Norwich Union Cuts Payouts
Norwich Union gave 1M holders of its with profits endowment policies a kick in the teeth yesterday.
It announced that it would be cutting payouts on maturing, longer term, policies by up to 11%.
The cuts are in spite of an investment return of over 11% before tax in 2004.
Norwich Union did at least try to ease the pain, by announcing that it has put aside £1BN to help its policy holders stuck with an underperforming endowment policy.
Mike Urmston, the chief actuary at Norwich Union Life, is reported to have said:
"The last two years of positive returns have not compensated for the negative returns of the previous three years."
Norwich noted that its maturing 25 year mortgage endowments are producing surpluses, over and above the target amounts. However, its 15 year mortgage endowments are falling short.
The company has reduced its exit penalties, that are charged when people cash in their policies early or move their money to other insurers, to a rather high 18%.