Norwich Union has called on the FSA to clarify its position on the procedure for reattribution as it considers sharing the £4.3bn orphan assets in its huge with-profits fund.
NU UK life chief executive Gary Withers wants the FSA to spell out its vision of a fair procedure for reattribution, which he says would be in the interests of policyholders and shareholders.
Reattribution would see orphan assets in NU's with-profits funds crystallised and distributed between policyholders and shareholders. Policyholders would get a cash windfall in exchange for relinquishing their interest in orphan assets.
The company says it wants the regulator's position clarified beforehand as it will not start the process if there is a risk of a rerun of the bitter court battle between Axa and the Consumers' Association in 2000 over how orphan assets should be divided. The procedure for reattribution is not as clearly set as for demutualisation, say experts.
Withers' comments come as the life office giant sets out a plan to simplify its nonwith-profits business by bringing the majority of its numerous subsidiaries into Norwich Union Life & Pensions. The restructure will see Norwich Union Linked Life, Provident Mutual, Fidelity Life, CGU, CGNU and CU funds brought into NULAP by January 1, 2005 subject to court approval. Policy benefits will not be affected and policyholders will not vote on the changes.
Withers says: “We are philosophically open to a redistribution. It is in the interests of policyholders, the company and the regulator that the rules under which reattribution takes place are understood at the outset so we can have a sensible process and avoid policyholder confusion.”
FSA spokesman Robin Gordon Walker says: “Our understanding is that the procedures in this area are not quite as precisely defined as they are for demutualisations.”
Chartwell business development manager Ben Willis says: “Why not go ahead? Investors are likely to be happy about it.”