Day of battle dawns over NU windfalls

Clare Spottiswoode is this week expected to submit her comments on Norwich Union's proposals for freeing up around £3bn from its life fund, paving the way for windfalls for policyholders.

The insurance giant has been in negotiations with Spottiswoode for more than a year over how its 'inherited estate', built up in its with-profits fund over decades, should be split between policyholders and shareholders. Spottiswoode, who was appointed to represent the interests of NU's policyholders, wants 90 per cent for her clients, in accordance with rules on how profits from investing the fund are distributed, while NU wants the share to be somewhere closer to the 30 per cent paid by Axa seven years ago.

NU hopes to put an offer to its 1.1 million policyholders in the summer. It would be their second windfall this year: last month the insurer said it would distribute £2.3bn of surplus assets over the next three years. While 90 per cent of that money had to go to policyholders, splitting up the inherited estate is far more controversial.

An agreement could pave the way for other distributions, notably with Prudential, which has appointed a policyholder representative to discuss the reattribution of its £9bn inherited estate.