Aviva windfalls under threat

By RICHARD DYSON
Updated:

 

Aviva has sounded its clearest warning yet that it will abandon the planned distribution of the £5bn surplus from its Norwich Union with-profits funds if the process drags on or threatens its reputation.

Norwich Union

This would dash hopes of a windfall for 1.1m policyholders.

The insurer told Financial Mail it might mothball the scheme for several years, abandon it altogether or bypass policyholder advocate Clare Spottiswoode and present offers direct to policyholders.

Officially, negotiations continue between the insurer and Spottiswoode, whose role was created by the FSA. Aviva maintains that it still hopes to strike a deal where the cash is split between policyholders and shareholders in a way both parties agree is fair.

Privately however, the FTSE insurer's executives believe such an outcome is becoming less likely.

It appears that Spottiswoode and Aviva cannot agree over how much of the money the insurer can ringfence for its own purposes. The FSA has sided with Aviva.

Furious Spottiswoode told Financial Mail: 'The bizarre thing about the FSA's stance is that I might have to present a deal to policyholders that isn't fair.'

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