While Aviva's reattribution process has, we believe, had a detrimental affect on the value of Aviva's Inherited Estate, there's no doubting that one aspect of their reattribution plan worked well. They successfully managed policyholder expectations about what payment to expect so that despite the value of the Inherited Estate falling over the period of the offer, policyholders were pleased with a higher than expected windfall.
Article posted initially on our sister website http://www.reattribution.com/with-profits-news/avivas-inherited-estate-hit-by-rising-markets

As so often with with-profits, the devil is in the detail. Stung by criticism for withdrawing the reattribution offer in 2008 when stock markets fell, the deal announced in January 2009 had a caveat that it would only proceed if the value of the Inherited Estate in the summer was higher than £1.2bn. Although at the time of the offer the Estate was valued at £1.5bn, they based the financial offer in their letters on the minimum fund value of £1.2bn.

This meant that even though the Inherited Estate was worth less in the summer than it was in January, it was higher than the minimum and therefore policyholders saw an increase in the payment from that stated in their letters.

If Aviva had not used derivatives as a method of ensuring the £1.2bn limit was not breached, it could have participated in the rise in value of the stock market. Instead, the fund chose not to participate and to accept a small loss when other funds were enjoying a strong rebound. By the time the reattribution offer had completed by the end of August, the FTSE 100 index of leading UK shares had risen 40% from its low point in early March but the Inherited Estate barely noticed it. We estimate that the Inherited Estate would have been worth 16% more if the fund had not used derivatives simply to ensure the deal proceeded.

We talk more about this in our Missing the Rally section of our website www.reattribution.com.