Aviva says considering response on surplus assets

LONDON, March 12 (Reuters) - British insurer Aviva (AV.L) said it was considering its next move after receiving a response to its compensation offer to UK policyholders that could allow it to reallocate surplus assets in two funds.

Aviva did not disclose the details of the response.

"We remain committed to trying to put an offer to policyholders, so long as it is fair to both shareholders and policyholders," an Aviva spokeswoman said on Wednesday, adding there would be a statement "in due course".

The insurer's UK arm has been considering options for the surplus money, or inherited estate, for two years, hoping to free up cash to write more new business. The estate was worth 5.4 billion pounds ($10.9 billion) at the end of June.

After almost two years of negotiations with an independent advocate defending policyholder interests, it said last month it would split the total -- deciding the future of the first half with a 2.1 billion pound bonus to 1.1 million policyholders.

The benefit of the remaining half, however, can only trickle down to shareholders if Aviva can "reattribute" the assets.

In this case the money is not distributed, but can be used more widely in the business. Policyholders would be offered incentive payments to compensate them for the change and these have been the subject of lengthy negotiations with the independent advocate.

Policyholder advocate Clare Spottiswoode said on Wednesday she had sent her formal response to Aviva -- a 19 page letter and 70 pages of supporting material.

Spottiswoode said she commented on the fairness of the offer, the advice she would give policyholders, on plans to allocate the money and on how policyholders who turn down the offer will be treated. She gave no further details and did not say whether the offer -- Aviva's third -- had been accepted.

(Reporting by Clara Ferreira-Marques; Editing by Richard Hubbard)