Norwich Union - Reattribution

chromehorse

:eek: The latest newsletter from Clare Spottiswoode's office refers to coverage on Citywire and ThisisMoney about the ongoing battle between Clare, trying to get the FSA to stop NU screwing its long-suffering policyholders, and greedy Norwich Useless, who'll stop at nothing to steal policyholder money.

If you hold a Norwich Union bond or mortgage endowment you'll know how pathetic - and still shrinking - the returns have been. How can they ignore this and threaten to run away from the deal because they can't steal more than the 10% to which they have at least some entitlement?

dunstonh

If you hold a Norwich Union bond or mortgage endowment you'll know how pathetic - and still shrinking - the returns have been.

I have several people with NU with profits bonds and their returns are in double digits and have been very stable (actually increasing in recent years). Its one of the main reasons they havent been pulled out. You shouldnt assume all plans are bad.

It may be better if you were more objective than posting anti NU comments which are incorrect.

chromehorse

dunstonh wrote: »

I have several people with NU with profits bonds and their returns are in double digits and have been very stable (actually increasing in recent years). Its one of the main reasons they havent been pulled out. You shouldnt assume all plans are bad.

It may be better if you were more objective than posting anti NU comments which are incorrect.

That's nonsense .... I don't know what NU with-profits products you're referring to but my mortgage endowment, like 99% of all such endowments, is 'red' to the tune of £30,000. If you'd been to any of the PA briefings you'd have been met by an army of long-suffering with profits consumers and mortgage endowment holders desperately worried about their prospects.

dunstonh

That's nonsense

Really? and your experience of NU is your endowment policy which is a legacy contract.

I don't know what NU with-profits products you're referring to but my mortgage endowment, like 99% of all such endowments, is 'red' to the tune of £30,000.

Please provide evidence to support your view that 99% of NU with profits endowments are red. You wont be able to. NU removed the amber classification so you only get red and green. The number that are red is certainly not 99%.

If you'd been to any of the PA briefings you'd have been met by an army of long-suffering with profits consumers and mortgage endowment holders desperately worried about their prospects.

What an awful thought. A bunch of professional whiners who would rather whine than do something about it.

There are plenty of NU WP policyholders who are doing nicely. There are some who are not. Dont assume that because you may have a duff plan that everyone has.

Old_Slaphead

I've several WP bonds taken out at roughly the same time (1999-2000).

NU is the 3rd best performer and certainly above (an albeit poor) average. It's yielded a net return of approx 37% in the last 8 years and, unlike some of the others, attracts no MVA.

Whilst I'm now convinced that WP policies are a bit of a ripoff NU is by no means the worst offender.

FWIW with the stockmarket going down over the past few months and with the (IMO) spectre of the possible reintroduction of MVAs, I've recently taken the opportunity to liquidate some (but not the NU policy) of my WP investments which, by and large, have outperformed my other equity based investments over the last 12-24months.

dunstonh

Whilst I'm now convinced that WP policies are a bit of a ripoff NU is by no means the worst offender.

Not so much a rip off. More a case of niche product nowadays. It was the main investment fund for so long but modern alternatives are usually better.

I've several WP bonds taken out at roughly the same time (1999-2000).

NU is the 3rd best performer and certainly above (an albeit poor) average. It's yielded a net return of approx 37% in the last 8 years and, unlike some of the others, attracts no MVA.

That was probably the worst time to invest and it is worth noting that your 37% is not great and a decent unit linked spread using the same asset split could have beaten that. However, there are an awful lot of people with FTSE trackers that have done worse than that in that period.

If we look at post 2001, there are only really two mainstream with profits funds that stand out with good performance. Norwich Union and Prudential. Both of these are managing returns just over 10% a year. The rest are more or less useless.

Would I have my money in With Profits? no. However, there is still the occassional minority time that it could still be right.

chromehorse

Please provide evidence to support your view that 99% of NU with profits endowments are red. You wont be able to. NU removed the amber classification so you only get red and green. The number that are red is certainly not 99%.

How about this from the BBC? (If I said 99% that was an error - but it is over 90%)

Last Updated: Friday, 12 January 2007, 11:42 GMT

Norwich Union endowment shortfall

Nine out of ten "with-profits" endowment policies sold by the Norwich Union (NU) will probably fail to repay their customers' mortgages, it says.
That will affect about 675,000 out of 750,000 NU endowment holders.
The insurer says it has already put aside about £1bn to make good part of the undershoot its customers will face when their policies eventually mature.
The figures have been released by the company as part of its annual bonus statement for with-profits investors.
In the red
Under rules set down by the Financial Services Authority (FSA), all financial companies that have sold endowments are obliged to write to their customers each year.
Using FSA assumptions about the likely range of future investment returns, the customers must be told whether their policy is still on target to repay the mortgage (green), possibly may fail (amber) or will definitely fail (red).
In 2005 the NU had 7% of its customers in the green category, 21% in amber and 72% in red.
This year, thanks to a pick-up in investment returns, 10.5% are now in green, but the company has given a red warning to the remaining 89.5% as it has decided to stop using the amber category.


I believe you'll find that the % has now climbed to just over 90%

dunstonh

I believe you'll find that the % has now climbed to just over 90%

If you want to play stats, you will find that 89.5% red includes all those that were £1 short on mid projection (or other tiny figures). It also doesnt include those plans that do not include final bonuses in the projections and it does not include those that will hit target due to the mortgage promise value.

It also only focuses on legacy endowments and not more modern business.

chromehorse

dunstonh wrote: »

If you want to play stats, you will find that 89.5% red includes all those that were £1 short on mid projection (or other tiny figures). It also doesnt include those plans that do not include final bonuses in the projections and it does not include those that will hit target due to the mortgage promise value.

It also only focuses on legacy endowments and not more modern business.

Fair enough - but Iwasn't playing stats - in fact being £30K short stops me feeling particularly 'playful'. Re mortgage endowment promise (MEP), NU have set aside £1Bn for this, which won't go very far at all when you consider the number of 'red' policies. Personally, I find the numerous caveats surrounding MEP to be pretty galling. I raised this wth Clare Spottiswoode in Cardiff, but haven't heard any indication that NU have any plans to remove the caveats. So as far as I'm concerned MEPs shouldn't be 'banked' by policyholders just yet.

chromehorse

Have just found the item on the latest figures on NU mortgage endowments :-
Norwich Union admits 90% of endowments may not pay loans
Norwich Union has cut endowment payouts by up to 10% and admitted that for the first time more than 90% of the 900,000 policies it sold to pay off mortgages are on "red alert" and unlikely to reach their target amount. The fall in payouts comes despite an investment gain of 5.8% over the year in the Norwich Union with-profits fund and 5.4% in the former Commercial Union fund acquired by NU.