Norwich to hand out pounds 3bn windfall
Friday 21 March 1997
Announcing the details of the pounds 3bn share allocation yesterday, Norwich Union said with-profits policyholders, including those with endowment mortgages, would receive a minimum of 300 shares, worth an estimated pounds 720.
Slightly more than 1 million members will get more than the minimum, depending on the current value of their policies. The basis of calculation has not yet been published, but there is no maximum award, and policyholders with large pension funds will get shares worth pounds 10,000 or more.
A further 1.1 million members with non-profit policies, which includes anyone with an ordinary life assurance policy, investors in Norwich Union unit trusts and pensioners with Norwich Union personal pensions, will get a fixed allocation of 150 shares, worth an estimated pounds 360.
Policyholders living abroad will be eligible for shares and there will be a cash alternative for members living in countries which do not permit share ownership. But the flotation will not benefit ordinary household and motor policyholders, who are not deemed to be members of the society.
The cut-off date for policies which are eligible is 1 October last year. Any taken out after that date will not qualify for free shares. The proposal must win 75 per cent approval from those voting at an extraordinary general meeting to be held on 18 April.
After the furore caused by second-named account-holders missing out on the building society flotations, Norwich also looks set to run into flak after ruling that each policy relates only to one member.
Where there are two named policyholders only the first name on the policy will be entitled to shares. The finance director, Richard Harvey, admitted yesterday that many thousands of divorced couples would still have joint policies, and only the first-named would receive the shares.
The shares would currently be worth an estimated 220p-265p each, Norwich Union said. It is raising pounds 1.75bn in new capital in a public share offer at the time of the flotation. The new money will go to pay costs of the float, estimated at pounds 120m. Another pounds 130m will be retained in the general insurance company, and the balance of pounds 1.5bn will be paid into the life assurance fund, and invested in shares and other assets.
Had the group been a public company throughout the past three years, profits would have risen from pounds 404m in 1994 to pounds 581m in 1995 before dropping back to pounds 567m last year.
Assuming a dividend yield of 5 per cent, the group is expected to be valued at over pounds 5bn based on the notional pounds 205m dividend it would have paid last year. That equates to around 1.1 times the embedded value of the life fund, whereas comparable companies are valued at between 1.3 and 1.8 times the embedded value, which suggests the market value of the group after flotation could be in excess of pounds 6bn.
It will rank in the top 40 UK companies when dealings begin in June.
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...