January 14, 2007
The battle lines around those policyholders who will, and those who won't get windfalls, if and when Norwich Union successfully distributes its £4 billion 'inherited estate' - are being drawn.
And, if last week's first public policyholders' meeting on the issue is anything to go by, it's going to get bloody.
Windfalls for some Norwich Union with-profits policyholders are in the offing because the insurer's parent company, Aviva, wants to re-distribute a vast pot of £4 billion 'inherited assets'. For more on the background to this, read here.
It's serious money. It could mean big windfalls (that's thousands of pounds) for many of the estimated 1.2 million eligible policyholders.
But it's not yet clear who will get what. Should policyholders who have put the most into their endowments or bonds or pensions, over the longest period of time, collect the biggest windfall as a reward? Or should it be the newer customers, whose future is tied up with Norwich Union for longer, who get the most, because they have the most to lose over time?
The woman who will play a major part in deciding is policyholder Advocate Clare Spottiswoode, pictured. 
Last Wednesday she fielded strings of questions from worried and sceptical policyholders in the first of the five national roadshows that she will conduct this month and next. (For details of how to attend, visit Policyholderadvocate.org)
But you can bet that what was on the top of most policyholders' minds was the money. How much they'd get, and when they'd get it.
For now Spottiswoode's job is relatively easy. She can claim, quite reasonably, that she is listening to all policyholders' points of view. But soon her role will get nastier. She will have to tell some groups of policyholders why she has decided that they ought to get less of a windfall than others.
Policyholders last week asked some difficult questions - to which, in some cases, Spottiswoode didn't have answers. Here are two of the most commonly asked:
"If this £4 billion pot of spare assets has been sitting around for so long, why haven't policyholders been given more, and better, bonuses?"
Spottiswoode didn't absolutely know the answer to this. But the gist of what she said - along with help from an actuary who works with her - was that this £4 billion originated largely from policyholders, now dead, who had not been paid out enough money when their policies matured back in the 1960s and 1970s.
The money hasn't been touched since then because Norwich Union's parent company Aviva needs policyholders' permission to use it. That's what this process is all about. But Spottiswoode later told me that she needs to, and will, establish for sure that the money has not been used at all to date to benefit policyholders.
"How do we know that the money is only worth £4 billion. Mightn't it be even more?"
Good question from someone who evidently knows that insurers are as trustworthy as a rope bridge in an Indiana Jones movie. Spottiswoode said: " Don't worry, I'll check. I'm getting the raw data in March, which is when the numbers haved to be filed to the regulator, and with the help of accountants KPMG I will work out whether £4 billion is correct."
Other policyholders asked less crucial questions, for instance about why the Policyholder Advocate's office employed call centre staff based in India. (The answer to that one, predictably, is that it's cheaper.)
No-one asked who was paying Spottiswoode's wages and other costs or how much it would come to. But since there has been some comment on this in the papers, one of Spottiswoode's colleagues explained that if divided among all the eligible policyholders, the bill for Spottiswoode would come to 23p each. If the deal goes through, policyholders will foot the cost.
Keep your comments and questions coming, using the tools below (your email addresses aren't published, and you can post under any name). The Norwich Union windfalls - which if they come at all will not be paid till much later this year - are going to be good news for a lot of people. But much could go awry between now and then.
Me, my colleagues on Financial Mail and those on Thisismoney will, between us, give you the best coverage you'll find anywhere in print or on the web. So do stay tuned.
- Richard Dyson
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. It's a terrible tale of bungled and reckless management, for which policyholders are patently paying - years later.
I'm the first to put my hand up when I've got it wrong. And yes, on the face of it, it doesn't look good. But bear with me while I restate my argument.
I never claimed to have some inside track on how Standard Life shares would perform. My point was that the majority of people receiving shares only take a passing interest in the stock market and individual shares - my dad included - and that they didn't have the interest/time to keep a close eye and make an informed decision.
Shares are volatile (as if you need reminding follow the roller coaster of recent weeks). So my advice to the majority of 1.5m not experienced in share trading was to sell the Standard Life shares and put the money into a fund. Unit trusts, Oeics and investment trusts will invest your money in anything from 30 to 400 shares, spreading (and reducing) the risk.
My original blog urged readers to check out fund tips that we'd gathered from independent financial advisers. One of the recommendations was the Jupiter Emerging European Opportunities, a fund in which I invest. It has powered ahead more than 20% since last summer. The other funds tipped have all had decent performance - and taking far lower risks than holding a single stock.
So the moral of the story involves eggs, but not on my face... when investing, don't put all your eggs in one basket.
- Andrew Oxlade, Editor, This is Money
>> This is Money's share school - www.thisismoney.co.uk/shareschool
>> This is Money's latest fund tips - www.thisismoney.co.uk/fundtips
>> All This is Money's news and advice about Standard Life shares - www.thisismoney.co.uk/standardlife