Aviva - FANTASTIC

missingtowindward

On the same day that Aviva published their spectacular company results and a 4.5% dividend hike for their shareholders I happen to see the 2014 Aviva Bonus Announcement for Endowment Policyholders.

Policyholders have been awarded an unchanged regular bonus of 0.5% on previous bonuses and an unchanged 0.00% on the sum assured.

This years bonus announcement follows a spectacular year for investors right across the world. In 2013 the FTSE 250 was up 28.8%; Germany was up 26%; Spain up 20% and France only managed 18%.

I then looked back to see when Aviva last altered the regular bonuses for endowment policies to discover that 0.5% on previous bonuses and 0.00% on the sum assured has been the same and unchanged for the last 12 years!!!!!!

At the same time I noticed a statement in the 2006 Bonus Pack that: 'We currently deduct 0.75% each year from your share of the fund to cover guarantees and to add to capital requirements'.

The next paragraph states: 'As we are a shareholder owned company shareholders receive a share of the profits - for every bonus of £9, which we add to your plan, we transfer £1 to shareholders'. That's 10% of all bonuses going to shareholders.

So, doing the maths from the figures above, it seems to me that my endowment policy is growing at the rate of 0.5% of nothing whilst paying out 10% of the bonus and 0.75% of the whole fund value. That's negative growth for the policyholder and riches for the shareholder.

Over the last 10 years shareholders have enjoyed an average return per year of 5% of their investment, in cash every 6 months, and endowment policyholders have scored a big fat zero!

Does this constitute a breach of contract?

I'm sure I remember reading Aviva/Norwich Union documentation suggesting that from our oddly named With Profits Fund: 'on average we aim to share out between a half and two thirds of the profits through regular bonus'.

Yep, it's true, that's what they said in 2003. In 2004 it all changed and now, 10 years on, we enjoy no profits and our investment is in a Zero Profits Fund.

Thanks Aviva!

PeacefulWaters

You are invested in a with profits fund. It is in Aviva's interests for this to do well as they skim 10% of any profit.

Most of the with profits fund is not invested in the indeces you reference in your post. If you want the returns to reflect these indeces invest in tracker funds. A typical with profits fund is, thanks to regulatory caution, heavily invested in gilts, fixed interest securities and other low return instruments.

Their share price and profit figures are a result of all their operations globally. Their with profits funds for UK endowment policy holders are part of this, but only a tiny part.

If you want to share in Aviva's success you'd be better buying shares in the company.

You can rant all you like. But a with profits fund is not a single company share. It is not a tracker fund. As such it behaves differently to these things.

Over the last 10 years shareholders have enjoyed an average return per year of 5% of their investment, in cash every 6 months, and endowment policyholders have scored a big fat zero!

Does this constitute a breach of contract?

Linking them or comparing them is meaningless. And pointless. They are not directly connected. They are not contractually linked. There is no breach of contract.

dunstonh

On the same day that Aviva published their spectacular company results and a 4.5% dividend hike for their shareholders I happen to see the 2014 Aviva Bonus Announcement for Endowment Policyholders.

Although the two things are not linked.

This years bonus announcement follows a spectacular year for investors right across the world. In 2013 the FTSE 250 was up 28.8%; Germany was up 26%; Spain up 20% and France only managed 18%.

That is not correct. It has been a really bad year for emerging markets and not a good year for fixed interest securities. Most WP funds are heavy in fixed interest.

I then looked back to see when Aviva last altered the regular bonuses for endowment policies to discover that 0.5% on previous bonuses and 0.00% on the sum assured has been the same and unchanged for the last 12 years!!!!!!

Seems about right as that is more or less in line with the regulatory changes that forced providers to lower annual bonus rates and instead focus on final bonus rates instead.

That's negative growth for the policyholder and riches for the shareholder.

Two unlinked things. So, not sure why you are linking them.

Over the last 10 years shareholders have enjoyed an average return per year of 5% of their investment, in cash every 6 months, and endowment policyholders have scored a big fat zero!

You are not correct. You cannot just look at on one of the bonus rates and treat it as the sole return. The final bonus will be where the bulk is.

Does this constitute a breach of contract?

No. You mixing up profits of a group of companies and an investment fund that has nothing to do with the parent company profits is not breach of contract.

I'm sure I remember reading Aviva/Norwich Union documentation suggesting that from our oddly named With Profits Fund: 'on average we aim to share out between a half and two thirds of the profits through regular bonus'.

It doesnt say company profits though. It is referring to fund profits.

kipperkendall

This year aviva final bonus rates have increased by a good amount - my aviva cu homemaker final bonus has risen from 15% to 21%!

Lucky for me that it matures in May! :j

missingtowindward

Well Well Well..................

It would seem that I am not the only one to notice:


thisismoney.co.uk/money/mortgageshome/article-2578580/Share-prices-soar-endowments-fall-third



So where are the regulators now, now that we need them to step up to the plate and do something for the benefit of the customers. We are being taken to the cleaners, by the likes of AVIVA, using closed endowment WP funds for the benefit of the Company and their shareholders!

dunstonh

thisismoney.co.uk/money/mortgageshome/article-2578580/Share-prices-soar-endowments-fall-third

If that is the headline then that is really poor reporting.

So where are the regulators now, now that we need them to step up to the plate and do something for the benefit of the customers.

The regulator is one of the reasons most WP funds are not heavily invested in shares.

We are being taken to the cleaners, by the likes of AVIVA, using closed endowment WP funds for the benefit of the Company and their shareholders!

Evidence?

adzy77

So to clarify...they're not fantastic?