MVRs down on Norwich Union With-Profits Funds

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MVRs down on Norwich Union With-Profits Funds

Fri 3rd Mar 2006

Norwich Union With-Profits Funds have today had their average market value reduction (MVR) decreased.

With-profits funds invest customers' money in a range of assets such as bonds, property and equities. Profits and losses are then shared out equally among investors.

The bank claims that the Norwich Union With-Profits Fund is intended to provide a "smoothed investment" as opposed to the "volatility" of stock market investment.

Investors in the CGNU (formerly General Accident and CGU) Commercial Union and Norwich Union Life and Pension funds will be affected by the changes.

Rates will be dependent on the year in which the units were purchased – those bought in 1998, 1999, 2000 and 2001 will have average rates of one per cent, two per cent six per cent and zero per cent respectively.

"With the continuing improvement in market performance in 2006 we are now able to make another reduction in MVRs. Our policy remains to remove MVRs as soon as markets allow and this is a further step in that direction," said David Riddington, senior actuary at Norwich Union.

MVRs are traditionally used to protect existing fund policyholders, especially when the market value of the assets in which the fund invests seems to be dropping below the value of the packages offered in the fund.

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