Insurance company Norwich Union has announced that it is reducing payouts on its with-profits investments through a reduction in final bonus rates.
No changes are being made to regular bonus rates and market value reductions are not being introduced.
Norwich Union has reported that it has reduced final bonus rates because equity markets, commercial property and corporate bonds have fallen significantly in value since the beginning of the year.
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.
Despite market conditions, Norwich Union’s With-Profit Fund has performed well against average savings accounts and the FTSE All-Share over the short, medium and long term. 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.