21st Nov 2006 07:03
Aviva PLC21 November 2006 News Release 21 November 2006 AVIVA UPDATE ON POTENTIAL REATTRIBUTION OF INHERITED ESTATE Clare Spottiswoode appointed as Policyholder Advocate following nomination in February 2006 As previously announced, Aviva plc ("Aviva") continues to pursue the possibilityof a reattribution of the inherited estate of two of its with-profit funds: CGNULife and Commercial Union Life Assurance Company (CULAC). In February 2006 Aviva announced the nomination of Clare Spottiswoode asPolicyholder Advocate, a consumer led role created to represent policyholders,under new Financial Services Authority (FSA) rules governing reattribution. Aviva has now agreed terms of reference with the nominated PolicyholderAdvocate, Clare Spottiswoode, who has today agreed to accept the role ofindependent Policyholder Advocate. This appointment has been approved by theFinancial Services Authority. At this stage, no decision has been taken to proceed with a reattribution, whichwill only take place if there is agreement on a fair outcome for policyholdersand shareholders. This will include agreement by the independent PolicyholderAdvocate and Aviva on any incentive payments to eligible with-profitspolicyholders. Aviva is confident that Clare Spottiswoode's experience as both a regulator andas a company director makes her ideally qualified to independently representNorwich Union's with-profits policyholders' interests and negotiate on theirbehalf the policyholder benefits of a reattribution. more AVIVA UPDATE ON POTENTIAL REATTRIBUTION OF INHERITED ESTATE PAGE 2 OF 4 During her nomination period Clare Spottiswoode has: • Established an independent office • Set up a technical team including actuarial and legal support • Familiarised herself with a reattribution scheme under FSA rules • Prepared plans for extensive consultation with policyholders • Agreed her terms of reference for any reattribution with Aviva, in consultation with the FSA Norwich Union will shortly be writing to customers in its CGNU Life and CULACwith-profit funds, who may be eligible, to notify them of a possiblereattribution and a proposed fund transfer. The proposed fund transfer wouldinvolve moving Norwich Union's with-profits policies into a single Norwich UnionLife company, which would simplify the administration of these funds. Thiscommunication to customers will also contain a letter from Clare Spottiswoodeoutlining her role in the possible reattribution and details of wherepolicyholders can get further information. The Policyholder Advocate will immediately begin a formal consultation processwith policyholders. The main part of the consultation will run until the end ofFebruary 2007 and will include a number of roadshows across the UK together withonline and telephone research. Policyholders will receive further details on theconsultation process and how they can take part in the letter from ClareSpottiswoode. Following consultation the independent Policyholder Advocate willcommence negotiations with Aviva on the structure of any offer that may be madein relation to the reattribution. Following these negotiations the PolicyholderAdvocate will produce a report and send a summary of the report to eligiblewith-profits policyholders. In addition to the appointment of the Policyholder Advocate, Aviva has appointedan Independent Expert, Nick Dumbreck, a consulting actuary at Watson WyattLimited, to report independently to the Court on the potential reattribution andfund transfer. Policyholders are reminded that they are not required to take any action at thispoint in time. Mark Hodges, chief executive of Norwich Union Life, said: "We've held detaileddiscussions about the potential reattribution with Clare Spottiswoode and theFSA and have now formalised her terms of reference. As a result we have askedClare to be the independent Policyholder Advocate to represent ourpolicyholders. We will only proceed with a reattribution if it is clear that anynegotiated outcome is fair to our policyholders and shareholders. It isimportant to stress that customers will be completely free to choose whether ornot to participate in any offer." more AVIVA UPDATE ON POTENTIAL REATTRIBUTION OF INHERITED ESTATE PAGE 3 OF 4 Clare Spottiswoode said: "My job is to negotiate with Norwich Union the size ofpayment to eligible policyholders in return for giving up their rights to anypossible future distributions from the inherited estates. As part of the processI shall be consulting widely with policyholders and others. "In the months ahead there will be intense negotiation with Norwich Union to tryto reach an outcome that I can recommend to policyholders. I have a strong teamof advisers to help and look forward to reporting to policyholders later in2007." Ends Press office contacts: James Evans Norwich Union 07800 699525 Louise Soulsby Norwich Union 01904 452617 Louise Zucchi Norwich Union 07800 699664 Sue Winston Aviva 020 7662 8221 Vanessa Booth Aviva 020 7662 2482 Financial Dynamics Charles Gorman 07795 977967 Analysts & Investors Charles Barrows 020 7662 8115 Jessie Burrows 020 7662 2111 Office of the Policyholder Advocate Sheree Dodd 020 7662 2618 NOTES TO EDITORS Outline timetable for potential reattribution scheme • November 2006 - Independent Policyholder Advocate appointed • December 2006 - Mailings to potentially eligible policyholders. • Up to the end of February 2007 - Policyholder Advocate consultation period with policyholders • Spring 2007 - Policyholder Advocate negotiations commence with Aviva • Autumn 2007- Eligible policyholders informed of any offer and invited to take part • Winter 2007 - High Court scheme hearings • Early 2008 onwards - Payments made to eligible policyholders who choose to accept the reattribution offer. Fund transfer takes place. The above timeline is approximate. AVIVA UPDATE ON POTENTIAL REATTRIBUTION OF INHERITED ESTATE PAGE 4 OF 4 In the event that Aviva decides to go ahead with a reattribution scheme, theinitial qualifying date for eligibility will be 21 November 2006. The proposed fund transfer will involve the with-profits policies of NorwichUnion being moved into one company within Norwich Union Life. There will be nochange to key policy conditions, or premiums as a result of the transfer. An inherited estate is money that has built up in a with-profit fund over manyyears, which is above the amount that is expected to be needed to meet currentand future policyholder commitments and other obligations such as tax andexpenses. The inherited estate is retained to provide security for policyholders againstunexpected adverse conditions, such as substantial falls in stock market values,to provide investment flexibility and to provide the finance that is needed tosupport the continued writing of new business in the fund. 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 paymentfor giving up their entitlement to any possible future distributions from theinherited estate. Under a reattribution, the inherited estate, subject to rigorous financialcontrols, remains within the life company to support the capital of thewith-profit fund as the policyholder incentive payment is made by the lifecompany's shareholders. Aviva is one of the leading providers of life and pensions in Europe withsubstantial positions in other markets around the world, making it the world'sfifth largest insurance group based on gross worldwide premiums at 31 December2005. Aviva's principal business activities are long-term savings, fund management andgeneral insurance, with worldwide total sales of £36 billion and assets undermanagement of £322 billion at 31 December 2005. Norwich Union is the UK tradingbrand of Aviva. The Aviva media centre at www.aviva.com/media includes images, company andproduct information and a news release archive. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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