€1bn 'golden ticket' row fails to stop Aviva growth

Max-Hervé George, 24, is locked in a legal dispute with the FTSE 100 giant

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The Independent Online

Aviva has dismissed claims by a French customer that an insurance policy he owns could leave the company facing a €1bn (£726m) liability in five years’ time.

Max-Hervé George, 24, is locked in a legal dispute with the FTSE 100 giant over the value of a “golden ticket” contract that allows him to switch around money to take advantage of prior movements in the financial markets.

The Fixed Price Arbitrage Life Insurance product was originally sold by French insurer L’Abeille Vie in the 1980s and 1990s, before it was acquired by Aviva in 2002.

Mr George received the contract from his father when he was seven years old. His lawyers say it could make him a billionaire by the end of the decade – something Aviva strongly disputes. Court proceedings are ongoing in France about the actual value of his policy.

Yesterday, the insurer’s chief executive Mark Wilson told The Independent its French unit did not face a huge liability.

He said: “Aviva France has been managing this issue for over a decade. It’s not new. The excessive sums being mentioned are speculative and without foundation. Aviva France remains appropriately provisioned and its reserves are reviewed annually with the French regulator.”

Sources close to Aviva say that previous holders of these policies have reached settlements with the company in the “low millions”. They also point to caps on the policy, limiting the amount that can be made.

In response, Mr George said: “I just want justice and want Aviva to honour my contract. I have no plans to settle.”

The dispute failed to take the shine off Aviva’s full year results yesterday, which showed the company had increased its pre-tax profits 6 per cent to £2.17bn last year, enabling it to raise its final dividend 30.3 per cent to 12.25p.

Reflecting on the results, Mr Wilson – who took over from Andrew Moss in 2012 following a shareholder revolt earlier that year – said his turnaround of the company still had “further to travel than the distance we have come”.

He cited areas like Aviva Investors as those expected to contribute more to the group’s profits over the next few months.

The £245.9bn under its control will grow by a further £70bn once Aviva seals its £5.6bn tie-up with rival Friends Life. This is expected to be approved by shareholders at a meeting on 26 March and the deal is likely to be completed by 13 April.

Friends Life also published its results yesterday, with pre-tax profits up 38 per cent to £556m. Aviva shares rose 7 per cent to 569.26p, while Friends climbed 7.07 per cent to 434.9p.

Hard road: Admiral blows hot and cold

Admiral served up a “baked Alaska” of a year yesterday as the motor insurer suffered its first fall in annual profits since listing in London in 2004.

Pre-tax profit fell 4 per cent to £357m after Admiral was hit by diving premiums in the UK market, where it covers 3.2 million vehicles. This accounts for  81 per cent of group turnover and 78 per cent of its customers.  “Admiral’s 2014 was the year of the baked Alaska – hot and cold in a single bite,” its chief executive, Henry Engelhardt, said. 

“The hot? Profits emerging from our international insurance businesses, ConTe in Italy, and record profits at Rastreator and LeLynx, our price-comparison businesses in Spain and France. The cold? For the first time since we went public, Admiral did not post a record profit, but we still made a lot of money, had an enviable 52 per cent return on equity and distributed 95 per cent of our after-tax profits to our shareholders.”

Shares in the company rose 3.77 per cent to 1,514.0p.

Mr Engelhardt claimed rivals were chasing volume and keeping premiums down. However, he said there are signs that prices are starting to rise again this year.