Reattribution and fund transfer
In summer 2009, we invited eligible policyholders in the CGNU Life and Commercial Union Life Assurance Company (CULAC) With-Profits Funds to take part in our reattribution.
We asked policyholders to make a choice: either to accept a one-off incentive payment, or retain their future interests in any possible future payout (or "special distribution") from the inherited estate.*
More than 87% of eligible policyholders took part in the reattribution, and of those 96% accepted our offer. Voting has now closed. Our plans were approved by the High Court and Aviva Board and the reattribution and fund transfer took place on 1 October 2009. Overall, we're paying policyholders £470 million from shareholders' funds. We expect to issue all reattribution payments by the end of March 2010. In most cases payments will be tax-free cash.
As well as policyholders who voted "YES", we're also sending payments to policyholders whose policies ended contractually (for example matured), or where a policyholder died between 21 November 2006 and 1 October 2009. These policies automatically qualified for a reattribution payment.
Further information about the reattribution and fund transfer is available on our dedicated website: www.aviva.co.uk/fundtransfer.
* The inherited estate is money that has built up in these with-profits funds over many generations and is above the expected amount needed to meet current and future policyholder commitments and guarantees, and other obligations such as tax and expenses.
Related documents
News releases
- 01 Oct 09: Aviva customers to receive £470 million in reattribution deal
- 18 Sep 09: High court hearing approves Aviva reattribution deal
- 03 June 09: Aviva started mailing one million policyholders with reattribution voting packs
- 06 May 09: Aviva announces restructured reattribution offer
- 30 Jul 08: Aviva announces £1 billion reattribution offer
- 26 Feb 08: Update on reattribution of inherited estate
- 13 Dec 07: Update by Aviva plc on reattribution process
- 21 Nov 06: Clare Spottiswoode appointed as Policyholder Advocate following nomination in February 2006
- 02 Feb 06: Clare Spottiswoode nominated as Policyholder Advocate
Explanation of the terms we’ve used
Inherited estate
An inherited estate is money that has built up in a with-profits fund over many years. It is in addition to the expected amount needed to meet current and future policyholder commitments, guarantees and other obligations, such as tax and expenses. The inherited estate is important because it is used to provide:
- security for policyholders against unexpected adverse conditions, such as substantial falls in stock market values,
- investment flexibility and
- the finance that is needed to support the continued writing of new business in the fund.
Please note that the term ‘inherited estate’ has a specific meaning here. It does not refer to an inheritance received when someone dies or to property of any sort.
Reattribution
A reattribution allows eligible policyholders to choose to receive an incentive payment in return for giving up their interests in any possible future payout from an inherited estate. The payment is made from shareholders’ funds and does not come from the with-profits fund.
With-profits fund
With-profits funds are investment vehicles designed to provide savers with access to stock market investment at lower risk than direct investment in shares. The products that use with-profits are typically regular and singular premium savings plans (endowments and bonds) and pensions.
With-profits funds pool policyholders’ investments, which the insurance company manages and adds bonuses to the value of the policies. The size of these bonuses depends on how well the investments perform and are subject to smoothing. A regular bonus (sometimes known as a reversionary bonus) is added to policies every year. A final bonus may be paid when the investor leaves the fund when the policy ends.
For a full list of terms relating to these proposals, please visit the dedicated website: www.aviva.co.uk/fundtransfer