Reattribution and fund transfer
Message from Mark Hodges, chief executive, Aviva UK Life
It gives me great pleasure to announce that we successfully completed our reattribution and fund transfer on 1 October 2009.
This is fantastic news and means that the hundreds of thousands of eligible policyholders who voted "Yes" to accept our reattribution offer can look forward to receiving their payment in the next few months. We’ll start issuing payments in early November, and expect that the vast majority of customers will receive theirs by the end of the year. Policyholders don't need to do anything further to prompt their payment.
More than 87% of eligible policyholders voted in the reattribution election and 96% of those voted "Yes". We’ve always believed that our offer is good for 99% of eligible policyholders and I’m delighted that so many of them will benefit from an extra cash payout. Voting has now closed.
I’m also pleased to say that policyholders who voted "Yes" will receive slightly more than the amount shown in their offer letters. Our flexible offer meant that payments would automatically increase if the average value of the inherited estate was higher than £1.2 billion over June, July and August 2009. As the final value of the inherited estates for the reattribution was £1.25 billion, reattribution payments will be around 7% higher.
Overall, we’ll be paying policyholders £470 million. The payment will come from shareholders’ funds. The reattribution and fund transfer will not impact on the security or performance of policies. Whether or not the policyholder accepted the offer, they will continue to receive their normal policy bonuses and the funds they are invested in will remain secure.
This has been an incredibly complex process, and I’d like to thank policyholders for their patience throughout. We’re delighted to have completed the fund transfer and reattribution, and we’ll now work hard in delivering reattribution payments to more than 800,000 policyholders.
Mark S Hodges
Chief Executive
Aviva UK Life
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