MORE letters keep arriving from disgruntled bank and building society customers whose mortgage protection policies are being held under single `group' policies with the Norwich Union. These readers have discovered - like thousands of others - that despite paying their premiums each month, they will not be entitled to the free shares allocated to Norwich Union customers who have individual mortgage protection policies then the company goes public later this year.
Mr M. from Dublin 14 says he took out his home loan two years ago with the TSB. "I had to effect a mortgage protection policy through the Norwich Union. Now it appears that the bank is to benefit from the free Norwich shares, when the company seeks a flotation on the London Stock Exchange in 1997. I find this unfair and unacceptable and I'm sure I am only one of many people in this situation.
The two institutions most concerned are the TSB and EBS building society. A spokesman for the EBS has told Family Money that as the designated `member' of the Norwich on behalf of the policyholders, the society will only receive a single allotment of shares, about 200, the same as any other member. Discussions have taken place between the EBS and Norwich but we understand no settlement is imminent. The Norwich Unions position is that under their rules (as a mutual company) the only policyholders who can receive shares, are those defined as individual members for example, joint pension fund members (in which all contributions are paid in, one lot by the employer) will not be entitled to free shares either.
The problem with comparisons like these is that many mortgage holders we have spoken to or have written to Family Money were not aware of the fact that their policies were being held in a joint account. "I took out the insurance policy with the Norwich Union, not a TSB insurance policy and I believe I should be entitled to the shares," Mr T from Dublin 3 told Family Money recently. The policyholders believe they are entitled to the shares or some other form of compensation.
The Norwich share allocation for this category of member policy holders will be quite modest, but if the Irish Permanent flotation in 1994 is anything to go by, such free shares are well worth getting.
As the graph shows, when Irish Permanent was launched in October 1994, when the share price was, set at 180p. Within a few months they had risen to 242p per share and have climbed steadily ever since to their January 1997 price of 505p. The initial 300 free shares went from a launch price value of £540.00 to a current value of £1,515.00. Over 110,000 Irish Permanent members still hold their shares, making them one of the most loyal group of small shareholders in the State.
We have included the share price movements of two other popular stock flotations in recent years, Irish Life and Greencore. As you can see, neither stocks have performed as spectacularly as the Irish Permanent free shares.
