Making Your Choice

The reattribution in brief

1. You are being offered a payment to give up your rights to future special distributions from the inherited estates of two of Aviva’s with-profits funds - CGNU Life Assurance Limited and Commercial Union Life Assurance Company Limited. If you accept the offer you will not be eligible to receive any future special distributions from the inherited estate. Those rights will be transferred to Aviva. In most cases payment will be cash - in the form of a cheque - unless there are legal, regulatory, security or tax reasons why a cash payment should not be made. Payments will be sent to policyholders from November 2009.

2. If you do not accept the offer you will keep your rights to any future special distributions. These would be paid as bonuses (not cash) added to your policy. Your policy will be put in a separate fund and its position protected. You will not receive a cash payment.

3. The FSA has examined the Aviva offer and given its preliminary view that the offer is fair under its current rules and may be put to policyholders.

4. Due to extreme volatility in the financial markets the value of the estate has fallen. In July 2008 it was valued at about £2.1 billion and at 31 December 2008 it had fallen to £1.57 billion (see note on page 7).

5. To ensure that an offer can still be made in these difficult market conditions Aviva has developed a formula where the cash offer is based on the average of valuations of the estate made in June, July and August 2009 (see website for updates).

If the value of the estate is more than £1.2 billion then Aviva will increase the total amount of the payment to be made. This means that policyholders and shareholders will have an offer based on the value of the estate as close as possible to the time that payments can be made.

6. Everyone who votes ’Yes’ will receive at least £200. If the average estate value is more than £1.2 billion this lowest payment will increase.

7. The offer in your letter is based on an estate of £1.2 billion and takes into account the time your policy has to run and the amount invested. The offer will increase if the average value of the estate is higher than £1.2 billion.

8. The total offer amounts to just over 40 per cent of the estate after allowing for the 2008 special distribution. (We explain on pages 15 and 22 to 23 why the offer is not 90 per cent of the inherited estate.)

9. In the opinion of the independent policyholder advocate, Clare Spottiswoode CBE, under current FSA rules, the offer is more than the amount that the great majority of current policyholders might expect to receive from any future special distributions if a reattribution did not take place.

10. If there were to be no reattribution, some policyholders could reasonably expect that over the lifetime of their policies, possible future special distributions might be worth more than the offer they are being made by Aviva. It is likely, however, that in most cases you will need to keep your policies for several years to get a significant level of such special distributions.

11. Policyholders have an individual choice about what to do. This is not a majority vote.

12. If the estate falls below £1.2 billion and Aviva goes ahead with the reattribution, the lowest payment will remain £200.

Whatever you decide, it will not affect any entitlement you may have to the special distribution announced in February 2008 - see page 13