Thank you for your letter dated 20 May 2008 requesting further information on the inherited estate.

  I confirm that the evidence, both written and oral, given to the Select Committee was correct. The funds are open to new business and as we reported in our recent Life New Business announcement the sale of with profits continues to be an important source of revenue for Norwich Union, because these excellent guaranteed products continue to meet increased customer demand in these times of global financial turbulence.

  The inherited estate continues to provide support by meeting the capital strain imposed by new business. This support is repaid to the estate over the life of the product.

  For a limited period, the board decided to offer an additional guarantee on our new product which was charged to the Inherited Estate, rather than policyholders. This was in addition to the support for the capital strain of new business. This additional support was withdrawn from 1 January 08, but our policy of using the Inherited Estate to fund the capital strain imposed by new business continues.

  The report that is referred to in your letter is the annual report by Norwich Union that confirms the board's compliance with our Principles and Practices of Financial Management. Each year we send out an annual statement to every policyholder. As well as setting out each policyholder's individual sum assured and bonus the statement refers the reader to our website www.norwichunion.com/ppfm where the report can be found.

  If any customer does not have access to the internet, we send out hard copies on request. For ease of reference I enclose the report for CGNU and CULAC.[93]

23 May 2008