Release date: 2 March 2004

NPI declares annual and final bonuses

During 2003, NPI Limited policyholders were advised that the company into which NPI Limited products are reinsured, Pearl Assurance Limited, had substantially reduced its equity holdings, investing the proceeds in fixed interest investments.

Policyholders were alerted to the change in asset mix and the potential for future bonuses to be reduced. These actions were taken to help to ensure that statutory solvency margins continue to be met and to protect contractual benefits and bonuses already added to policies.

Annual and interim bonuses

The bonus rates declared on Unitised With Profit and Socially Responsible With-Profits (SRWP) business for 2003 are

For individual pensions business - 3.0% for the second half of 2003, down from 4% for the first half of 2003*.

For With Profit Bond business - 2.5% for the second half of 2003, down from 3.5% for the first half of 2003.

With the reduction in Pearl’s equity holdings, the fund is focused on maintaining the security of policyholders’ contractual benefits. Interim bonus rates for 2004 have been reduced to 2.0% per annum for pensions business and 1.5% per annum for with profit bonds.

Final bonuses

As a new company, which started writing business in 2000, NPI Limited has not yet declared final bonuses. Market Value Reductions are in force against much of the Unitised With Profit and Socially Responsible With Profit business in order to bring surrender payments in line with the policyholders’ fair share of the underlying value of the fund.

Notes to editors:

• The new rates took effect on 1 January 2004

• At 30 June 2003, the Equity Backing Ratio for Pearl (into which NPI Limited is reinsured) was 29%, made up primarily of equities and property.