Reattribution and fund transfer
Message from Mark Hodges, chief executive, Aviva UK Life
I am delighted that we are giving customers the opportunity to benefit from a reattribution and a free choice on whether or not to accept our offer. Voting packs are being sent out to eligible policyholders during June 2009 and completed voting forms should be returned by 21 August 2009.
Our offer to eligible policyholders allows for future changes in the value of the inherited estate, which means that the payment quoted in our offer letter to policyholders is the lowest amount they would receive if they accept the offer and the reattribution goes ahead.
Policyholders have an entirely free choice on how they vote. The reattribution doesn't depend on a majority vote and the decision a policyholder makes relates only to their own individual policy. Eligible policyholders must vote YES and accept the offer to receive a payment. If they vote NO or don’t vote at all, they will retain their interests in any potential future special distributions, but won’t receive a payment.
More information included on our dedicated reattribution and fund transfer website - www.aviva.co.uk/fundtransfer.
Policy benefits, premiums and normal bonuses will be unaffected whatever way the policyholder chooses to vote.
This is a good deal for our policyholders and shareholders and we believe the offer is good value for 99% of eligible policyholders.
The reattribution and fund transfer remain subject to a final FSA review and approvals from the Aviva Board and High Court. If all goes to plan we expect to start making payments to customers who vote YES from November 2009.
What happens next?
June: Voting packs are being sent to around one million eligible policyholders.
Vote forms must be returned by 21 August 2009 to ensure they are registered.
Mark S Hodges
Chief Executive
Aviva UK Life
Media contacts
Louise Soulsby, senior media relations manager, Aviva UK Life : 01904 452617 / 07800 699526
Related documents
News releases
- 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 terms
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
