Members 'have no rights' to Axa orphan assets

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The Independent Online

The French insurance giant Axa defended plans yesterday to give less than half of its orphan assets estate to policy holders, saying that they have no claim on the £1.7bn fund.

The French insurance giant Axa defended plans yesterday to give less than half of its orphan assets estate to policy holders, saying that they have no claim on the £1.7bn fund.

The company, which has been forced to put its case to the High Court, has proposed to distribute about £400 each to policyholders in return for them surrendering any future rights to the orphan assets. Axa's proposals would give about 30 per cent of the surplus fund to policyholders, with the rest going to shareholders.

Axa told the court yesterday that it was under no obligation to hand out any of the fund to policyholders. The company barrister David Richards QC said policyholders did not have a claim because they did not expect to receive a cut of the fund when they took out an Axa policy. He said this view was supported by Michael Arnold, the appointed independent actuary. The case may set a precedent for the distribution of £20bn locked in orphan assets in the UK.

Axa has been challenged by the Consumers Association, which says Axa ought to give 90 per cent of its orphaned assets to policyholders, in accordance with a 1995 government report.

Axa denied that the report was relevant to its proposal. The DTI report deals with a straightforward split of the with-profits fund. In contrast Axa plans to pay some money into policyholders' funds and would additionally hand out about £400 in cash. The insurers said the cash payment meant that the DTI guidance did not apply.

Angry Axa policyholders, who will give submissions in court today, disagree. One said last night: "I believe that it is a reasonable expectation that policyholders have a claim on the orphan assets fund and that 90 per cent of it should go to us."

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