Aviva Policyholders Lose
The Times reports:
"800,000 policyholders of with-profits funds run by Aviva, Britain’s largest insurer, will share less than half of the billion-pound windfall promised just over 18 months ago.
The investors had been pledged £1 billion in February last year when the funds were valued at £4.2 billion, but were told this March that the payout would be £500 million because falling gilt, bond and property prices had reduced the funds to £1.2 billion.
The High Court yesterday upheld Aviva’s decision to pay the £500 million because the fund had shrunk in value. Aviva will keep £700 million for its own use.
Eligible policyholders — those with Commercial Union Life, CGNU Life and Norwich Union Life with-profits funds — will receive between £200 and £1,150. Aviva said it would put the scheme into effect on October 1, with the majority of payments being made before the end of the year."
Why has the FSA sat on its hands and allowed Aviva to take (Which? uses the word "plunder") £700M of policyholders' money?
Some also argue that Aviva have deliberately dragged this out; so as to not to have to pay out so much money, as the markets continued to fall.
Policyholders, yet again, have been ill served by a life assurance company.
Showing posts with label orphan assets. Show all posts
Showing posts with label orphan assets. Show all posts
Saturday, September 19, 2009
Tuesday, July 21, 2009
Aviva Error
Aviva Error
The Telegraph reports that a computer error by Aviva, has resulted in the miscalculation of Aviva's orphan asset payout to 9,000 policyholders.
One million policy holders were contacted in May, wrt the terms of distribution for Aviva's £1.4BN inherited estate.
Aviva was then forced to send another letter to 9,000 policyholders, to tell them of a "technical error" that resulted in them being offered the wrong amount.
The Telegraph reports that a computer error by Aviva, has resulted in the miscalculation of Aviva's orphan asset payout to 9,000 policyholders.
One million policy holders were contacted in May, wrt the terms of distribution for Aviva's £1.4BN inherited estate.
Aviva was then forced to send another letter to 9,000 policyholders, to tell them of a "technical error" that resulted in them being offered the wrong amount.
Thursday, July 31, 2008
The £1BN Payoff
The Times reports that long suffering Norwich Union endowment policyholders have been offered £1BN of its with-profits fund.
Aviva, the owner of Norwich Union, will offer about 700,000 policyholders between £400 and £1,000 in exchange for foregoing their right to future bonus payments. A further 220,000 will receive up to about £3,500 and a handful of long-term investors will collect several thousand pounds more.
Clare Spottiswoode, the policyholder advocate, is well pleased and describes the result as a "triple-whammy winner" for the policyholders.
Aviva, the owner of Norwich Union, will offer about 700,000 policyholders between £400 and £1,000 in exchange for foregoing their right to future bonus payments. A further 220,000 will receive up to about £3,500 and a handful of long-term investors will collect several thousand pounds more.
Clare Spottiswoode, the policyholder advocate, is well pleased and describes the result as a "triple-whammy winner" for the policyholders.
Thursday, June 05, 2008
Reattribution Change
Reattribution Change
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
Monday, April 21, 2008
Norwich Union Deadlock
Norwich Union Deadlock
The negotiations over the fate of the orphan assets of Norwich Union have become deadlocked.
As such the task of freeing up the deadlock has fallen to John McFall, chairman of the Treasury Select Committee.
Norwich Union are refusing to offer policyholders anymore. However, policyholder advocate Clare Spottiswoode is standing firm against the current offer on the table by Norwich Union.
Norwich Union have surplus (orphan) assets of £5BN (aka "inherited estate"). They are using £2.1BN to increase the value of policyholders' assets over the coming 3 years.
However, the dispute centres around what will happen to another £2.7BN.
The argument is focused on whether it is right for Norwich to use the money in ways that do not benefit policyholders, eg instance paying tax or financing growth.
The danger is that Norwich walk away from the negotiations and keep this £2.7BN for themselves.
The negotiations over the fate of the orphan assets of Norwich Union have become deadlocked.
As such the task of freeing up the deadlock has fallen to John McFall, chairman of the Treasury Select Committee.
Norwich Union are refusing to offer policyholders anymore. However, policyholder advocate Clare Spottiswoode is standing firm against the current offer on the table by Norwich Union.
Norwich Union have surplus (orphan) assets of £5BN (aka "inherited estate"). They are using £2.1BN to increase the value of policyholders' assets over the coming 3 years.
However, the dispute centres around what will happen to another £2.7BN.
The argument is focused on whether it is right for Norwich to use the money in ways that do not benefit policyholders, eg instance paying tax or financing growth.
The danger is that Norwich walk away from the negotiations and keep this £2.7BN for themselves.
Monday, March 24, 2008
Fingers in The Pie
Fingers in The Pie
The trouble with some of the life assurance companies that are "managing" this country's useless and underperforming endowment policies, is that they can't seem to distinguish between assets that belong to their hapless and much put upon policy holders and the company's assets.
Normally, this "confusion" over ownership is demonstrated by the excessive and unjustified management charges levied by life assurers against the minuscule returns of the endowment policies that they fail to manage.
However, Norwich Union have found another way to tap the assets of their hapless endowment policy holders. The Times reports that Norwich Union has helped itself to £300M of policyholders' funds, in order to plug a hole in its own pension fund and to pay for its own mis-selling costs.
Some would argue that it is pretty rich of Norwich Union to help themselves in this manner, in fact most people with any concept of ownership and property would argue this. However, Norwich Union is unabashed; safe in the knowledge that it can do this, because it can do this.
If only life were that simple and profitable for its policy holders!
Needless to say this raid on the policyholders' funds will mean lower payouts for 1.1 million policyholders.
Norwich Union has helped itself to £83M of its surplus assets to cover a deficit in its staff pension scheme, with £182M being set aside to pay for endowment and pension mis-selling.
To run that by you again, it is making its policy holders pay for its pension failings and for its mistakes wrt selling endowment policies.
Happy with that?
Vince Cable, the Liberal Democrats’ Treasury spokesman, is quoted in The Times:
"The Financial Services Authority perpetuates rules which give preference to shareholders over policyholders and allow such appalling abuses as penalties for pensions mis-selling to be taken from policyholders' inherited estates. Companies like Norwich Union and Prudential are managing, under the cloak of complexity, to deprive their policyholders of large sums."
Norwich Union is currently involved in "testy" and "bad tempered" negotiations as to how it will split up £5BN of orphan assets (inherited estate). Needless to say, Norwich Union wants to take as much of that money for themselves as they can, they believe that their shareholders outrank their policyholders.
The fact that these orphan assets arise as a direct results of the policyholders' contributions, and not from anything that the shareholders have done, is irrelevant to Norwich Union.
Why are they treating their policyholders with such contempt?
Simple, because they can!
They know that their policyholders lack the legal and vocal clout of their shareholders.
It is high time that the policyholders gave companies such as Norwich Union a very bloody nose, a class action should be initiated by the policyholders of Norwich Union and the life assurance companies given a lesson not to treat their policyholders with such contempt.
The trouble with some of the life assurance companies that are "managing" this country's useless and underperforming endowment policies, is that they can't seem to distinguish between assets that belong to their hapless and much put upon policy holders and the company's assets.
Normally, this "confusion" over ownership is demonstrated by the excessive and unjustified management charges levied by life assurers against the minuscule returns of the endowment policies that they fail to manage.
However, Norwich Union have found another way to tap the assets of their hapless endowment policy holders. The Times reports that Norwich Union has helped itself to £300M of policyholders' funds, in order to plug a hole in its own pension fund and to pay for its own mis-selling costs.
Some would argue that it is pretty rich of Norwich Union to help themselves in this manner, in fact most people with any concept of ownership and property would argue this. However, Norwich Union is unabashed; safe in the knowledge that it can do this, because it can do this.
If only life were that simple and profitable for its policy holders!
Needless to say this raid on the policyholders' funds will mean lower payouts for 1.1 million policyholders.
Norwich Union has helped itself to £83M of its surplus assets to cover a deficit in its staff pension scheme, with £182M being set aside to pay for endowment and pension mis-selling.
To run that by you again, it is making its policy holders pay for its pension failings and for its mistakes wrt selling endowment policies.
Happy with that?
Vince Cable, the Liberal Democrats’ Treasury spokesman, is quoted in The Times:
"The Financial Services Authority perpetuates rules which give preference to shareholders over policyholders and allow such appalling abuses as penalties for pensions mis-selling to be taken from policyholders' inherited estates. Companies like Norwich Union and Prudential are managing, under the cloak of complexity, to deprive their policyholders of large sums."
Norwich Union is currently involved in "testy" and "bad tempered" negotiations as to how it will split up £5BN of orphan assets (inherited estate). Needless to say, Norwich Union wants to take as much of that money for themselves as they can, they believe that their shareholders outrank their policyholders.
The fact that these orphan assets arise as a direct results of the policyholders' contributions, and not from anything that the shareholders have done, is irrelevant to Norwich Union.
Why are they treating their policyholders with such contempt?
Simple, because they can!
They know that their policyholders lack the legal and vocal clout of their shareholders.
It is high time that the policyholders gave companies such as Norwich Union a very bloody nose, a class action should be initiated by the policyholders of Norwich Union and the life assurance companies given a lesson not to treat their policyholders with such contempt.
Wednesday, March 05, 2008
Sir Nicholas Montagu
Sir Nicholas Montagu
Liberal Democrat Treasury spokesman, Vince Cable, has questioned the impartiality, effectiveness and independence of the Norwich Union With-Profits Committee (set up to protect the interests of policyholders).
He is concerned about Norwich Union's plans to distribute a proportion of its inherited estate to policyholders over three years, as opposed to a one off lump sum payment.
Mr Cable wrote to Sir Nicholas Montagu, chairman of the committee, questioning the committee's role in allowing the special bonus to be phased over three years.
Quote:
"Your committee has been established to protect the interests of policyholders and yet in your first public act you seem to have destroyed any prospect of being seen as a credible champion for them."
Montagu, a former civil servant who presided over the Inland Revenue during a period of bungles and who now gives after-dinner speeches for £5K a time, is seemingly reluctant to answer questions from "This Is Money" about this decision.
However, Montagu is paid from policyholders' funds to safeguard their interests therefore he is obliged to answer questions from policyholders.
Policyholders should send their complaints, comments and any queries relating to his role to:
Sir Nicholas Montagu,
Norwich Union With-Profits Committee,
Norwich Union Life,
2 Rougier Street,
York
YO90 1UU.
With-profits committees, if they are to really serve the policyholders that they claim to represent, need to be independent, impartial and effective.
It would appear that some fall short of this.
Liberal Democrat Treasury spokesman, Vince Cable, has questioned the impartiality, effectiveness and independence of the Norwich Union With-Profits Committee (set up to protect the interests of policyholders).
He is concerned about Norwich Union's plans to distribute a proportion of its inherited estate to policyholders over three years, as opposed to a one off lump sum payment.
Mr Cable wrote to Sir Nicholas Montagu, chairman of the committee, questioning the committee's role in allowing the special bonus to be phased over three years.
Quote:
"Your committee has been established to protect the interests of policyholders and yet in your first public act you seem to have destroyed any prospect of being seen as a credible champion for them."
Montagu, a former civil servant who presided over the Inland Revenue during a period of bungles and who now gives after-dinner speeches for £5K a time, is seemingly reluctant to answer questions from "This Is Money" about this decision.
However, Montagu is paid from policyholders' funds to safeguard their interests therefore he is obliged to answer questions from policyholders.
Policyholders should send their complaints, comments and any queries relating to his role to:
Sir Nicholas Montagu,
Norwich Union With-Profits Committee,
Norwich Union Life,
2 Rougier Street,
York
YO90 1UU.
With-profits committees, if they are to really serve the policyholders that they claim to represent, need to be independent, impartial and effective.
It would appear that some fall short of this.
Monday, March 03, 2008
Call For Evidence
Call For Evidence
In a move designed to ensure that another endowment related scandal does not occur, the Treasury Select Committee has called for written evidence as part of its inquiry into the orphan assets (Inherited Estate) held by life companies' with-profits endowment funds.
The call comes as concerns are raised over the actions of AXA, Prudential and Norwich Union as they attempt to re attribute their Inherited Estates.
These assets are worth billions of pounds yet, despite these funds being contributed by policyholders, some insurance companies have been using a portion of them for the benefit of their shareholders rather than policyholders.
In 2000 AXA paid out a paltry 31% of its inherited estate to policyholders, this gave rise to the FSA to creating the post of Policyholder Advocate.
Claire Spottiswoode, Policy Advocate, is currently acting on behalf of Norwich Union policyholders.
Ms Spottiswoode, who is not happy with the current plans by Norwich Union (eg to pay the policyholders their share over 3 years), has welcomed the call for evidence:
"Foremost among the issues will be the way in which the FSA allows companies to subsidise the writing of new business, which has the effect in a re attribution of transferring value from the estate directly to shareholders.
Further, the way in which the FSA allows companies to pay shareholder tax from the estate is costly to policyholders and requires explanation."
The committee would like to hear about the following areas:
In a move designed to ensure that another endowment related scandal does not occur, the Treasury Select Committee has called for written evidence as part of its inquiry into the orphan assets (Inherited Estate) held by life companies' with-profits endowment funds.
The call comes as concerns are raised over the actions of AXA, Prudential and Norwich Union as they attempt to re attribute their Inherited Estates.
These assets are worth billions of pounds yet, despite these funds being contributed by policyholders, some insurance companies have been using a portion of them for the benefit of their shareholders rather than policyholders.
In 2000 AXA paid out a paltry 31% of its inherited estate to policyholders, this gave rise to the FSA to creating the post of Policyholder Advocate.
Claire Spottiswoode, Policy Advocate, is currently acting on behalf of Norwich Union policyholders.
Ms Spottiswoode, who is not happy with the current plans by Norwich Union (eg to pay the policyholders their share over 3 years), has welcomed the call for evidence:
"Foremost among the issues will be the way in which the FSA allows companies to subsidise the writing of new business, which has the effect in a re attribution of transferring value from the estate directly to shareholders.
Further, the way in which the FSA allows companies to pay shareholder tax from the estate is costly to policyholders and requires explanation."
The committee would like to hear about the following areas:
- The regulatory definition of the inherited estate in a with-profits fund.
- The extent to which life assurance companies should be permitted to diminish inherited estate in order to subsidise corporate activity, including financing new business, making strategic investments, paying shareholder tax and paying the costs of compensation for mis-selling.
- Whether allowing life assurance companies to use inherited estate to subsidise corporate activity has any adverse effects on competition.
- The principles that should guide the division of inherited estates in 90:10 funds between policyholders and shareholders upon re attribution of the estate.
- The appropriate sharing of inherited estate between current and future policyholders.
- Whether policyholders' reasonable expectations of distributions from inherited estate should be zero or have a positive value.
- Whether any distribution of benefits from the inherited estate should be made in a single payment or phased over several years.
- The role and responsibilities of the Policyholder Advocate.
- The framework for negotiation between the Policyholder Advocate and the life assurance companies.
- The role of the with-profits committees of life assurance companies.
- The approach of the Financial Services Authority to the issue of inherited estate.
Wednesday, February 06, 2008
Norwich Union Windfall
Norwich Union Windfall
Some good news for over a million Norwich Union endowment policyholders. They have been promised a share of a £2.1BN arising from Norwich's "orphan assets" or "inherited estate" surplus.
Norwich Union has agreed to hand back almost half the £5.4BN surplus in its two main with-profits funds.
Individual payouts will vary, depending on the size of investment and how long it has been in force. However, projections indicate that policyholders should see the value of their assets increase by 10% by 2010.
It is also estimated that approximately 50,000 holders of Norwich Union mortgage endowment policies, currently projected to shortfall, will be reassigned a "green light" over the next three years.
Policyholders will receive 90% per cent of the £2.3 billion being distributed. The remaining 10% will go to shareholders.
Norwich Union have tabled a separate offer of a cash payment to policyholders in exchange for renouncing their claims on the rest of the estate (£3.1BN).
Clare Spottiswoode, the policyholder advocate responsible for securing the best deal for Norwich Union customers, is not entirely happy with the arrangement. She is quoted in the Times as saying:
"The money is available now, so how on earth can it be fair to deny it to policyholders now?"
She also called on Norwich Union to backdate payouts to cover customers who have cashed out of policies since November, when Norwich first said that it would press ahead with a distribution.
IFA's who have paid out compensation, because of Norwich Union's mis-selling of endowment policies, are also not that happy. They are asking why, if the policies now look like thy are going to revert to surplus, should they have been penalised.
Some good news for over a million Norwich Union endowment policyholders. They have been promised a share of a £2.1BN arising from Norwich's "orphan assets" or "inherited estate" surplus.
Norwich Union has agreed to hand back almost half the £5.4BN surplus in its two main with-profits funds.
Individual payouts will vary, depending on the size of investment and how long it has been in force. However, projections indicate that policyholders should see the value of their assets increase by 10% by 2010.
It is also estimated that approximately 50,000 holders of Norwich Union mortgage endowment policies, currently projected to shortfall, will be reassigned a "green light" over the next three years.
Policyholders will receive 90% per cent of the £2.3 billion being distributed. The remaining 10% will go to shareholders.
Norwich Union have tabled a separate offer of a cash payment to policyholders in exchange for renouncing their claims on the rest of the estate (£3.1BN).
Clare Spottiswoode, the policyholder advocate responsible for securing the best deal for Norwich Union customers, is not entirely happy with the arrangement. She is quoted in the Times as saying:
"The money is available now, so how on earth can it be fair to deny it to policyholders now?"
She also called on Norwich Union to backdate payouts to cover customers who have cashed out of policies since November, when Norwich first said that it would press ahead with a distribution.
IFA's who have paid out compensation, because of Norwich Union's mis-selling of endowment policies, are also not that happy. They are asking why, if the policies now look like thy are going to revert to surplus, should they have been penalised.
Friday, January 11, 2008
Norwich Union's Sleight of Hand
Norwich Union's Sleight of Hand
It seems that Norwich Union is planning an interesting use of £150M of its inherited estate (orphan funds), which in theory are meant to be for the benefit of its policy holders.
Norwich plans to use £150M of £5BN surplus assets to pay for claims made against the company.
Currently Norwich Union is in the process of re attributing the funds to with-profits policyholders and shareholders, which is perfectly reasonable. However, Which? has warned that £150M has been designated to pay for past mis-selling.
It should be noted that the Financial Services Authority (FSA) does allow money in with-profits funds to be used in a number of ways, including settling compensations claims. It is considering a change in its regulations.
However, it seems to be rather "sharp practice" to use policy holders' money to pay for mis-selling perpetrated by the company that claims to be acting in the interest of the policy holders.
Which? is of the same opinion, and has quite rightly threatened to take the matter to court.
Norwich Union is negotiating the re attribution of the £5BN surplus, and also wants to use some of the money to finance business expansion; which also seems to me to be taking a liberty with policy holders' funds.
Dominic Lindley, financial policy adviser to Which?, is also claiming that billions of pounds of with-profits money has already been used by insurance companies to pay for the mis-selling of endowments and pensions.
What are the FSA doing about this?
Why do they sit on their hands and allow companies, such as Norwich Union, to get away with this?
It seems that Norwich Union is planning an interesting use of £150M of its inherited estate (orphan funds), which in theory are meant to be for the benefit of its policy holders.
Norwich plans to use £150M of £5BN surplus assets to pay for claims made against the company.
Currently Norwich Union is in the process of re attributing the funds to with-profits policyholders and shareholders, which is perfectly reasonable. However, Which? has warned that £150M has been designated to pay for past mis-selling.
It should be noted that the Financial Services Authority (FSA) does allow money in with-profits funds to be used in a number of ways, including settling compensations claims. It is considering a change in its regulations.
However, it seems to be rather "sharp practice" to use policy holders' money to pay for mis-selling perpetrated by the company that claims to be acting in the interest of the policy holders.
Which? is of the same opinion, and has quite rightly threatened to take the matter to court.
Norwich Union is negotiating the re attribution of the £5BN surplus, and also wants to use some of the money to finance business expansion; which also seems to me to be taking a liberty with policy holders' funds.
Dominic Lindley, financial policy adviser to Which?, is also claiming that billions of pounds of with-profits money has already been used by insurance companies to pay for the mis-selling of endowments and pensions.
What are the FSA doing about this?
Why do they sit on their hands and allow companies, such as Norwich Union, to get away with this?
Friday, August 03, 2007
A Slice of The Pie
A Slice of The Pie
Standard Life has promised its two million policyholders a windfall payout from its £1.3BN orphan fund pot, surplus cash held in its with-profits fund.
Standard Life said that it would pay the cash to qualifying policyholders as their policies matured, rather than paying out one lump sum to all its customers in one go.
The orphaned assets are pots of surplus cash that inflate insurers' solvency figures.
Aviva, parent company of Norwich Union, will divide its £4BN orphan assets between shareholders and policyholders and Prudential is also considering what to do with its pot of surplus assets, worth £9BN.
A Standard Life spokesman told The Times:
"When other insurers, such as AXA, distributed their orphan assets, they made a one-off payment to all policyholders.
We are taking a different approach and are giving enhanced payouts when a policy reaches maturity, or when it is surrendered or transferred.
We are doing this because we want to retain some of this cash cushion over the life of our policies, some of which have decades to run."
This approach means that investors will be forced to keep their policies until maturity, if they wish to receive their share of the pot.
Standard Life has promised its two million policyholders a windfall payout from its £1.3BN orphan fund pot, surplus cash held in its with-profits fund.
Standard Life said that it would pay the cash to qualifying policyholders as their policies matured, rather than paying out one lump sum to all its customers in one go.
The orphaned assets are pots of surplus cash that inflate insurers' solvency figures.
Aviva, parent company of Norwich Union, will divide its £4BN orphan assets between shareholders and policyholders and Prudential is also considering what to do with its pot of surplus assets, worth £9BN.
A Standard Life spokesman told The Times:
"When other insurers, such as AXA, distributed their orphan assets, they made a one-off payment to all policyholders.
We are taking a different approach and are giving enhanced payouts when a policy reaches maturity, or when it is surrendered or transferred.
We are doing this because we want to retain some of this cash cushion over the life of our policies, some of which have decades to run."
This approach means that investors will be forced to keep their policies until maturity, if they wish to receive their share of the pot.
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