Aviva's with-profits protects policyholders from market turmoil

Article date: 10 February 2012

  • With-profits products provide protection for customers who wish to invest in the markets but don’t want to be exposed to the full impact of volatile market conditions.
  • A £10,000 with-profits bond purchased 10 years ago is now worth £15,410, giving customers a total return of 54.1% and significantly outperforming a bank or building society average savings account return of 23.7% over the same period (all figures after tax and charges). 
  • With-profits not only outperforms the average savings account, but can also outperform many other investment options, as the annualised returns (over 10 years) on a £10,000 investment show:
    • Aviva With-Profits Bond £15,410 or 4.4% pa
    • Average savings account* £12,367 or 2.2% pa
    • ABI UK Mixed Investment 20%-60% Shares - Life** £13,400 or 3.0% pa
    • ABI UK Mixed Investment 40%-85% Shares - Life** £13,804 or 3.3% pa
    • FTSE100 with dividends reinvested** £15,227 or 4.3% pa
  • In 2011, Aviva added £954 million in bonuses to customers’ with-profits policy values (£525 million in annual bonuses and £429 million in final bonuses).
  • In 2011, 16,000 with-profits bond customers benefited from our valuable inflation protected guarantee. Payouts for a further 15,000 policyholders, whose policies reach their fifth anniversary during 2012, will be protected by the inflation protected guarantee. 
  • Market value reductions (MVRs) reduced by an average of 2.6% in April 2011, increasing the policy value for customers where an MVR applies.

2011 overview
Investment markets remained extremely volatile during 2011, with the FTSE falling 5.5% due principally to European debt and US recessionary concerns. The consensus view is that low growth and interest rates will continue to be key economic factors over the medium-term.

This challenging economic backdrop has highlighted the success of the prudent approach we have taken to managing our With-Profits Fund for the benefit of our customers who have been protected from the full impact of these volatile market conditions.

What does this mean for our customers?
A with-profits bond with an initial investment of £10,000 and held for 10 years:

  • Is worth £15,410 (as at January 2012), a return of 4.4% per annum. 
  • Has outperformed a bank or building society average savings account which returned 2.2% per annum (after basic rate tax and charges). 
  • Has grown by 1.0% (net of tax & charges) during 2011.

A 25-year £50 per month mortgage endowment in the main Aviva With-Profits Fund, taken out on 1 January 1987, has a maturity value of £31,950 and grew 7.4% in 2011. Over the 25 years of the policy, this equates to an annual return of 5.6% (all figures net of tax).

Phil Willcock, propositions director at Aviva, commented: “Our research tells us that investment volatility is a significant concern for our customers. Thanks to the strength of our with-profits funds, we have been able to protect our customers from the full effects of the severe market volatility we’ve seen throughout 2011. The unique features of with-profits, coupled with long-term returns that compare very favourably with those offered by average bank or building society savings accounts and a number of other investment options, means that we continue to meet the needs of our with-profits customers.”

Key bonus rate changes effective on 1 January 2012

  • Annual bonus rates have been decreased for some funds, which reflects future economic expectations and prudent management of the fund:
    • Annual bonus rates for new business are 2.50% for bonds, 3.00% for pensions and 2.75% for Stakeholder pensions - all of which remain attractive when compared with current interest rates.
    • 0.25% rate reduction for unitised with-profits in the ex-CGNU fund and for unitised life policies in the ex-NULAP fund. The rate reduction does not apply to those policies with a guaranteed regular bonus rate.
    • 0.5% reduction in the regular bonus rate for conventional endowment policies in the ex-CGNU and ex-CU funds.
  • Final bonus rates for unitised with-profits policies, which were increased in July, have been reduced – by an average of 6% - due to falls in investment markets.
  • With-Profit Income Fund reduction in total bonus rate of between 0.25% and 1.5% depending on year of investment.

With-profits policy impact of 2011 rate changes
The table below shows typical changes in policy values over 2011 for our main with-profits products invested in our main with-profit fund. They do not necessarily reflect the changes to an individual policy. The bond and endowment figures are net of charges and basic rate tax. The pension figures are gross of tax and after charges.



Investment details

(started on)

Total investment

Payout value

1 Jan 2012 -annual yield

Change in payout value over 2011 (excluding premiums)

Average savings account payout -  annual yield


(5 year)

£10,000 single premium,

(1 January 2007)



3.1% pa




1.9% pa


(10 year)

£10,000 single premium,

(1 January 2002)



4.4% pa




2.2% pa


(20 year)

£200/month starting on

(1 January 1992)



5.3% pa




3.2% pa

Endowment (25 years)

£50/month starting on

(1 January 1987)



5.6% pa




3.1% pa

About the fund, underlying investments and policies:

  • At the end of June 2011, the total value of Aviva’s with-profits funds was approximately £50 billion with 1.8 million customers.
  • The equity backing ratio (the amount of equities and property) of the main Aviva With-Profit Fund, the old and new with-profits sub funds (ex-CGNU) is 63.7%.
  • Despite market volatility and a fall in the value of the FTSE of 5.5% in 2011, the main Aviva With-Profit Fund, the new and old with-profits sub funds, has delivered an estimated investment return of -1% before tax in 2011.

Asset mix of the main Aviva With-Profit Fund as at December 2011

Asset mix of the main Aviva With-Profit Fund as at December 2011


If you would like further information, please contact:
Louise Soulsby   
Telephone: +44 (0)1904 452617   
Mobile: +44 (0)7800 699526

Tom Wilson  
Telephone: +44 (0)1904 684283   
Mobile: +44 (0)7800 692053

* The average savings account used is the Moneyfacts Average up to 90 days’ notice, with a £10,000 minimum investment, invested from 1 January 2002 to 1 January 2012. Past performance is not a guide to the future.

** Source: Lipper Hindsight for a £10,000 initial investment invested from 1 January 2002 to 1 January 2012. All values are net of charges and tax.

*** The pension examples above are based on a male, investing £200 a month for 20 years from 1 January 1992 with a policy maturing at age 65, and a return of fund death benefit. The figures at 1 January 2012 assume retirement at selected retirement age and therefore benefit from the MVR-free guarantee. All figures are gross of tax and after charges.

The value of investment-linked funds can go down as well as up and is not guaranteed. It is possible that you may not get back the amount invested. Money in a savings account is accessible and safe, and interest, once earned, is guaranteed.

Notes to editors:
Aviva is the world’s sixth largest* insurance group. We provide 44.5 million customers with insurance, savings and investment products with total worldwide sales in 2010 of £47.1 billion**.
We are the UK’s largest insurer with over 14 million customers. Our combination of life, health and general insurance is unique in its scale and breadth in the UK market.  Customers can choose to buy our products through intermediaries, our corporate partners or from Aviva direct and we have become the partner of choice for many of the UK’s biggest organisations. 

We are ranked as one of the UK’s top 10 most valuable brands and Aviva plc are in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index. In 2010 we invested £4.3 million into our communities in the UK, which included 1,500 Aviva volunteers giving 24,000 hours for good causes. In addition, our employees gave £600,000 through fundraising and donating. Read our corporate responsibility report at www.aviva.com/2010cr.
Aviva is working in partnership with Railway Children through the Aviva Street to School programme to get children living or working on UK streets back into everyday life. Find out more at www.aviva.co.uk/street-to-school.
The Aviva media centre at www.aviva.com/media includes company information and a news release archive.
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* based on gross worldwide premiums at 31 December 2010.
** at 31 December 2010.


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