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AIG Life to pay out £100m to protected recovery fund investors

AIG Life is paying out £100m, or just over 5 per cent, to investors in its protected recovery fund on June 6.

By mid-December last year 95 per cent of investors in the enhanced fund, which was suspended on September 15 2008, chose to transfer half their assets into the protected recovery fund, with the other half taken as a cash lump sum.

When the enhanced fund was suspended it was worth approximately £5.6bn. Following the transfer and withdrawals the fund’s value fell to £2.2bn. It currently stands at around £2bn.

AIG Life guaranteed the size of clients’ investment as long as capital is held for three years.

When the protected recovery fund began, AIG Life stated that they hoped to return cash to policyholders in bi-annual distributions where it was “possible and prudent to do so”.

The June distribution accounts for 4p for each unit a policyholder holds. It will be moved into AIG Life ’s standard fund, where it can either be withdrawn or left invested.

AIG Life says unit prices of the protected recovery fund will fall by around 1p after the distribution.

In its latest newsletter, AIG LIfe says: “Each distribution can only be finalised in the context of up to date asset prices, interest rates, market sentiment and policyholder needs. Therefore no decisions on any subsequent distributions have been made and policyholders should not see this distribution as an indication of future actions.”

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