AVIVA CUSTOMERS TO RECEIVE £4

RNS Number : 0270A

Aviva PLC

01 October 2009

 



1 October 2009

AVIVA CUSTOMERS TO RECEIVE £470M IN REATTRIBUTION DEAL

·         Final value of the inherited estate for the reattribution is £1.25bn

·         90% of eligible customers will receive between £214 and £1230

·         £470m* to be paid out from shareholder funds

·         805,000 customers will receive payments

·         Around 70% of the value of the inherited estate paid to customers through specialbonus and reattribution

Aviva plc ('Aviva') has confirmed that it has completed the reattribution of the inherited estate in its CGNU and CULAC with profits funds. The total value of the inherited estate for the reattribution is £1.25 billion, based on the average calculated estate values at the end of June, July and August 2009**.

The completion of the reattribution deal follows the High Court's approval of the offer in September, and final approval by the Aviva plc and Aviva UK Life boards.

Just over 87% of eligible policyholders voted during the election process, with 96% of them choosing to accept the offer. The voting period has now closed and those customers who have voted 'yes' do not need to do anything further to receive their payment.

Customer payouts slightly higher than indicated

Approximately 90% of payments to eligible customers will be between £214 and £1230. The final payments will now be slightly higher than the indicative offer included in policyholders' individual voting packs, because the final value of the inherited estate is higher than minimum level of £1.2 billion on which the offer was based. 

Customers will automatically start receiving their payments from early November with most receiving them by the end of the year. In total, £470 million will be paid from shareholder funds to policyholders.  The vast majority of the payments will be tax-free.

The reattribution offer is in addition to the special bonus of £2.1 billion for policyholders announced at the beginning of 2008. The first two instalments of the special bonus have already been added to policies. The last special bonus payment will be added in 2010. Through the special bonus and reattribution payments, Aviva will have allocated the equivalent of around 70% of the value of the inherited estates to customers.

All policyholders, regardless of whether they have accepted the offer, will continue to receive their normal bonuses and the reattribution will have no impact on the security or performance of their investment.

Anticipated shareholder benefit updated

As previously stated, from a shareholder perspective the reattribution is expected to enhance the cash flow profile of Aviva's UK life business and will bring significant financial benefits. In return for the £470 million shareholders are expected to gain access to around £650 million of additional capital over five years, to fund new, non profit business. It is anticipated that the reattribution will also create a one-off profit of around £180 million on an MCEV basis and £80 million on an IFRS basis. Ongoing annual earnings are expected to be around £30 million on an MCEV basis and around £45 million under IFRS. 

A fair deal for policyholders and shareholders

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, and that's exactly what we've achieved.  I'm particularly pleased that we've been able to conclude the process in time for most customers to receive their payments by Christmas. 

'We've always made sure that customers had a choice of whether they wished to accept the offer, depending on what was best for their personal circumstances, and we believe this offer is good for 99% of policyholders so it's great to see that so many customers have voted 'yes'.'

For more information policyholders can go to www.aviva.co.uk/fundtransfer, or call the helpline: 0800 051 1566.

- ends - 

* Of the £470 million paid out from shareholder funds, £450 million will be in cash and the remaining £20 million will be added to policies in the form of bonuses.

**  Based on the average values of £1.163 billion in June, £1.251 billion in July and £1.336 billion in August, plus interest.

Enquiries:

City and business media

Sue Winston, head of group media relations                                [phone]

Vanessa Rhodes, senior group media relations manager            [phone]

Matthew Newton/Ed Simpkins, Finsbury                                       [phone]

Personal finance and trade media

Louise Soulsby, Aviva UK Life                  [phone] or [phone]    

Diane Mangan, Aviva UK Life                    [phone] or [phone]

Analysts

Charles Barrows, investor relations director                                 [phone]

Notes to editors:

About the reattribution of the inherited estate

The 'inherited estate' is part of a with profits fund. It's the amount over and above that which is required to meet realistic liabilities and which the insurance company retains to ensure it can meet its promises to customers; provide investment flexibility; and provide the initial capital to support new business. The inherited estate has been built up over many years and is an asset of the company.

Policyholders in the CGNU and CULAC with profits funds were given the option of receiving a payment now in return for giving up their right to receive uncertain future distributions from the funds' inherited estates. 

About Aviva plc

Aviva is the world's fifth largest* insurance group, serving 50 million customers across Europe, North America and Asia Pacific. 

Aviva's main business activities are long-term savings, fund management and general insurance, with worldwide total sales of £51.4 billion and funds under management of £381 billion at 31 December 2008.  

We are the largest insurance services provider in the UK and one of the leading providers of life and pension products in Europe.  

The Aviva media centre at www.aviva.com/media includes images, company and product information and a news release archive.

For broadcast-standard video, please visit www.thenewsmarket.com/aviva.  

*based on gross worldwide premiums at 31 December 2008

 

END

 

 

MSCUUGAUUUPBUQG