Norwich Union has said that policyholders will get the final say on whether its parent company, Aviva, shares out £3.3 billion of orphan assets between shareholders.
The funds are made up of money that was originally set aside with the £8.6 billion CGNU Life and £10.4 billion Commercial Union Life Assurance with profits funds to pay for smoothing.
The money was left over when bonus payouts did not match investment returns - mainly before 1970, which had then passed into the ownership of Norwich Union.
In order to release the funds, they will need to be reattributed to Aviva shareholders. The company will need to appoint an independent policyholder advocate, in line with Financial Services Authority rules on treating customers fairly, to ensure that policyholders get a fair deal when the funds are handed over.
This is likely to come in the form of a windfall payout to policyholders to compensate for the fact that they give up the right to any future redistribution of the assets.
Our view
We suggest most will go for a windfall now rather than take part in future shareholder changes.