Judge sanctions Aviva fund pay out
The High Court has rejected attempts to block a scheme under which insurance group Aviva is offering policyholders £500 million in exchange for giving up their rights in a fund worth £1.2 billion.
A judge sanctioned the deal - giving eligible customers between £200 and £1,150 each - despite objections from a minority group of dissident policyholders, supported by consumer champion Which?
The pay-out is less than half of what could have been available before the banking crisis and was described by Which? as "derisory".
But after a three-day hearing in London, Mr Justice Norris sanctioned the "reattribution" of Aviva's "inherited estate" - a surplus with-profits fund built up over decades from policyholders' payments.
The judge said he would give reasons for his decision at a later date.
Aviva, relying on favourable reports from the Financial Services Authority (FSA) and policyholder advocate Clare Spottiswoode, argued that the scheme would allow it to retain sufficient funds to help support future investment flexibility and security against risk, and provide initial capital to support new business, all to the benefit of existing customers.
Of the 852,400 eligible policyholders - those who hold Commercial Union Life, CGNU Life and Norwich Union Life with-profits policies under the Aviva banner and whose policies were in force on the scheme's launch date of November 21 2006 - 80% have voted, and of those, 96% accepted the offer.
Those who have refused or failed to respond will retain their interest in the fund, but run the risk that it will not pay out in the future.
Consumer groups take the view that policyholders should get 90% of the cash held in such funds when it is distributed.