Norwich Union with-profit policy holders to share £2.1 billion
Over 1 million Norwich Union with-profit policyholders are to share a £2.1 billion bonus while shareholders are set to receive £230 million.
The one-off bonus payments will benefit 1.1 million with-profits policyholders in the CGNU Life and CULAC with-profits funds. Typically people holding endowment policies, pension policies and with-profits bonds would be eligible for the bonus.
Norwich Union, which is the UK arm of insurer Aviva, said the payout will be made in instalments over 3 years and will add 10% to policy values. The deal follows earlier disputes on how the money (part of a £5.5 billion surplus in Aviva’s investment funds) should be divided.
A spokesperson for NU said the company had identified £2.3 billion in the inherited estate that was no longer required to support these funds. Therefore it was obliged to free the money which would be divided 90% to policyholders and 10% to shareholders.
Clare Spottiswoode, an independent expert appointed to represent policyholder interests, said she was pleased that policyholders would get the bulk of the initial surplus payout. Ms Spottiswoode had already rejected 2 earlier offers.
She said I am disappointed, however, that the payment is to be made over a 3 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.
The company has not divulged how much it is offering this time, saying only that it represented ‘a significant cash windfall’. NU has asked Ms Spottiswoode to reply by the end of February.
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