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Norwich Union breaks records yet again with a projected £1.4billion payout to some 70,000 customers in 2000.

Group chief executive, Richard Harvey commented, "Customerswhose policies mature in 2000 are enjoying excellent returns wellabove the rate of inflation. For example a 25 year endowment has areturn of 12.3% compared to inflation of 5.1%"

"By smoothing out the volatility of market fluctuations andinvestment returns through bonus declarations, with-profit policiescontinue to give policyholders good returns while reducing therisk. They are an ideal stepping stone between deposits and equitybased investments."

Payouts in 2000
Payouts on unitised policies remain strong with increases in theadditional bonus scales for all years money has been invested.

For a man aged under 75 investing £25,000 in a Norwich Unionwith-profits bond five years ago, the payout would be £40,648. Thisrepresents a yield of 10.2% . For the same investment ten yearsago, the payout would be £59,104, representing a yield of 9%.Inflation over the period was 2.8% and 3.5% respectively.

For a man investing £200 per month into a ten year unitisedpersonal pension plan the payout at age 65 will be £40,693,representing a yield of 10.2% (1999:10.1%).

Annual bonus rates
Annual bonus rates have been reduced for 2000 as part of an ongoingprogramme of managing bonus rates to reflect future lowerinvestment returns.

The rates for the current series of unitised policies untilfurther notice will be:

The rates for conventional with-profits policies at 31/12/99are:

Richard Harvey concluded: "Against a wider background in recentyears of lower interest rates and low inflation, our view of thelonger-term investment outlook has led us to further adjust annualbonus levels. We believe annual bonuses need to be managed at arealistic level, which allows us the investment freedom to maximisethe overall investment returns which can be passed on topolicyholders through the payment of additional bonuses.

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Notes to Editors

BONUS TERMS EXPLAINED
There are two types of with-profits policies: Unitised andConventional.

Unitised:
Contributions buy units in the With-Profits Fund. The unit priceincreases as the annual bonus is added on a daily basis.

The payout for a unitised with profits policy is made up of twoelements: The value of units and additional bonus.

Value of units: This is the value of the units held.

Additional Bonus: At the date of claim the value of the units iscompared with the total earnings of the policy. Any balance is madeup by the declaration of an additional bonus. Scales are expressedas percentage of the unit value and vary according to the year themoney was invested. Different additional bonus rates will apply tothe units bought with the different years' contributions.

Conventional:
Contributions secure a guaranteed benefit. Bonuses are added to theguaranteed benefit annually and at the end of the policy term asdetailed below.

The payout under a conventional with-profits policy is made upof three elements: the guaranteed benefit, annual bonus andadditional bonus.

Guaranteed benefit (also known as sum insured): This is theamount payable at the date of the claim (e.g. maturity or earlierdeath). Bonuses are added to this amount over the term of thepolicy to make up the final payout.

Annual Bonus (also known as reversionary bonus): This is theamount added to a with-profits policy each year. It is a payment onaccount towards the full share of policy earnings which will bepayable at the date of claim. For most policies it is expressed asone percentage applying to the guaranteed benefit and a furtherpercentage applying to the bonus already added in previousyears.

Additional bonus (also known as terminal bonus): At the date ofclaim the total of the guaranteed benefit and annual bonuses todate is compared with the total earnings of the policy. Any balanceis made up through the declaration of an additional bonus.Additional bonus rates are expressed as a percentage of theguaranteed benefit and will form a scale of rates that will varyaccording to the year the policy was taken out.

Please note: The above is designed as an introduction to bonusterms. For details relating to specific policies, you should referto the policy terms and conditions.

UNITISED BONUSES
Additional bonus rates have been improved as follows:

N.B The additional bonus rate is a percentage increase to theunit value and varies according to the year the money was invested.(#: provided units have been held for at least a year).

UNITISED BONUS - PAYOUT TABLES

With-profits Bond

10 Year Self-Employed Pension

The bond examples above are based on a £25,000 singlecontribution made by a man under age 75 at outset. The pensionexample is as issued to a male for a monthly premium of £200,maturing at age 65, with a return of fund death benefit.

CONVENTIONAL BONUSES - PAYOUT TABLES

10 year endowment

25 year endowment

The endowment policy examples above are based on a male aged 30next birthday, when the policy was started, for a monthly premiumof £50.

Note: £30 a month endowment figures available on request.

Important notes:

Future bonus rates are not guaranteed and may vary, as theydepend on profits yet to be earned. Past performance is notnecessarily a guide to the future.

The value of investment linked funds can go down as well as up.The illustrative maturity amounts include periods of high inflationand high investment returns.

We may apply a market adjustment factor on encashments (excepton maturity or death) which will reduce what you get back from theunitised with-profits fund.

Full written terms and conditions of Norwich Union products areavailable on request. Norwich Union Life & Pensions Limited isregulated by the Personal Investment Authority and only advises onits own products.