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Aviva reaches with profits agreement

Aviva Investors has come to an agreement over a reattribution offer for its with-profits fund policyholders.

The offer promises a minimum payout of £200 for each CGNU and CULAC fund policyholder, with 90% eligible to receive between £200 and £1150. The other 10% will receive higher payouts, Aviva says.

This estimate is based on an inherited estate value of £1.2 billion, the lowest valuation at which Aviva would proceed with the reattribution. Individuals can choose whether to accept cash or to continue receiving normal bonuses, which would have no impact on their investment.

Clare Spottiswoode, the policyholder advocate, has been in negotiations with Aviva over the terms of the reattribution offer for some time. She said in a statement: “This is good news for policyholders after the turmoil in the financial markets that affected the plan announced last year. This offer is also good for the great majority of policyholders under the FSA’s current rules.

“The Aviva proposal shows that together we have found an imaginative way of keeping the reattribution in place which includes the opportunity for policyholders to benefit from any increase in the estates. Policyholders who decide not to accept the offer and keep their rights to future special distributions are also protected.”

Aviva will write to the one million policyholders in two of its with-profits funds with details of the revised reattribution offer. They will receive a voting pack in June, and Aviva anticipates making payments from November 2009.

The offer follows the £2.1 billion that was allocated to policyholders at the start of 2008, of which two-thirds has now been added to policies, the group says.

The payouts will take into account future changes in the value of inherited estate. The final payments will be based on the average value of the inherited estate over the three months from June to August. They will be funded from Aviva’s shareholder funds, not the inherited estate or the with-profits funds, to protect the strength of the funds, the group says.

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