aviva with-profits attribution

They don't have any surplus since many current policies will have a shortfall.

IMHO any such "inherited estates" should be used to pay current policy holders. One of the reasons we are in this mess is they didn't smooth properly and paid out too much in the past.

"Mark" wrote

Would you be saying that if it had turned out that the inherited estate wasn't needed, in order to pay the current policyholders their guaranteed benefits and a reasonable return -- would you be happy in that case to have paid *all* the IE to the shareholders?

"Mark" wrote

Eh? If they *had* paid out too much in the past, then there wouldn't *be* any inherited estates!!

No. I meant what I said. All money from the IE should go to policy holders, none, 0%, nothing should go to shareholders.

There is a case, if anyone in the past was underpaid, for them to be traced and given a share. However, IIRC there has never been a shortfall until recently.

Looking at it from the other side: why are there many policies with shortfalls when they have a big pot of money for this very purpose?

Why do you think that?

"Mark" wrote

Ahem - the IE exists *because* higher bonuses were not declared in the past on old policies. But if higher bonuses *had* been declared, then the shareholders would have got their cut at the time - the classic "90/10 gate" (90% goes to WP policyholders' bonuses, 10% to shareholders).

So - if it had been paid to the old policyholders previously, the shareholders would have got their share then. Why do you think they *shouldn't* get their share now, if past policyholders were traced and got their share now?

"Mark" wrote

What 'purpose' do you think the "big pot of money" (IE) is for? It wasn't created deliberately; it has arisen because no-one knew exactly what level of bonuses should have been declared in the past...

Because it was paid for by the policyholders and intended for them.

Do shareholders automatically get 10% of every payout?

It is a reserve of money to pay out to policy holders when times are lean. Like now.

And it has a use now.

Going back to the original topic shareholders often get a lot more than 10%.

"Mark" wrote

... just as *any* company's profits are effectively paid for by its customers... [What's the difference here?]

"Mark" wrote

I don't agree - where did you get that from?

"Mark" wrote

Eh? Are you asking how the 90/10 gate works? Basically, whenever With Profit policyholders get bonuses, the shareholders get one-nineth of that value. So if p/h's get 900 in bonuses, then shareholders get 100.

"Mark" wrote

Yep, under the 90/10 gate (see above).

Not really. (Most of) it is a reserve of money that

Fair enough. That's one of the reasons why they are doing the attribution process now - so that the IE can be used without going through the formal 90/10 gate.

"Mark" wrote

Howso? Think about it: if they could get at more than 10% normally, then they wouldn't need to be going through the process of attributing part to shareholders now!!

Because they are the ones paying the premiums.

I was not aware of this. In my mind shareholders should get a divident based on the overall profitability of the company and not directly 10% of my endowment policy.

At what point does the money become an inherited estate? Surely it's a continuous process of collecting money from policyholders, investing it and then paying out. In other words why does all this money "belong" to past policyholders only and not in any way to present policy holders?

I thought that the proposals were precisely this and to give shareholders more than 10%

In the AXA case a few years ago the shareholders got 55% and the policyholders only 45%.