Consumers' Association drops legal challenge to ruling on Axa assets

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The Independent Online

The Consumers' Association has dropped its legal action against Axa, the French insurance group, over plans to distribute most of its £1.7bn surplus "orphan assets" to shareholders rather than policyholders.

The Consumers' Association has dropped its legal action against Axa, the French insurance group, over plans to distribute most of its £1.7bn surplus "orphan assets" to shareholders rather than policyholders.

The consumer group had been set to appeal against a High Court judgment in December backing Axa's scheme, but after yesterday's publication of the judge's reasons for his ruling, the association said there were no legal grounds for action.

The scheme will now go ahead, with 450,000 policyholders receiving pay-outs of £400 in April. The sum is in return for them surrendering any future claim on the orphan asset estate.

However, the association warned that the court's decision could set a precedent for the rest of the with-profits industry to divide its total of £20bn orphan assets in a similar way. If companies followed Axa, policyholders would receive about 30 per cent of the total fund. Government guidelines say that this group should receive 90 per cent of the inherited estate.

Ashley Holmes, head of legal affairs at the Consumers' Association, said: "It's a bit of a shame. The judgment by Mr Justice Evans-Lombe shows that there are clever ways to get round the 90-per-cent rule."

Prudential has already come under pressure to divide its surplus £8bn fund from a group of policyholders, who are pursuing legal action in order to force a judgment. Prudential yesterday refused to comment on whether it thought the Axa judgment was a blueprint for its own case.

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