Norwich Union Windfall
Some good news for over a million Norwich Union endowment policyholders. They have been promised a share of a £2.1BN arising from Norwich's "orphan assets" or "inherited estate" surplus.
Norwich Union has agreed to hand back almost half the £5.4BN surplus in its two main with-profits funds.
Individual payouts will vary, depending on the size of investment and how long it has been in force. However, projections indicate that policyholders should see the value of their assets increase by 10% by 2010.
It is also estimated that approximately 50,000 holders of Norwich Union mortgage endowment policies, currently projected to shortfall, will be reassigned a "green light" over the next three years.
Policyholders will receive 90% per cent of the £2.3 billion being distributed. The remaining 10% will go to shareholders.
Norwich Union have tabled a separate offer of a cash payment to policyholders in exchange for renouncing their claims on the rest of the estate (£3.1BN).
Clare Spottiswoode, the policyholder advocate responsible for securing the best deal for Norwich Union customers, is not entirely happy with the arrangement. She is quoted in the Times as saying:
"The money is available now, so how on earth can it be fair to deny it to policyholders now?"
She also called on Norwich Union to backdate payouts to cover customers who have cashed out of policies since November, when Norwich first said that it would press ahead with a distribution.
IFA's who have paid out compensation, because of Norwich Union's mis-selling of endowment policies, are also not that happy. They are asking why, if the policies now look like thy are going to revert to surplus, should they have been penalised.