February Update 2

Dear Policyholder,

It has been yet another busy week with the Norwich Union announcement of the £2.3 billion pre-reattribution special distribution. This is a 90 per cent to policyholders and 10 per cent to shareholders distribution so policyholders will receive some £2.1 billion. As you know this is to be phased over three years and Clare has said she is disappointed that it will not all be available now. Clare has given an interview to Paul Lewis of BBC Radio 4 Moneybox and this will be broadcast tomorrow (Saturday 9 February) at 12.00 noon. I understand that one of Norwich Union’s team - executive director Stephen Mann - has also given them an interview, so this will be a good opportunity to hear both sides of where we are.

We are getting quite a lot of comment through our contact page, so thank you all for that and for the many kind and supportive remarks. Our call centre team also is busy and this is a good opportunity for me to thank them and our admin team for all that they are doing.

There are quite a few questions that we are being asked and here are the top 5 with the answers

1. My policy has matured already will I be eligible for the Special Distribution?

No, I am afraid that to be eligible you have to have a policy that was in force on 1 January 2008. Clare Spottiswoode has raised these matters with the company, Sir Nicholas Montagu (chairman of the with-profits committee) and the Financial Services Authority, but her views have not been adopted.

2. Am I eligible for the special bonus?

If you have a policy that was in force on 1 January 2008 you will get the first stage of the payment. If it is still in force on 1 January 2009 then you will get the second stage, if it is still in force on 1 January 2010, you will get the final stage. You cannot buy a policy now and qualify.

3. What is the meaning of this 90/10 payout that they are talking about?

This payment goes out in the proportions 90 per cent to policyholders and 10 per cent to shareholders. Overall the payment is £2.3 billion, so £2.1 billion goes to policyholders and £230 million goes to shareholders.

4. Do I have to wait for 3 years to get this complete payout?

If your policy is eligible you will get the money added to your policy as a bonus, not cash, in three stages, one this year, one in 2009 and the last in 2010. Your policy must be in force for all three years to get the lot.

5. Why are policies that are going to mature before 3 years not eligible?

That is a question for Norwich union and its with-profits committee. Clare Spottiswoode believes that this is unfair but has been unable to persuade them to do anything different.

As before I have collected as many links as possible to the media stories that have appeared so you can see the broad spread of the coverage.

And finally, as they say, Clare has asked me to repeat for you what she said earlier this week, 'I want a reattribution offer to go to policyholders and I want them to be given a choice. That offer must be a fair offer that does not over-reward shareholders, given that the money in the inherited estate has accumulated purely from policyholders.'

Have a good weekend.

Yours faithfully,

Jonathan Haslam

And many thanks to Money Marketing for its agreement to let us give you a link to a story from last week.

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