Norwich Union majority of endowment policies will be in shortfall
Norwich Union has revealed that more than 90 percent of its endowment policies will be in shortfall when they mature and will therfore not provide sufficient funds to pay off mortgages.The number of policies expected to be in shortfall and designated as ‘ red’ has increased to 90.3 percent from 89.5 percent last year. Of Norwich Unions 2.4 million with-profit customers, 900,000 are endowments.
One consolation for Norwich Union policyholders is the Mortgage endowment promise, designed to make up the shortfall on a mortgage endowment policy when it matured. This promise was conditional on Norwich Union earning a sufficient investment return on its free reserves. Fortunately the company believes that it is “viable under the current and improving market conditions and, as a result, is not under review”. Although £1 billion has already been committed to this scheme, Norwich Union has stated that the “promise may be reviewed” if market conditions change in the future.
