Fewer than one in 10 Norwich Union mortgage endowment policies are on track to be large enough to repay the home loan they were taken out to cover, the group said yesterday.
The insurer said only 9.7 per cent of its with-profits mortgage endowments had green status, meaning they are on track to reach their target sum or provide a surplus, while 90.3 per cent are red, meaning holders are likely to face a shortfall.
But it said the average shortfall people faced was only around £1,400, while those policies that were closest to maturity were also the most likely to be on track to repay the mortgage in full.
It added that around two-thirds of policyholders were also set to benefit from its mortgage endowment promise - under which it pledged to make up the projected shortfall policyholders faced in 1999 - which is likely to halve the deficit for those who are eligible.
The news came as the group announced it would be paying the same regular bonus rates on its with-profits policies as it did last year, while the final bonuses paid on many of its pensions and savings policies have been increased.
Regular bonus rates for 2008 range from 2-5 per cent depending on the policy type.
Bonuses on conventional policies range from zero to two per cent, although these policies do have investment guarantees.
The group said 2007 had been a "rough ride in the markets for investors", but added that despite this its funds had seen a fifth consecutive year of positive returns.
Norwich Union currently has 2.4 million with-profits customers and its four with-profits funds are collectively worth £60 billion.