2nd Feb 2006 10:04
Aviva PLC02 February 2006 News release 2 February 2006 AVIVA UPDATE ON POSSIBLE REATTRIBUTION OF INHERITED ESTATE • Clare Spottiswoode nominated as Policyholder Advocate As previously announced, Aviva is reviewing the possibility of a reattributionof the inherited estate, or orphan assets, of two of its with-profit funds; CGNULife and Commercial Union Life Assurance Company (CULAC). At this stage, nodecision has been taken to proceed with a reattribution. This will only beundertaken if there are clear benefits for both policyholders and shareholders. Under FSA rules, one condition of the new regulations (introduced in 2005) forthe reattribution of an inherited estate, is the appointment of an independentPolicyholder Advocate to represent policyholders during the procedure, adevelopment that Aviva welcomes. Aviva is delighted to announce that ClareSpottiswoode has been nominated as the Policyholder Advocate and that theFinancial Services Authority (FSA) has approved this nomination. As the nominated Policyholder Advocate, Ms Spottiswoode's initial period of workwill include: • Establishing an independent office • Setting up an independent technical team including actuarial and legalsupport • Familiarisation with a reattribution scheme • Preparing detailed plans for consultation with policyholders • Finalising terms of reference The actual appointment of the Policyholder Advocate would occur once terms ofreference are agreed, the FSA has fully considered the outline of anyreattribution scheme and if Aviva is fully satisfied that a reattribution is inthe clear interests of policyholders and shareholders. The appointment is notexpected to happen before the autumn of 2006. /more AVIVA UPDATE ON POSSIBLE REATTRIBUTION OF INHERITED ESTATEPage 2 of 3 If Aviva does decide to proceed with a reattribution, then as the appointedPolicyholder Advocate, Ms Spottiswoode would negotiate with Aviva on behalf ofeligible policyholders. Ms Spottiswoode, 52, is a former Director General of Ofgas (1993-98), theregulator of the gas industry. As Director General she spearheaded theintroduction of choice and competition in the provision of UK gas products andservices to the benefit of both commercial and domestic consumers. During hercareer Ms Spottiswoode has acted as an economist at HM Treasury, lectured atLondon Business School, managed private business interests, and held a number ofnon-executive directorships. She is a Commander of the British Empire (CBE). Commenting on the nomination, Gary Withers, chief executive of Norwich UnionLife, said: "We are delighted Clare Spottiswoode has agreed to representeligible with-profits policyholders in any reattribution. Her broad experienceas both a regulator and as a director makes her an ideal choice as aPolicyholder Advocate." Clare Spottiswoode said: "I am looking forward to acting on behalf ofpolicyholders and I am impressed by the autonomy and independence of thePolicyholder Advocate's office. I will ensure that continues. My experience ofthe financial services sector is as a customer and I will make sure that Iretain this perspective throughout when representing eligible policyholders - mykey responsibility is to ensure that they are treated fairly. "A reattribution is a complex transaction but I will do everything possible toexplain the options in the clearest terms. As a result I'll need some time toresearch the issues and hold discussions with Aviva and the FSA on the basicterms. Subject to the reattribution going ahead, I expect to communicate withpolicyholders in due course, but not before the autumn of 2006". Policyholders are reminded that they need take no action at this stage. Ends Press office contacts:Out of hours Cheryl Cox 01904 452617 07800 695275James Evans 01904 452791 07800 699525 AVIVA UPDATE ON POSSIBLE REATTRIBUTION OF INHERITED ESTATEPage 3 of 3 Financial Dynamics Rob Bailhache 0207 269 7200 07771 565659Dominick Peasley 0207 269 7243 07748 474952 Analysts Charles Barrows, investor relations director +44 (0)20 7662 8115 Nicole Marques, investor relations manager +44 (0)20 7662 8302 NOTES TO EDITORS The inherited estate is the surplus of assets over policyholder liabilities thatwill have accumulated over time in a with-profits fund. These surplus assetsarise from retained profits not distributed to shareholders or previousgenerations of policyholders many years ago. With-profits companies distributepayouts at a level to ensure that policyholders are treated fairly and receivetheir asset share or guaranteed benefits, if higher, in accordance with thePrinciples and Practices of Financial Management ("PPFM"). A reattribution is a transaction that enables a life company to reorganise apart of its capital - the inherited estate - to benefit both policyholders andshareholders. Under the transaction, shareholders offer policyholders a one-offpayment for giving up entitlement to any possible future distributions from theinherited estate. Under a reattribution, the inherited estate, subject torigorous financial controls, remains within the life company to support thecapital of the with-profits fund as the policyholder payment is made by the lifecompany's shareholders. Aviva is the world's sixth-largest insurance group based on gross worldwidepremiums and market capitalisation (at 31 December 2004). It is one of theleading providers of life and pensions in Europe and has substantial businessesin other markets around the world. Aviva's main activities are long-term savings, fund management and generalinsurance, with worldwide total income of £40 billion and assets undermanagement of £280 billion (at 31 December 2004). Norwich Union, a wholly owned subsidiary of Aviva plc, is the UK's biggestinsurer. It is a leading provider of life, pensions and investment products andone of the largest Financial Adviser (FA) providers. FAs provide over 70% ofthe company's long-term savings business in the UK. Norwich Union has strategicalliances with building societies and other leading UK brand names, includingCIS and The Royal Bank of Scotland Group. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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