Norwich Union is reducing final bonus payouts on its with-profits investments by around 7.5%, the insurer announces today.
The firm, which is also reducing payouts on conventional business by up to 10%, blames poor investment conditions, particularly in the commercial property and corporate bond markets.
It affects policyholders in each of its four with-profits vehicles - CGNU, CULAC, Norwich Union Life and Pensions (NULAP), and Provident Mutual – and came into effect on 1 September.
It also follows a move in May to cut the surrender values across the same funds by up to 9%.
Both the CGNU and CULAC with-profits funds saw returns of -7.3% before tax at June 30. The return at end of 2007 was 5.4%.
Returns on the NULAP fund were -6.5% and the Provident Mutual fund saw -3.9% returns at the end of June.
“We are taking responsible action to reflect the market movements over the past nine months,” John Lister, chief actuary at Norwich Union, says.
“We need to make sure 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.
“We remain committed to with-profits and see it as a good investment choice for many customers.”
Norwich Union says no changes are being made to regular bonus rates and Market Value Reductions (MVRs) are not being introduced.
Many customers in the CGNU and CULAC funds are also in line for a reattribution payout in the “near future”, Lister says.
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