In essence this does not do much more than update its previous offer and there seems to be little new money on the table. The announcement of the pre-reattribution special distribution now means that we are able to compare more accurately the scale of the offer to be made to policyholders when that happens. I am considering my response to this and still have issues to resolve with the company before doing so.

I want the reattribution offer to go to policyholders and I want them to be given a choice. That offer must be a fair offer and one that does not over reward shareholders given that the money in the inherited estates has accumulated purely from policyholders.'

More...

Clare Spottiswoode is available for interview.

 

 

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