At March 31, Aviva valued the inherited estate at £1.4bn but last week, as it announced 805,000 policyholders would get a share of £470m after the completion of its reattribution deal, it revealed the value had dropped by almost £250m to be worth £1.16bn at June 1.
At March, around 30 per cent of the assets in the funds were invested in equities, 18 per cent in property and 28 per cent in corporate bonds, with the balance split between cash, gilts and international corporate bonds.
According to Standard Life, between March 31 and May 29 equities rallied by 14.6 per cent, corporate bonds rose by 3.4 per cent and property fell by 2.49 per cent.
Aviva reattribution director Gary Price says: “The inherited estate is the difference between total assets and liabilities, not just a pot of assets you can value.
“What drives this is much more complex than what happens to the FTSE. It is valued using regulations, which are independently assessed. It is what it is. It is not a number that we make up.”
Hargreaves Lansdown pensions analyst Laith Khalaf says: “The inherited estate deal now looks a bit like the one customers get on petrol station forecourts – petrol prices go up when the price of oil goes up and they go up when the price of oil goes down.
“I am sure there is a perfectly legitimate, extremely convoluted reason why the estate fell in value during a market rally. It is after all part of a with-profits fund with all the complexities that involves. But when it is too complicated to explain how the value of an investment is arrived at, it is probably time for policyholders to rethink why they are invested in it.”