Payments averaging £1,000 are to be offered to a million policyholders in two of Norwich Union Life’s , insurer Aviva has announced.
The move to free up surplus assets in the company’s life funds means around 700,000 people can expect to receive between £400 and £1,000 if they accept the offer, while a further 220,000 will get between £1,000 and £3,500.
Eligible policyholders will learn the level of their payout later this year, with the payment likely to be made next summer.
Which? has prepared some advice for policyholders eligible for the offer; to receive our advice, email firstname.lastname@example.org.
Details of the offer emerged as Aviva announced a 12% rise in half-year operating profits to £1.72bn.
The bottom-line result showed losses of £1.27bn after Aviva accounted for a reduction in the value of its assets in the current climate.
It said sales in the faster growing markets of North America and Asia Pacific offset ‘the more challenging markets’ of Europe, including the UK.
Aviva said it expected the UK market for life and pensions to remain ‘subdued’ in the second half of the year, but said it had managed to increase its share of a declining market over the first half of the year.
In general insurance, profits rose 15% to £326 million after weather conditions returned to normal compared with the previous year’s floods.
The £1bn reattribution offer follows lengthy discussions between Aviva and independent policyholder advocate Clare Spottiswoode.
She said the deal was in the best interests of ‘the great majority of policyholders’.
Ms Spottiswoode added: ‘This been a long and difficult process. I have challenged many aspects of the rules of the with-profits industry to try to ensure that policyholders receive the best deal possible.’
Peter Vicary-Smith, chief executive of Which?, said: ‘Clare Spottiswoode has made the best of a difficult set of circumstances. While most policyholders will probably welcome this payout, they could have received more if the Financial Services Authority (FSA) had regulated this area effectively.
‘The FSA now needs to ensure that the deal contains sufficient safeguards to protect policyholders’ interests. They must also implement the changes recommended by the Treasury Select Committee and ensure that Norwich Union are held to their estimates and projections which form the basis of this deal.
‘Policyholders deserve a regulatory framework based on a clear set of principles which guarantees that all inherited estates are used in their best interests. The FSA needs to act now.’