AXA to Share $2.5 Billion In Life Assets

July 25, 2000

French insurer AXA has proposed to release $2.5 billion in “orphan” assets in its British life insurance fund, which could mean a $788 million payout for policyholders. The proposals, reported Tuesday by Reuters news service, was approved by the Financial Services Authority and could pave the way for other UK insurance firms to unlock an estimated 20 billion pounds of inherited assets.

Inherited assets are reserves made up of unclaimed life policies and surplus profits from lapsed life and pension policies. AXA, which owns UK insurer Sun Life & Provincial, has been in negotiations with the Financial Services Authority over whether the assets held by its subsidiary Equity & Law were owned by the company’s shareholders or by current holders of life policies, Reuters reported.

The FSA told the news service it had accepted the proposals being put to policyholders. However, AXA also needs approval from policyholders and the UK High Court. Reuters also reported that AXA was proposing a $450 million payment directly from the company to policyholders, worth about $600 per policyholder on average.

Policyholders would also get $337 million in reorganization bonuses from the orphan estate. They could also get 90 percent of a special bonus from the estate, which has a current value of $375 million. AXA will keep the rest of the orphan estate — about $2.1billion — which it estimates could generate releases worth between $600 and $750 million to the company in the future.

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