The cash will be paid to those who sold preference shares in the period from 8 to 22 March this year.
In its full year results announcement on 8 March, following clear legal advice, Aviva noted its ability to cancel existing preference shares as part of considering its options to return capital to shareholders.
Following that announcement, Aviva says it spoke to “a large number of investors and received some strong feedback and criticism.”
On 23 March 2018, in light of the feedback, Aviva announced it would take no action to cancel the preference shares.
That announcement enabled preference shareholders to be secure in their holdings.
Under current regulation the preference shares will no longer count as regulatory capital in 2026 and Aviva will work towards obtaining regulatory approval for the preference shares, or a suitable substitute, to qualify as capital from 2026 onwards.
Aviva said it “recognises the uncertainty created for preference shareholders whilst Aviva was considering its options and the impact it had on the wider reputation and trust in the company.”
It said the pay outs were “a further step towards restoring that trust.”
Aviva estimated that fewer than 2,000 individual investors sold their preference shares in the period from 8 to 22 March 2018 and that the total cost of the goodwill payment scheme will be around £14m.
Eligible shareholders will have up to six months to make a claim from the date the process opens.
Mark Wilson, group chief executive of Aviva, said: “Our announcement on 23 March meant that Aviva’s preference shareholders could rest secure in their holdings.
“However, we recognise that whilst we were considering our options for the preference shares this caused uncertainty and led some investors to sell their shares.
“The board and I want to do the right thing and make this goodwill payment.”
He added: “We accept that whatever action we take, we will continue to hear divergent views on this topic from various stakeholders.
“However, together with our previous announcement not to proceed with the cancellation of the preference shares, we hope this goodwill payment goes some way to restoring trust in Aviva."