Some 805,000 customers of Aviva will share in a £470m payout from next month, the insurer said today. Most will receive tax-free payouts of between £214 and £1,230 after voting to relinquish any future claims to the profits generated by the funds that hold their investments.
Individual payouts to customers of the CGNU and CULAC with-profits funds will be slightly higher than expected as the total value of the inherited estate for the reattribution is £1.25bn, more than the minimum level of £1.2bn on which the offer was based.
The reattribution will start in early November and be completed by Christmas, Aviva said. Mark Hodges, chief executive, Aviva UK Life, said: "Our objective has always been to create a reattribution that was fair to both shareholders and policyholders. I'm pleased that we've been able to conclude the process in time for most customers to receive their payments by Christmas.”
But David Trenner, technical director at independent financial adviser Intelligent Pensions said the deal favoured shareholders. “Let's be clear about this, shareholders are getting money that should go to policyholders. Norwich Union/Aviva is still hitting some policyholders with MVRs, yet they have £470m to use to bribe other policyholders to give up their rights to their inherited estate.”
Eligible policyholders had to choose to accept the offer and just over 87 per cent voted during the election process, with 96 per cent choosing to accept the cash offer. Customers who voted “yes” should automatically now receive their payment. The estimated 195,000 policyholders that voted “no” or failed to vote will continue to benefit from any future profits in the funds.
Aviva has already paid two instalments to policies of a £2.1bn bonus announced at the beginning of 2008. The last bonus payment will be added in 2010 and Aviva claimed it will then have allocated the equivalent of around 70 per cent of the value of the inherited estates in the funds to customers.