Norwich Union Starts To Hand Back Orphan Assets
The issue of so called insurance orphan assets has long been a major problem for the insurance industry, who owns them and what can legal be done with them. In a deal which has taken two years to negotiate, CGNU has announced that more than one million policyholders will receive compensation of between £400 and 1,000 to forego any right to future bonuses and payments from the orphan assets.
The total fund available for distribution is in excess of £1 billion with 70% going to policyholders and the remaining 30% going to shareholders whether by some special dividend or a cash injection into the group. However, now that one of the main UK insurers has broken ranks and arranged a distribution, with the blessing of the regulator, it seems only a matter of time before the other insurers follow suit.
This does seem the best way to use to funds available with shareholders receiving the benefits via the group and policyholders in line for a useful payout at a time when money is tight across the UK. The deal has been one long struggle for CGNU but they have somehow found an agreement which has been accepted by all parties.
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