Aviva cuts final payout for Norwich Union policy holders by 10 per cent
Norwich Union, part of giant British insurance group Aviva, will slash its final policy payout by 10 per cent, in a move that will affect 2.4m policyholders.
Norwich said yesterday its terminal bonuses would be cut by as much as 10 per cent after its funds were hit by faltering stock markets, commercial property and corporate bond markets.
The cuts have been applied to all four of Norwich Union’s with-profit funds including its two largest NULAP and CGNU.
John Lister, chief actuary at Norwich Union, said: “We are taking responsible action to reflect the market movements over the past nine months. We need to ensure 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.”
Lister added that despite tough market conditions the company’s with-profit fund had “performed well against average savings accounts and the FTSE All-Share over the short, medium and long term”. He added: “This demonstrates that smoothing protects customers from the extremes of stock market volatility and that well managed with-profits investments have good prospects for long-term growth.”
The changes came into effect on 1 September after the CGNU fund lost 7.3 per cent of its value for the six months of the year ending 30 June. Last July Norwich Union gave more than 1m of its with-profits policyholders an average payout of £1,000 after agreeing to hand back £1bn of its £2.1bn inherited estate or surplus with-profits assets.
Policyholders have already received a £2.3bn special bonus from the inherited estate.