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Questions over NU estate as Pru keeps orphan cash

Prudential’s decision not to carry out a reattribution of its £8.7bn with-profits fund surplus could make it easier for Norwich Union to follow suit, say advisers.

Prudential revealed last week that it will not be proceeding with the reattribution of its inherited estate, arguing that it is in the best interests of policyholders and shareholders to continue running the fund on its current model.

Prudential says it does not believe the estate is an excessive buffer for the £79.1bn fund.

UK and Europe chief executive Nick Prettejohn says: “The whole of the inherited estate is required and it will remain as the working capital of Prudential’s with-profits sub-fund, helping to support continued superior investment performance, security and the ongoing financial strength of the fund for the benefit of current and future policyholders.”

Norwich Union is in discussions with policyholder advocate Clare Spottiswoode over the potential reattribution of its £5.5bn inherited estate, with a decision expected in weeks.

Informed Choice managing director Martin Bamford says: “The Prudential with-profits fund is probably the best in the market in terms of performance and financial strength and I think it probably does need the money to manage risk and stay invested in property and equities to generate long-term returns for policyholders.

“From a public relations perspective, it will make it slightly easier for Norwich Union if it decides not to proceed with reattribution.”

A spokesman for Spottiswoode says: “We are optimistic that we will be able to conclude our discussions over the next few weeks and hope it will result in an offer to policyholders. Norwich Union has been looking at reattribution for a number of years so we hope it will reach a positive conclusion.”

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