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NU rethinks with-profits bond strategy

Norwich Union says it is looking to diversify away from with-profits bonds in the medium term because of poor sales of the product across the industry.

Anecdotal evidence is mounting of a shift away from with-profits bonds following publicity surrounding market value adjusters and bonus cuts.

NU is unwilling to disclose information about sales, saying they are commercially sensitive. But confidential ABI figures seen by Money Marketing in April revealed NU as the market leader last year, accounting for £3bn of the £15bn in with-profits bond sales.

Published ABI figures show that sales of with-profits bonds have fallen to £6.7bn for the first half of this year compared with £7.5bn last year while unit-linked bond sales increased.

NU sales and marketing director Peter Hales says: “The with-profits market is down by 10 per cent and our figures broadly reflect that.

“Over the medium term, we are looking to diversify away from with-profits but over the long term, we still believe in the with-profits story. We are doing more guaranteed bond, term and annuity business.”

Berry Birch & Noble senior consultant Richard Holden says: “There is new money going into with-profits bonds and people are aware of MVAs but not as much. About a quarter of my clients are put off by the lack of transparency.”

Axa sales and client management director Gary Tarleton says: “We have not taken the decision whether to re-enter the with-profits market because we are not sure there is one to return to.”

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