The persistency pay-off

High lapse rates have been destroying UK insurers' embedded value for some time - but they have faced up to the problem and are using a variety of approaches to stop value leaching from their future profits. Laurie Carver reports


On its corporate website Aviva subsidiary Norwich Union boasts that its green achievements include recycling 80% of its paper since 2006 as part of a commitment to go carbon neutral. Sadly for the York-based company, paper isn't the only part of its business that it is adept at recycling.

According to its 2008 results Norwich Union took a £73 million hit to its embedded value simply through applying more realistic persistency assumptions and was forced to add another £50m to its reserves held

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