Factors in Determining Bonuses for Participating Policies

Insurance policies which pay bonuses/ dividends are usually referred to as participating policies. Investment in participating policies is a mechanism by which risks* are pooled for a group of customers.

The bonus Aviva pays and the returns its customers get for participating policies will be dependant on a number of factors within this pooling arrangement. The key factors that affect bonus payout for participating policies include:

• The participating fund's investment performance;
• Aviva's operating expenses e.g. administrative cost, investment cost and commission to the intermediaries;
• The amount of tax Aviva has to bear;
• The shareholders' share of profits;
• The claims Aviva has to bear, such as death and surrender claims; and
• Other profits and losses in the participating fund

Aviva will also take into account the historical performance as well as the future outlook of the participating fund when determining the level of bonus to be distributed.

* including investment risk, insurance risk (e.g. mortality, morbidity), expenses risk, surrender/ lapse risk, business risk.