General Insurance Article - Aviva and the number of Fixed Price Arbitrage Contracts

 Following court rulings in France in the autumn, the potential impact on the Aviva subsidiary from one small contract alone, written in 1997, could be worth €1 billion by 2020. The company is still hiding the potential risk deep within unquantifiable technical provisions in the recently announced 2014 results. And despite direct questions to the Chairman at the general meeting to vote through the take over of Friends Life, Aviva refused the request for greater transparency and answer simple questions such as how many contracts are still in existence.
 
 In France, a growing number of Cours Connu contract holders are continuing to look to the French legal system to defend their rights and have their contracts honoured. In the last two weeks Nicolas Lecoq-Vallon, the French lawyer who represents 30 holders of Cours Connu signed up ten more new Cours Connu clients.
 
 Shareholders of Aviva – and now those of Friends Life - cannot begin to make that judgement unless they know how many contracts are still in existence. If Aviva is comfortable with the Cours Connu problem, then it should – as a first step - be more transparent about how many exist and the size of the financial risk from being exposed to these contracts
 
 A spokesman for Max Herve George, the contract holder who has won a number ofcourt judgments in France, including the need for Aviva to honour the terms and conditions of his contract in France’s Supreme Court, said: “We were looking for a straightforward answer to a straightforward question at the General Meeting which was how many of these contracts still exist.
 
 “Aviva may not want to own up to the potential size of the problem in France, or they may not have confidence about what is going on in their French subsidiary, but if we were to give them the benefit of the doubt, then maybe they do not know how many contracts still exist, but that too would be extraordinary.”