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Aviva setback as further legal challenges materialise

Insurance giant Aviva has received a setback in its three-year battle to pay out orphan funds to shareholders, policyholders and the company itself. The original £1 billion offer from a £4.2 billion fund has since been reduced to £500 million after the fund in question fell in value to just over £1 billion. However, last week saw what many believe was the final ruling in this ongoing saga but it now appears that further legal hurdles will need to be addressed.

Many people believe the ongoing legal actions are nothing to worry about, with the scheme likely to be rubberstamped in the short term, although there are concerns that some policy holders will not receive their funds as quickly as had been anticipated. While Aviva is the largest UK insurer to go down this particular route to date, it is highly likely that other leading UK insurers with substantial "orphan funds" will follow suit as and when the path has been cleared and the legal framework has been put in place.

Orphan funds are in effect assets which have been put to one side over the years to flatten out the peaks and troughs in the traditional financial cycle. Unfortunately, it has proved impossible to find the "rightful owners" of some of these particular assets and as such they have been nicknamed "orphan funds", with no home.

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