Final payouts on some of Norwich Union's conventional with-profits policies are to be reduced b...
Final payouts on some of Norwich Union's conventional with-profits policies are to be reduced by up to 5%, effective 1 July.
In its latest review of its with-profits policies and rates, the group has also decided that in light of improving market conditions, it will lower its market value reduction rate from 11% to 9%, effective immediately. However, it is to leave regular bonus rates on conventional and unitised with-profits policies and final bonuses on unitised with-profits policies rates, unchanged. Norwich Union chief actuary, Mike Urmston, said: 'The market recovery we have seen has worked through in the form of a lower level of MVR.
However, on conventional policies that have matured in 2003, we have been paying out around 118% of what has been earned (asset share) so some further adjustment to payouts is necessary for overall fairness.'
The group is forecasting the average return on its with-profit funds for the first half of 2003 will be around 7% before tax. The return on the funds during 2002 was -8.5% and -9.5% in 2001.
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