Aviva Policyholders Set to Vote Print E-mail

TEP - Jun 3, 2009

Insurance giant Aviva has begun mailing voting packs on its proposed £400 million payout offer to policyholders.

Around one million policyholders are being offered a cash windfall in exchange for giving up their rights to any future redistribution of the surplus assets that have built up in the group's with-profits funds.

The payout will see 90% of eligible policyholders receive between £200 and £1,150, with the remaining 10% getting more. The group had originally hoped to pay out a minimum of at least £400 per person, but pulled the offer in February due to steep stock market falls.

The voting packs include a letter setting out the minimum amount that individuals will receive if they vote in favour of the reattribution and a personalised voting form, as well as booklets from both Aviva and the independent policyholder advocate Clare Spottiswoode. Ms Spottiswoode is also holding roadshows at 10 locations across the UK to give policyholders the chance to ask questions about the reattribution.

Aviva hopes to start sending payments to people who vote in favour of the offer from November 2009. Policyholders have until August 21 to vote, ahead of a High Court hearing in September.

Gary Price, reattribution director for UK Life at Aviva, said: "We believe this offer represents a good deal for our customers. We have aimed to provide policyholders with as much information as we can, in plain English, to help them make their choice. The voting pack, combined with our dedicated website and call centre as well as the policyholder advocate roadshows will enable people to make an informed choice."

The surplus assets in the with-profit fund, known as the inherited estate, were valued at £2.1 billion in June last year, shortly before the reattribution offer was announced. But the figure had fallen to £1.4 billion at the latest valuation carried out at the end of March.

The payouts outlined in the letters being sent are based on the fund being valued at £1.2 billion, but the final amount policyholders will receive will be calculated according to the average value of the inherited estate during the three months between June and August.

The move will enable policyholders to benefit from any increase in the inherited estate's value, but the reattribution offer will not go ahead if it falls below £1.2 billion.

The £400 million payout, which is based on 80% of policyholders accepting the offer, will be made from Aviva's shareholder funds, not from the inherited estate itself. It is estimated that the move will free up around £600 million from the inherited estate, which will be used to underwrite new policies.


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