Three-quarters of Norwich Union's endowment policy holders could be facing shortfalls.

The UK's biggest insurer, which is about to send out its second batch of warning letters, has said that as many as 75% of its 1.3 million endowment policies are at risk of not meeting investment targets.

Plunging world stock markets over recent months have pushed many endowments further off track, adding thousands of mortgage-holders to the list of those already facing shortfalls.

Norwich Union's projection is just short of Eagle Star and Allied Dunbar, both part of Zurich Financial Services Group, which recently revealed that 79% of their policies were not meeting investment targets.

Red letter day

Insurers must write to endowment policyholders every two years informing them of any shortfalls.

The letters are colour-coded according to the level of risk.

Amber letters show there is a significant risk that the endowment is not on track to pay off your mortgage.

Red letters show there is a high risk of people being unable to repay your mortgage at the end of the endowment's term.

Last time the insurer carried out the exercise, 64% of the letters were red and amber, with about 6% of them showing the most serious warning.

A spokesman told BBC News Online that "in the intervening two years, there has been a significant and lengthy fall in world stock markets, it was always going to be the case that a greater proportion of policyholders would have projected shortfalls than two years ago. "