Norwich Union deserves a good seven out of ten for coming to terms with its policyholders over its inherited estate. The settlement is not perfect and it's not completed, but at least some of the £5 billion or so of surplus capital in its two with-profits funds is at last being distributed to policyholders.

Every day of delay meant hundreds more maturing policyholders missed out on a distribution of capital belonging to them. As it is, generations of policyholders have missed out on what was rightfully theirs.

Every day of delay meant more money for the actuaries, for whom this entire episode has become a near-legendary gravy train, and less for shareholders and policyholders.

The three-year staged payment schedule is not ideal. It means that some customers whose policies mature in the next two years will miss out on some of the excess surplus that should be theirs. Sadly, Clare Spottiswoode, the policyholder advocate, was unable to convince either Norwich Union or the Financial Services Authority of the merits of their case.

The upside for Norwich Union is that it helps to prevent an unseemly and lumpy stampede for the exit from its funds.

In the first part of the settlement, the so-called distribution, the 90/10 doctrine underpinning such payouts has been rightly upheld. Policyholders will get £2.1 billion, while shareholders will receive £230 million.

The second part of the settlement, the reattribution, is going to be a tougher battle. The 90/10 rule doesn't apply and Norwich Union appears to be in no mood to come to terms yet. Ms Spottiswoode has rejected two offers and sounds sniffy about the third, arguing that there is little new money on the table.

By coming to a partial settlement, Norwich Union and its parent Aviva have thrown down the gauntlet to Prudential, which is bound to come under fresh pressure for a similar payout. The sums at stake here are collossal, something like £9 billion.

So far, however, progress appears to have been glacial. Pru's policyholder advocate has been named but not formally appointed. The pace needs to pick up.

patrick.hosking@thetimes.co.uk

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