Final payouts on Norwich Union with-profits funds could be down up to 15% on last year, although regular bonus rates have been held on conventional policies.
The group announced final bonus rates have been reduced from 1 January 2009 to bring payouts back in line with asset share subject to smoothing.
Of the reduction, up to 10% was announced in September but this figures could now be as high as 15%.
However, regular bonus rates have been held on conventional policies. For unitised policies, regular bonuses have been cut by 0.75%. MVRs on the funds have been reduced from 16.2% to 11%.
NU said unprecedented market conditions over the past year have affected short term performance. In 2008, the CGNU and CULAC funds were down 11.9% while NULAP fell 12.3% and Provident Mutual fund 1.5% (after tax). Smoothing helped the funds outperform the FTSE All Share which was down 29.9% over the period.
The proportion of the funds in shares and property in the CGNU fund was 55% at the end of 2008, down from 72% at the end of 2007.
The group also said 2.3m customers each received bonuses of approximately £740 on average in 2008. Bonus payments of £1.7bn in total were made to policyholders last year.
David Barral, director at NU, comments: " Our with-profits funds have continued to prove their worth by delivering attractive long-term returns for investors while protecting them from the ups and downs of the stock market.
"In a time of market turmoil, the smoothing effect of with-profits together with the option of valuable guarantees is proving to be a popular choice with investors and professional advisers."
NU is the latest with-profits provider to cut bonus rates. Friends Provident announced last week that its final payouts could be cut by as much as 22.5% after gross investment returns fell 10.5% in 2008.
Standard Life also confirmed it would cut its stakeholder with-profits payouts by 10% after stock market volatility hit the fund, and other providers are expected to follow suit.
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