Payouts on unitised policies have been reduced by 7.5 per cent and conventional business payouts have been reduced by up to 10 per cent.
Returns on the CGNU and CULAC with-profits funds were -7.3 per cent before tax at June 30. The return at end of 2007 was 5.4 per cent.
The NULAP fund saw returns of -6.5 per cent and the Provident Mutual fund saw -3.9 per cent returns at the end of June. Last years’ returns were 5.9 per cent and 3.3 per cent respectively.
NU says the changes are due to poor investment conditions since the beginning of the year.
No changes are being made to regular bonus rates and Market Value Reductions are not being introduced.
Chief actuary John Lister says equity markets, commercial property and corporate bonds have fallen significantly in value.
He says: “We are taking responsible action to reflect the market movements over the past nine months. We need to ensure that those policyholders who leave the fund do not take more than their fair share at the expense of those customers who remain in the fund.
“Despite market conditions, Norwich Union’s with-profit fund has performed well against average savings accounts and the FTSE ALL Share over the short, medium and long term. This demonstrates that smoothing protects customers from the extremes of stock market volatility and that well-managed with-profits investments have good prospects for long term growth.
“In addition to this performance, many customers in the CGNU and CULAC funds will be eligible for a reattribution payment in the near future.”