Preference shares

Aviva plc and General Accident plc preference shares

Announcement of goodwill payment
 

Read the announcement we made on 30 April 2018 regarding a discretionary goodwill payment  to shareholders who sold  our preference shares* in the period from 8 to 22 March 2018 (inclusive).  

Questions and answers relating to the goodwill payment can be found below. 

A dedicated helpline has been set up for investors wishing to discuss the goodwill payment scheme on:

UK Freephone::    0800 046 8988
International:        +44 (0) 1603 606389

(Open 0900 – 1700hrs Monday to Friday)

Please note that the helpline is unable to provide any further information to that already provided on this website and we're unable to answer any specific questions about individual circumstances at this time.

When the scheme opens, we will update the information available on this website and write to all registered holders of preference shares who have been identified as entering into a sale of preference shares in the period from 8 to 22 March 2018 (inclusive).

*Preference shares issued by Aviva plc and General Accident plc (a member of the Aviva Group)

Questions and answers about our discretionary goodwill payment

These questions and answers will be updated over time as we finalise the process. 


Aviva is voluntarily launching the goodwill payment scheme because we believe that it is the right thing to do.

We recognise that the announcement on 8 March 2018 caused some uncertainty as to whether we would seek to cancel the preference shares at par value (a course of action which we later decided against adopting) and that this uncertainty caused a drop in the market price of the preference shares. 

In this context, a discretionary one-off goodwill payment will be offered to shareholders who sold their preference shares in the period from 8 to 22 March 2018 (inclusive) (the “Relevant Period”) at a share price that was lower than the price that the preference shares returned to following our announcement on 23 March 2018. The goodwill payment is intended to put those shareholders who sold during the Relevant Period in the same financial position they would have been in had they sold their preference shares following the 23 March announcement.

We believe that taking this step will further restore investors’ trust in Aviva, which is in the interests of all of our stakeholders.


No. This is entirely voluntary. 

We are confident that Aviva has at all times behaved appropriately in relation to the announcements made about the preference shares, and that there is no legal or regulatory obligation for Aviva to compensate those shareholders who sold preference shares during the relevant period. 


Eligible shareholders will be those who were the beneficial owners of the following preference shares (i.e. the party with the ultimate right to receive the income and the proceeds of sale from the preference shares) who entered into a sale of preference shares with a transaction date of 8 to 22 March 2018 (inclusive):

  • Aviva plc 8.375% preference shares (GB0002114154)
  • Aviva plc 8.750% preference shares (GB0002124963)
  • General Accident plc 7.875% preference shares (GB0003692513)
  • General Accident plc 8.875% preference shares (GB0003692737)


We have appointed KPMG LLP as an independent administrator to handle the goodwill payment claims and payment process. By 31 July 2018, we expect to have completed the preparations required to open and operate that process and will make a separate announcement at that time setting out full details of how eligible shareholders (or their brokers or nominees) may then claim their goodwill payment. These questions and answers will also be updated over time as we finalise the process.

KPMG will be writing to all eligible shareholders (or their brokers or nominees), on our behalf, upon the opening of the goodwill scheme.


We expect to have completed the preparations required to open and operate the goodwill payment scheme by 31 July 2018. A further announcement will be made at that time setting out full details of how eligible shareholders (or their brokers or nominees) may then claim their payment, including the anticipated timetable for making a claim and receiving payment. These questions and answers will also be updated over time as we finalise the process.

KPMG will also be writing to all eligible shareholders (or their brokers or nominees) upon the opening of the goodwill scheme.


Eligible shareholders will have up to six months to make a claim from the date the goodwill payment scheme opens.


For each eligible shareholder who accepts the offer of a goodwill payment, the amount of the goodwill payment will be calculated as the sum of (i) the Basic Goodwill Payment, (ii) any Transaction Costs and (iii) the Additional Amount.

The Basic Goodwill Payment will be calculated as follows:

  • Aviva plc 8.375% preference shares:  the amount by which 150.81p exceeds the price at which the preference shares were sold
  • Aviva plc 8.750% preference shares:  the amount by which 158.02p exceeds the price at which the preference shares were sold
  • General Accident plc 7.875% preference shares:  the amount by which 140.01p exceeds the price at which the preference shares were sold
  • General Accident plc 8.875% preference shares:  the amount by which 157.42p exceeds the price at which the preference shares were sold.

Transaction Costs are any third party dealing or other transaction costs incurred in respect of the sale of preference shares by an eligible shareholder.  Further details on the transaction costs which may be claimed and the evidence required to support a claim will be provided when the scheme is launched.

The Additional Amount is intended as a notional investment yield to recognise that if investors had received the Basic Goodwill Payment on 23 March 2018 they would have had the opportunity to re-invest it for income.  The Additional Amount will be calculated by applying a rate of 6% per annum to the sum of the Basic Goodwill Payment and the Transaction Costs for the period from 23 March 2018 to the date that is 3 months after the launch of the goodwill payment scheme (inclusive).

Any gains made by a shareholder from investing in preference shares during the relevant period will be offset against the goodwill payment.


The goodwill payment is intended to put eligible shareholders in the same financial position they would have been in had they sold their preference shares following the 23 March 2018 announcement, rather than during the Relevant Period. Following the 23 March 2018 announcement, the price of the preference shares settled at a price which reflects the market’s understanding of the terms of the preference shares and Aviva’s current plans.

The basic goodwill payment will therefore be determined by calculating the amount by which the volume weighted average price of the relevant series of preference shares over the 5 business days from (and including) 23 March 2018 exceeded the sale price for that shareholder’s preference shares.

The basic goodwill payment will be increased by any third party dealing or other transaction costs incurred in respect of the sale of eligible shareholders’ preference shares.  That total amount will be increased further by an Additional Amount intended to reflect a notional investment yield in recognition of the fact that had an eligible shareholder sold its preference shares on 23 March 2018 at the normalised share price that shareholder would have been able to invest the full amount of the proceeds of sale at that time for income.  The Additional Amount will be calculated by applying a rate of 6% per annum to the aggregate of the basic goodwill payment and applicable transaction costs for the period from the 23 March 2018 announcement to the date that is 3 months after the launch of the goodwill payment scheme.  The rate of 6% is broadly in line with the yield available to investors had they decided to invest in the preference shares at that time.

Any gains made by a shareholder from investing in preference shares during the relevant period will be offset against the goodwill payment.


Eligible shareholders may claim an amount equal to third party transaction costs (e.g. broker commission) incurred in respect of the sale of preference shares. Further details on the transaction costs which may be claimed and the evidence required to support a claim will be provided when the scheme is launched.


Any gains made by a shareholder from investing in preference shares during the relevant period will be offset against the goodwill payment. What this means is that if a shareholder who sold preference shares during the Relevant Period also purchased preference shares during the Relevant Period, and therefore benefitted from the increase in the share price of the relevant series of preference shares following the 23 March 2018 announcement, then any goodwill payment for which that shareholder is eligible will be reduced by the amount gained from the investment.


No.  Aviva is not offering to compensate investors for any tax that may have become payable as a result of the investor disposing of their preference shares (whether as a result of the investor benefitting from a capital gain or otherwise).  


Based on the information currently available, Aviva estimates that goodwill payments will be paid out to up to 2,000 individual preference shareholders and that the total cost of the goodwill payment scheme should not exceed approximately £14 million.

However, we are continuing to obtain and analyse trading data for the relevant period, and it will only be possible to ascertain for certain how many shareholders will be eligible to receive a goodwill payment and the level of uptake from preference shareholders, and therefore the total amount that will be paid under the scheme, at the end of the claims period for the scheme. 


The goodwill payment scheme is designed for those shareholders who sold their preference shares during the Relevant Period because they received a sale price that was lower than the price that the preference shares returned to following our announcement on 23 March 2018. The goodwill payment is therefore intended to put those eligible shareholders into the same position they would have been in had they sold their preference shares following the 23 March 2018 announcement.

Aviva is offering the goodwill payment to those shareholders as a discretionary gesture in recognition of the fact that our first announcement on 8 March 2018 led to uncertainty as to whether we would seek to cancel the preference shares at par value (a course of action which we later decided against adopting) which may have caused some shareholders to sell their preference shares. This applies to relatively few shareholders; other shareholders did not take any action in respect of their preference shares whilst awaiting Aviva’s final decision and, following the 23 March 2018 announcement, the price of the preference shares settled at a price which reflects the market’s understanding of the terms of the preference shares and Aviva’s current plans. 


We have appointed KPMG LLP as an independent administrator to handle the goodwill payment process. KPMG LLP will determine whether or not shareholders are eligible for a goodwill payment and, if so, will calculate the amount of the goodwill payment that will be offered to each eligible shareholder. Full details of the process for submitting a claim and accepting a goodwill payment will be announced once we have completed the preparations required to open and operate the scheme, which we expect to be by 31 July 2018. 


We expect to have completed the preparations required to open and operate the goodwill payment scheme by 31 July 2018. A further announcement will be made at that time setting out full details of how eligible shareholders may then claim their payment, including the anticipated timetable for submitting a claim to the scheme administrator and receiving payment. These questions and answers will also be updated over time as we finalise the process. 


KPMG LLP (who has been appointed as the independent scheme administrator) will liaise with brokers and nominees who executed transactions during the relevant period to establish the process through which claims for preference shareholders who sold their preference shares through brokers or other nominee accounts can be made and settled when the scheme opens.

We will provide full details on the process for eligible shareholders (or their brokers or nominees) to submit a claim for a goodwill payment once we have completed the preparations required to open and operate the scheme (which we expect to be by 31 July 2018). These questions and answers will also be updated as we finalise the process. 


We will provide full details on the process for eligible shareholders to submit a claim for a goodwill payment, including the information and supporting documentary evidence to be provided, once we have completed the preparations required to open and operate the scheme (which we expect to be by 31 July 2018). These questions and answers will also be updated over time as we finalise the process. 


Yes, if you are an eligible shareholder and wish to accept any offer of a goodwill payment, you will be required to sign a release. In broad terms, this will release Aviva (and any member of the Aviva group) from claims in relation to the preference shares and the administration of the goodwill payment scheme. It will also release KPMG LLP as the administrator of the scheme in relation to the administration of the goodwill payment scheme. We will provide full details on the terms of the release when the scheme is launched (which we expect to be by 31 July 2018). These questions and answers will also be updated over time as we finalise the process. 


Eligible shareholders will need to take their own advice on the tax treatment applicable to receipt of the goodwill payment.  However, Aviva has discussed the proposed payment with HMRC and, based on these preliminary discussions, understands that the Basic Goodwill Payment and the Transaction Costs should be characterised as capital for UK tax resident recipients and the Additional Amount should be characterised as income for UK tax resident recipients. 


KPMG LLP have been appointed as an independent administrator to handle the goodwill payment process.  KPMG LLP will determine whether or not shareholders are eligible for a goodwill payment and, if so, will calculate the amount of the goodwill payment that will be offered to each eligible shareholder.  We want the goodwill scheme process to run as smoothly as possible and KPMG have good experience in handling similar processes.


Preference shares remain an industry issue and we will be seeking to work with regulators and the industry to identify a market-wide solution before the 2026 deadline when, under the current regulatory environment, all shares of this nature will cease to count as regulatory capital.

Aviva is hoping to work towards obtaining regulatory approval for the preference shares, or a suitable substitute, to qualify as capital from 2026. If as we approach 2026 Aviva needs to reconsider this position, we will do so after taking into account the fair market value of the preference shares at that time. 


A dedicated helpline has been established for any investors wishing to discuss the goodwill payment scheme, on:

UK Freephone: 0800 046 8988
International: +44 (0) 1603 606389

(Open 0900 – 1700 Monday to Friday)

Please note that the helpline is unable to provide any further information than that already provided on our website and we are unable to answer any specific questions about individual circumstances at this time. Full details of the terms of the goodwill payment scheme and the claims process will be published on our website once we and KPMG LLP have completed the preparations required to open and operate the scheme. We expect to be in a position to open and operate the scheme by 31 July 2018.  We will issue a further market announcement at this time and will at that stage write to all registered holders of preference shares who have been identified as entering into a sale of preference shares during the Relevant Period.

Statement - issued 23 March 2018

On 23 March 2018 we issued a statement regarding our preference shares.  You can read this announcement in our Newsroom.

Frequently Asked Questions - 23 March 2018:

  • We have announced that we have decided to take no action to cancel the preference shares.  You will continue to hold the preference shares on their existing terms.
  • Aviva will work towards obtaining regulatory approval for the preference shares, or a suitable substitute to qualify as capital from 2026 onwards.  If, as we approach 2026, Aviva needs to reconsider this position, it will do so after taking into account the fair market value of the preference shares at that time.
  • If you have any further questions, please contact your financial adviser or broker.
  • Since the full year results announcement on 8 March 2018 we have heard a wide range of views on our preference shares, have spoken to a large number of investors and received strong feedback and criticism.  As a result we have listened.
  • The reputation of Aviva, and the trust people have in us, is paramount.
  • We hope our decision today goes someway in restoring that trust.
  • Yes.  No changes are being made or have been made to the terms of the preference shares.  Preference shareholders can continue to enjoy the rights attached to those shares on their current terms, including the right to dividend. 
  • As we have explained in our statement, we have decided to take no action to cancel the preference shares.  You will continue to hold the preference shares on their existing terms.
  • Aviva will work towards obtaining regulatory approval for the preference shares, or a suitable substitute to qualify as capital from 2026 onwards.  If, as we approach 2026, Aviva needs to reconsider this position, it will do so after taking into account the fair market value of the preference shares at that time.
  • If, as we approach 2026, Aviva needs to reconsider its position we would make shareholders aware via a market announcement.
  • Our announcement today means that preference shareholders can rest secure in their holdings. 

If you require any help or further information the Statement on Preference Shares (23 March 2018), please contact Aviva’s Registrar, Computershare Investor Services PLC using the contact details below:

  • By telephone: 0371 495 0105.  Lines are open Monday to Friday, 0830hrs to 1730hrs UK time, excluding public holidays. Please call +44 117 378 8361 if calling from outside the UK.
  • By email: AvivaSHARES@computershare.co.uk 
  • Online: www.computershare.co.uk/contactus
  • In writing: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, United Kingdom

Statement - issued 15 March 2018

  • In the announcement of Aviva plc’s (“Aviva” or “we”) 2017 full year results on 8 March 2018 we signalled our intention to reduce hybrid debt by £900 million and that we were targeting more than £500 million in additional capital returns, incorporating liability management and returns to shareholders, and that we were considering our alternatives for doing so. We noted in this regard that we have the ability to cancel the Aviva and General Accident plc (“GA”) preference shares at par value (plus accrued interest, arrears and in the case of GA plc, issue premium). GA made a similar announcement on the same day.
  • We have received a number of questions regarding the reference made in the announcements to the ability to cancel the preference shares issued by Aviva and GA  through a court approved reduction of capital, subject to the approval of the relevant issuer's ordinary and preference shareholders voting together.
  • In response to these queries we are providing investors with a more detailed explanation of the mechanism through which the preference shares may, with Court and shareholder approval, be cancelled following a reduction of capital.  This is one of a number of methods by which preference shares such as these can be retired.
  • Neither this document nor the additional information provided should be taken as a statement of the Company’s intent either with respect to any decision to return capital on the preference shares, the mechanism of cancellation or the amount per preference share to be returned, and no inference of such intention should be made.   No decision has yet been taken. If and when a decision is taken, we will make the appropriate market announcements.
  • As noted in our announcement on the 8 March 2018 we and GA are evaluating the available alternatives, including how to balance the interests of ordinary and preferred shareholders.
  • Preference shareholders should consult their broker or financial adviser on what steps, if any, they should take as a result of this document.
  • If you require any help or further information regarding your shareholding, please contact Aviva’s Registrar, Computershare Investor Services PLC using the contact details below:
    • By telephone: 0371 495 0105.  Lines are open Monday to Friday, 0830hrs to 1730hrs UK time, excluding public holidays. Please call +44 117 378 8361 if calling from outside the UK.
    • By email: AvivaSHARES@computershare.co.uk 
    • Online: www.computershare.co.uk/contactus
    • In writing: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, United Kingdom