AIG Life has said it will redistribute £100 million (around $151 million) to investors in its crisis-hit Enhanced fund who opted to transfer funds to a protected recovery vehicle.

The distribution will be made on 6 June and accounts for 4 pence for each unit a policyholder holds in the Protected Recovery fund. Distributions will be moved to AIG Life (UK)’s Standard fund, where they can either be withdrawn or remain invested.

When the AIG Life Enhanced fund closed in December, investors were told that if they cashed in their holdings immediately they stood to receive 87 per cent of their total investment - 95 per cent of investors in the fund opted to transfer their assets into a Protected Recovery fund with a maturation date of 2012.

At the inception of the Protected Recovery plan, AIG Life said it hoped to return cash to policyholders in bi-annual distributions where it was “possible and prudent to do so.”

The AIG Life Enhanced fund was initially suspended in September 2008, after AIG’s bailout by the US government sparked a rush of redemption requests.

Disgruntled investors in the fund subsequently formed an action group, AIG Victims, and appointed legal representation.  At the end of last year, a spokesperson for the group told WealthBriefing its members say they were mis-sold the fund and that there are a number of legal actions in the pipeline. 

In December, prominent UK businessman Sir Keith Mills launched a high profile attack on Coutts after the private bank allegedly advised him to invest in the fund.