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Norwich Union announces special bonus of £2.3bn to with-profits customers

Norwich Union has announced it will pay out a special bonus of £2.3bn to 1.1 million with-profits policyholders and has put an improved reattribution offer to the policyholder advocate.

Of the £2.3bn, £2.1bn will go to policyholders while £230m will be distributed to shareholders on the 90/10 basis.

This will give each policyholder a windfall of around £2,000.

NU says this will add an average of 10 per cent to the policy value over three instalments for policyholders in its CGNU Life and CULAC with-profits funds.

In addition, NU’s parent company Aviva has confirmed that it has put an improved reattribution offer to policyholder advocate Clare Spottiswoode to buy out eligible policyhoolders’ interests in ithe remainder of the inherited estate.

This is the third offer put to Spottiswoode following nearly a year of negotiations.

Aviva has asked Spottiswoode to respond to the offer by the end of the month so it can aim to pay electing policyholders before the end of the year.

Spottiswoode has welcomed the pre-reattribution payout of £2.1bn for with-profits policyholders but says she is disappointed that the payment of the special bonus is to be made over a three-year period.

She also says the new offer from Aviva is not very different to its previous offer and there is little new money in it.

Spottiswoode says: “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.

“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.”

Norwich Union Life chief executive Mark Hodges says: “We think it is now time to give clarity to policyholders and shareholders alike. We have made this improved offer to help bring the negotiation process to a mutually acceptable close.

“Today’s special distribution will give our policyholders around half of the
inherited estate on a 90/10 basis. We want to reattribute the balance. Our
reattribution offer means that eligible policyholders stand to receive a
significant cash windfall if they decide that’s what they want.”

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