More than 1m Aviva policyholders are set to share a £2.1bn ($4.1bn) special bonus as the UK’s biggest insurer moves to free surplus capital in its life fund.
The group will distribute roughly half of the just over £5bn so-called inherited estate.
That is money that has built up in the life fund over decades, which is over and above that needed to meet its obligations to policyholders in two of its life funds.
Some 1.1m policyholders will share £2.1bn, which will add 10 per cent to the value of their policies in three instalments, the last in 2010.
Some £230m will go to shareholders.
Aviva is in a stand-off with Clare Spottiswoode, the former gas industry regulator, who is representing policyholders’ interests in negotiations over how the £5bn pot should be shared between shareholders and policyholders.
However, Mark Hodges, chief executive of the life arm of Norwich Union, the brand under which Aviva trades in the UK, denied the insurer was attempting to sideline Ms Spottiswoode by making the early distribution.
“We have no intention to pull the rug from under Clare’s feet,” he said.
Ms Spottiswoode welcomed the distribution, which is on the basis of 90 per cent going to policyholders and 10 per cent to shareholders.
“It would never have occurred without us finding the excess surplus and making sure it did come out,” she said.
Ms Spottiswoode said that while the special bonus was welcome, she was “disappointed” that some policyholders would lose out under the arrangements.
Which?, the campaigner on behalf of consumers, also attacked the phased payment.
It said: “Norwich Union has no justification for holding on to this money a moment longer.”
Aviva also said it had put a third offer to Ms Spottiswoode on how the remainder of the pot should be split.
The insurer refused to give any details, but analysts suspect Aviva is looking for far more than a 10 per cent share of the remaining funds.
Aviva wants to restructure the remainder of the so-called inherited estate, whereby it would compensate policyholders for giving up their right to future pay-outs from this pot.
Ms Spottiswoode said the new offer was not materially different from the previous one.
“There seems to be little new money on the table,” she said.
She added that she was considering her response, but she still had “issues to resolve with the company before doing so.”
Shares in Aviva, which is due to announce 2007 sales figures on Wednesday, fell 19p to close at 609½p.