Aviva Extended the Deadline to Vote to 21 Sept 09 Print E-mail

Telegraph – 19 August 2009    

Three-quarters of Aviva's 1m eligible policyholders have voted on a proposal to pay windfalls averaging £500 to those willing to forego any future interest in the insurer's surplus funds, or "inherited estate".

The group extended the deadline to vote on the “reattribution scheme” for the remaining 250,000 policyholders by a month to September 21. Aviva said of those who had voted so far, 96pc were in favour.

Aviva, which recently rebranded from Norwich Union, is sitting on a surplus of £1.2bn in two of its with-profits funds - the CGNU and Culac funds. This offer is being made to policyholders with pensions, endowments or bonds invested in these funds and whose policies were in force on November 21, 2006. Those whose policies have matured since then will still receive windfall payments, but cannot vote. Mark Hodges, chief executive of Aviva UK Life, said the group expected to make windfall payments from November. He said: “We’re keen for as many of our eligible policyholders as possible to take advantage of our reattribution offer, which we believe is good value for at least 99pc of them.”

Windfall payments will vary according to the value and age of each policy, but Aviva said they would not be below £200. One-third of policyholders can expect the minimum, but the group said most will fall between £200 and £1,150. The total on offer to policyholders is £500m, representing 40pc of the estate. Consumer groups say inherited estates – also called “orphan assets” – which are surplus funds accumulated over many decades, should be split 90/10 in favour of policyholders. Aviva counters that it has already agreed to another redistribution of £2.1bn in three tranches to all policyholders.

In this latest offer, policyholders will not be forced to sign away their rights to the inherited estate. Those who vote against the proposals, or do not vote at all, will keep their entitlement, although there is no guarantee of any future distribution from the surplus.

Clare Spottiswoode, the policyholder advocate appointed by Aviva to negotiate the deal on behalf of policyholders, has come under fire for drawing out the talks, which took two-and-a-half years. During that time, the value of the inherited estate tumbled from more £2bn to £1bn, leading to Aviva revising its offer.

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